Commercial Property Landlords

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.