CRAR – Further protection for commercial tenants
Covid-19 has caused unprecedented interruption to businesses globally. Official government guidance encourages landlords to ‘offer support and understanding to tenants who may start to see their income fluctuate’. Many landlords and tenants are working together to reach a compromise in relation to payments of rent. Where agreement is impossible, some landlords have exercised CRAR (Commercial Rent Arrears Recovery) to recover unpaid rent.
What is CRAR?
CRAR is a process which can be used by landlords of commercial property to recover rent arrears. A landlord should instruct an enforcement agent who will then:
- Serve notices on the tenant;
- Enter a tenant’s premises;
- Take control of tenant’s goods; and
- Sell the tenant’s goods to recover a sum equivalent to the unpaid rent.
Changes to CRAR:
From 25 April 2020, landlords may only use CRAR where at least 90 day’s net rent is unpaid. This measure will be in place until at least 30 June 2020 and may be extended.
Impact of changes:
In theory, this provides tenants with greater protection against landlord action to recover unpaid rent. Practically, we do not expect this change to have a significant impact as necessary social distancing measures have made it difficult, if not impossible, for enforcement agents to physically take control of tenant goods.
Additional restrictions are set to be announced shortly which will prevent landlords from serving statutory demands or presenting winding up petitions where a company cannot pay its bills due to Covid-19. This will increase protection for tenants who are struggling to pay rent. Further details on this will be on our dedicated Coronavirus Hub once released.
The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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