Sending in the bailiffs… no longer an option for landlords

Sending in the bailiffs… no longer an option for landlords

The current lockdown has effectively resulted in the closure of the UK high street and this has led to less than half of the commercial rent being paid.

This is a 28.3% reduction on the preceding year according to the COVID 19 Rent Collection Impact Report from property management platform Re-Leased.

We have seen various tactics being utilised by landlords to seek to recoup unpaid rent including serving statutory demands and issuing Notices of Enforcement to utilise the Commercial Rent Arrears Recovery process (“CRAR”). It is no wonder that the Government has introduced a range of temporary measures to seek to prevent aggressive rent collection tactics by landlords.

What has 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 lasts until 30 June 2020. In a nutshell, the 2020 Regulations restricts the landlord’s use of CRAR unless there is 90 days’ of unpaid rent owing. The law previously allowed landlords to utilise CRAR if only seven days’ of unpaid rent was owing.

What does this mean for me?

If then you are a tenant that pays your rent monthly and your landlord has served a Notice of Enforcement upon you for unpaid rent for March (31 days) and/or April 2020 (30 days for April or 61 days for March and April in total), that notice is invalid. A landlord cannot utilise CRAR for sums of rent owing for less than 90 days.

This change is likely to benefit those tenants who pay rent on a monthly basis, as it provides them with more time to pay. However, for those who pay rent on a quarterly basis, we ascertain that if tenants can pay a small proportion of the rent, so that the sum in arrears is always less than 90 days’ worth of rent, this should prevent the use of CRAR by your landlord entirely under these temporary changes.

If you are served with a Notice of Enforcement, it is important to check that Notice to ensure it adheres to the restrictions imposed by the 2020 Regulations. Furthermore, even though landlords may not be able to enter your premises to take control of goods at the present time (e.g. if your business is closed), once a Notice of Enforcement expires, landlords can wait until premises re-open to take control of your goods. That is why it is key to check the validity of any Notices served upon you and take appropriate steps to dispute the same if they are invalid.

Tenants should watch out for rent that becomes due in June 2020, because the 2020 Regulations come to an end on 30 June 2020 and unless extended, landlords will be able to utilise CRAR in the usual way from 1 July 2020.

Contact us
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.

Please contact Martin Edwards or Justine Ball for further information on another member of the property litigation team in your local office.

For more details or for more general business advice in relation to coronavirus visit our dedicated resource hub.

From inspirational SHMA Talks to informative webinars, we have lots of educational and entertaining content for life and business visit SHMA® ON DEMAND.