On 6 April 2014, a new set of rules relating to the recovery of rental arrears by seizing tenants' goods came into force.
The new rules are intended to redress the balance between tenants and landlords.
The commercial rent arrears recovery (CRAR) procedure is set out in the Tribunals, Courts and Enforcement Act 2007 and the Taking Control of Goods Regulations 2013.
The ancient right of distress has been abolished. The new procedures are much stricter, and several conditions must be met before CRAR can be used:
- CRAR only applies to leases of commercial premises and can only be used if the lease is in writing. It does not apply to residential premises or where part of the premises are used for residential purposes.
- CRAR only applies to the main l rent, VAT and interest. It does not apply to other payments reserved as rent, such as service charges, insurance premiums and rates.
- CRAR can only be exercised by certified enforcement agents and the tenant must be given seven days' notice of the intention to use the CRAR rules.
- The tenant must be at least seven days in arrears before CRAR can be used.
- In addition, there is guidance about tenants' goods which cannot be seized. Once goods have been seized, the tenant must be given an inventory of those goods by the enforcement agent as soon as reasonably possible. The seized goods must be valued within seven days and then sold or disposed of for the best price that can reasonably be obtained.
If the landlord has a right to forfeit, exercising CRAR will mean they waive that right.
Further details can be found in the Taking Control of Goods Regulations 2013 and accompanying explanatory memorandum.