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New rules on rent arrears – commercial landlords urged to act now

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New regulations on the recovery of rent arrears are about to come into force and commercial landlords need to act now to ensure they do not fall foul of the tough new system.

From April 6, commercial landlords will no longer be able to seize tenants’ goods without warning to sell and set off against rent arrears.

The ancient and controversial common law remedy of distraint is being abolished and replaced with Commercial Rent Arrears Recovery (CRAR).

Matthew Pugh, head of property litigation at Langleys, said:

“This will constitute the biggest change for more than three centuries in a landlord’s right to recover items belonging to a tenant in satisfaction of rent arrears.

“Whilst landlords will still, if they follow the new procedures, be able to take control of a tenant’s goods with a view to selling them, there are significant changes and disadvantages compared with the old regime.

“The most significant drawback is that landlords will lose the element of surprise.

“The big risk is of tenants putting themselves into administration during the new statutory notice period in order to block any claims.

“Distraint has historically been the smart choice for landlords who believe their tenant may be on the verge of going bust and is still widely used.”

Matthew Pugh
Matthew Pugh

 

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