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Sending in the bailiffs… no longer an option for landlords
Updated 15 September 2020 | Sending in the bailiffs… no longer an option for landlords
On 15 September 2020, the government announced further measures to protect commercial tenants from recovery action by restricting the ability of landlords to recover unpaid rent by utilising the Commercial Rent Arrears Recovery process (“CRAR”).
The British Property Federation have reacted with disappointment, as some businesses are taking advantage of the crisis by refusing to pay rent - despite them having the funds to pay. However, this announcement will no doubt be very welcome news for those tenants who have struggled to rebuild their businesses since the national lockdown earlier in the year.
What has now changed?
On 24 April 2020, the Taking Control of Goods and Certification of Enforcement Agents (Amendment) (Coronavirus) Regulations 2020 (“the 2020 Regulations”) came into force and restricted the use of CRAR, unless 90 days’ of rent remained unpaid.
In June 2020, the government extended the law so that CRAR could only be utilised if 189 days’ of rent remained unpaid.
Now, a further amendment has been made, which will come into force on 29 September 2020, and the law provides that:
A. CRAR can only be utilised between now and 24 December 2020 if there is 276 days’ of unpaid rent; AND
B. CRAR can only be utilised after 25 December 2020 if there is 366 days’ of unpaid rent.
What does this mean for me now?
This effectively means that landlords can only utilise CRAR between now and 24 December 2020 if a tenant has not paid 276 days’ worth of rent. This equates to the rent that was owed for the March, June and September 2020 quarters.
The law then goes further and states that if landlords wish to utilise CRAR on or after 25 December 2020, then there must be 366 days’ of unpaid rent owing. This equates to a further 90 days of rent and essentially means that landlords will also be unable to utilise CRAR if the December 2020 quarter rent remains unpaid.
If you are a landlord
If you are a landlord, CRAR may no longer be an effective recovery method available to you for unpaid rent from March 2020. However, you may be able to utilise CRAR if there are larger sums of unpaid rent which pre-date March 2020.
Further, remember that there are alternative remedies that landlords can utilise to seek recovery of rent and other sums if your tenants are not engaging with you. Our real estate disputes team can advise and guide you through the options.
If you are a tenant
If you are a tenant, you should carefully review any Notice of Enforcement that is served upon you, as these are now likely to be invalid. It appears CRAR will be an ineffective method of recovery until March 2021.
We can advise you on any Notice of Enforcement you receive and your options. We have developed a tailored fixed fee service to guide you in this process – so please get in touch with a member of the team.
We can help and advise you in these difficult situations but time is of the essence. We have developed a tailored fixed fee service to guide on your options.
We have launched our guide to recovery and resilience, helping to support businesses and individuals unlock their potential, navigate their way out of lockdown and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.
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