In July 2013, the UK government released a law to improve the procedure that bailiffs and property owners must abide by concerning rent recovery service. Unlike before, they cannot freely confiscate assets to get back unsettled commercial rent, counting VAT and interest.
The primary features of the Commercial Rent Arrears Recovery law consist of:
Notice of Enforcement
The landlord must give the tenant at least seven clear days of notice in writing before initiating the CRAR procedure. After that, they can freely seize the assets belonging to the debtor.
Otherwise, they can request for a shorter notice period if the tenant is most likely to dispose or move their assets to avoid this enforcement notice.
Notice to sub-tenants
The property owner will have the freedom to give sub-tenants notice. Instead of them paying the principal tenant, they will have to pay the landlord directly. Although, the law will only allow this 14 clear days after they have served the “Notice of Enforcement.”
Principal rent recovery
The property owner can only take advantage of CRAR to get back unpaid debts of the principal rent greater or equal to seven days or more.
They cannot use this process to retrieve other unsettled lease amounts, like insurance payments or service charges, whether or not these were a part of the rent.
Time restrictions for recovery
The government will only allow freedom to seize goods between 6 am and 9 pm or other business hours of the tenant. Moreover, the government abolished the former constraint on the implementation of distress on a Sunday.
Restrictions on mixed premises
If the property owner happens to use the commercial premises for personal residence, then CRAR will not be valid.
The government made these modifications to amend some of the severe outcomes of the regular law remedy of distress for tenants. Nevertheless, property owners can now pursue other means to recover rent arrears, such as forfeiting the lease or instigating court proceedings.