Rent and service charge recovery

Commercial rent arrears recovery (CRAR) is a way of recovering rent arrears relating to commercial property. The regulations came into force in 2014 and brought to an end the ancient common law right of distress

CRAR works by allowing a landlord to instruct an enforcement agent to take control of a tenant’s goods and sell them in order to recover an amount equivalent to the rent arrears.

Various notices must be served on the tenant by the enforcement agent at each stage of the process. The regulations do not set out the form of the notices, but a variety of information must be included for the notices to be valid. Therefore, care must be taken when producing the notices to ensure that they have the desired effect.

The process only applies to business premises let on a formal written tenancy, so it cannot be used where there are informal licence arrangements. Neither does it apply after the end of a lease where the tenant remains in occupation (often referred to as ‘holding over’) and the landlord has not given consent for the tenant still to be there.

Above all, landlords should be aware that by using the CRAR process, they lose the right to forfeit the lease (i.e. to remove the tenant from the property). It is vital, therefore, that landlords consider how any other breaches of the tenant’s obligations under the lease will be dealt with.

If you are a landlord who has tenants who are late with their rent – or if you are a tenant whose landlord is threatening rent recovery proceedings, you may find that taking expert advice as early as possible will save you time, money and undue stress.

When dealing with service charge arrears recovery, the first step is to identify the payments that have not been made. If the leaseholder denies liability, it will be necessary to scrutinise any relevant covenants and other terms of the lease in order to demonstrate that liability exists.