The Government has introduced further measures to protect commercial
tenants during the Covid-19 pandemic. The Commercial Rent Arrears Recovery
(CRAR) regime has been temporarily amended, making it more difficult for
landlords to use during the lockdown. Additional measures are expected next
month preventing landlords from using insolvency law to pursue rent arrears
from tenants who are experiencing financial difficulties due to the
pandemic.
Commercial Rent Arrears Recovery (CRAR)
CRAR is a mechanism for landlords to recover rent arrears from tenants. The
landlord appoints an enforcement agent (or bailiff) who first serves a
notice on the tenant setting out the sums owed and requiring payment by a
specified date. If the debt is not settled by that date the enforcement
agent may enter the tenant’s property and seize goods belonging to the
tenant.
Ordinarily CRAR rights may be exercised when there are 7 days’ worth of
rent arrears. Until 30 June 2020 (and possibly beyond this date if the
Government so decides) CRAR will only be exercisable if there are at least
90 days’ worth of rent arrears.
The CRAR documents have been reviewed and remain suitable for use during
the pandemic, but landlords should note the new requirement for 90 days’
rent arrears.
Coming soon – Corporate Insolvency and Governance Bill
The Corporate Insolvency and Governance Bill has been published. When
enacted, which is likely to be in June, it will restrict landlords’ ability
to serve statutory demands and issue winding-up petitions as a means of
recovering rent arrears. We are monitoring the progress of the Bill and
will update the documents and guidance in due course.
The contents of this Newsletter are for reference purposes only and do not constitute
legal advice. Independent legal advice should be sought in relation to any specific
legal matter.