Come 6 April 2014 Part 3 of the Tribunal Courts and Enforcement Act will come into force and landlords will no longer be able to exercise the right of distress to enter their tenant’s premises and seize goods. In its place will come Commercial Rent Arrears Recovery (CRAR).
Most of the salient features of distress will remain but CRAR cannot be levied for service charges and insurance even if reserved as rent, albeit interest and some other sums will be.
There are new further restrictions that the landlord will have to consider on enforcement.
The lease has to be in writing and CRAR cannot be used against mixed use premises, except where residential use is a breach of the tenant’s covenants. Tools of the trade up to a value of £1,350 are exempt although it will be possible to recover goods from the highway and from other premises (with the permission of the court).
The CRAR also varies the procedure requiring that an enforcement notice be served providing a minimum of 7 days notice before an enforcement agent can attend the premises. The agent has limited powers to use reasonable force to enter the premises and is limited to attending between 6am and 9pm on any day of the week or at other times when the business is open.
Once entry has been gained the agent completes a Controlled Goods Agreement detailing the goods he intends to seize allowing a further 2 days before re-entering the premises to collect the goods or items. There is then a minimum waiting period of 7 days before the goods or items can be sold.
The new regime will clearly lessen the impact of one of the quickest and cheapest methods of recovering rent arrears and allows the tenants the opportunity of removing their goods from the premises before the agents visit. The time scales for serving notices, attending the premises can be shortened and extending the powers to force entry can be varied by application to the court, but one of the strengths of distress was that no warrant or court approval was required and it is unlikely that many such applications will be made.
This is undoubtedly good news for tenants who will be given the opportunity to address any disputes over unpaid rent before it affects their business and ability to trade from the premises. https://www.gannons.co.uk/expertise/property-litigation/
Jonathan Cass is a property litigator with many years of experience in both bringing and defending property claims. Please do get in touch with Jonathan if you would like to discuss your matter.