It is now approaching a year since the rights of Landlords in respect of the recovery of arrears changed significantly with the introduction of CRAR which became effective from 6th April 2014. The new legislation raised a number of concerns from property owners, but as a brief reminder some of the changes meant that:
• Action can only be taken in respect of commercial property, not where there is any residential element.
• Only rent can be recovered. Not ancillary costs even where reserved as rent under a lease.
• Only goods belonging to the tenant are capable of seizure, not third parties occupying in breach of the lease.
• Landlords have to give 7 days advance notice to the tenants. This does not include weekends, bank holidays and the days of service and receipt of the notice.
• There are strict fee structures for each stage of the recovery process.
Although unfortunately during the recent recession an increased number of businesses have failed or experienced financial difficulties, the recent economic improvement has meant in our experience the need to use Enforcement Agents as they are now known has been limited.
Since the changes however, despite the concerns expressed by Landlords particularly in respect of the need to give notice, the new system works well with the recovery of any arrears of rent normally being achieved once the notice has been received by the tenants. One area where problems remain however is where historic leases have a residential element included which negates recovery by this method.
Although the discussions leading to the new rules seemed to take years to finalise this is still an area of property ownership/management that needs to be monitored as we are led to believe that as there have been some teething problems since its introduction, items of the legislation may be changed. Something owners of commercial property must keep abreast of.
Ian Le Grice BSc(Hons) MRICS