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Commercial Property Management

Commercial Rent Arrears Recovery (CRAR)

The documents below can be used in connection with the Commercial Rent Arrears Recovery procedure ("CRAR"), which has been in place since April 2014.

CRAR replaced the old remedy of distress, which allowed landlords to seize and sell property belonging to a tenant who had rent arrears. The new regime is more limited in scope and sets out a prescribed enforcement procedure.

A landlord wishing to use CRAR must appoint an enforcement agent (otherwise known as a bailiff) to act on his behalf. The enforcement agent will then serve notice on the tenant warning him that the CRAR procedure will be used unless the tenant settles the arrears by a specified date. If the arrears are not paid by that date, the enforcement agent may enter the tenant’s property and take control of goods belonging to the tenant. Further notices need to be served once the property has been entered.

If there is a sub-tenant of the property, the landlord has an alternative to appointing an enforcement agent to take control of the tenant’s goods. The landlord can instead serve notice on the sub-tenant requiring the sub-tenant to pay its rent to the landlord rather than to the tenant. There are notices below for the landlord to send to the sub-tenant.

These documents will be of use to landlords and enforcement agents exercising Commercial Rent Arrears Recovery (CRAR) powers. 

A temporary moratorium on exercising CRAR may apply if the arrears in question are 'protected rent debts' under the Commercial Rent (Coronavirus) Act 2022. 

Commercial landlords and letting agents need to be aware of The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020. These regulations may affect you if your tenant (an individual) is in problem debt.  These regulations prohibit you from chasing your tenant (and anyone who is jointly liable) for rent arrears, charging late interest and fees and taking any enforcement action for rent arrears caught by the moratorium whilst your tenant is in a 'breathing space'.  These regulations mainly affect residential tenancies but commercial tenancies may be caught where the tenant is an individual, they are not registered for VAT and the debts do not relate solely to the business.

Commercial Rent Arrears Recovery (CRAR) is part of Property. Just £38.50 + VAT provides unlimited downloads from Property for 1 year.

Frequently Asked Questions

My commercial tenant owes rent. Can I seize their goods to recover it? +
Yes, through Commercial Rent Arrears Recovery. You instruct a certificated enforcement agent who serves notice and, if the arrears remain, can take control of the tenant's goods to sell. CRAR applies only to purely commercial premises let under a written lease, and only to principal rent, not service charge or insurance. This sub-folder has the CRAR notices.
How much rent must be owed before I can use CRAR? +
At least an amount equal to seven days' rent must be due, both when notice is given and when goods are taken. CRAR covers only pure rent, so you strip out service charge, insurance and VAT unless the lease makes them rent. If the debt falls below seven days' rent, you cannot proceed. This sub-folder's notices reflect these limits.
What notice do I have to give before an enforcement agent takes goods? +
The enforcement agent must give the tenant a notice of enforcement of at least seven clear days before taking control of goods, excluding Sundays and bank holidays. The court can shorten this only where there is a real risk the goods will be moved or sold to defeat the process. This sub-folder has the notices used in the CRAR procedure.
There is a sub-tenant in the property. Can I collect their rent instead? +
Yes. As an alternative to taking goods, CRAR lets you serve notice on a sub-tenant requiring them to pay their rent to you instead of to your tenant until the arrears are cleared. The notice binds the sub-tenant after a short prescribed period. This sub-folder has the notices to serve on a sub-tenant.
Does using CRAR stop me forfeiting the lease? +
Yes, for that rent. Exercising CRAR treats the lease as continuing, so it waives your right to forfeit for the arrears you are recovering. You generally cannot do both at once for the same debt, so choose your remedy. If the tenant is an individual in a breathing space, CRAR is also paused. This sub-folder covers the CRAR route.
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