What Happens Next With CRAR?

What Happens Next With CRAR?

We posted a while ago regarding the 25th March – a significant date for our industry.

Last Friday marked the date when Commercial Rent Arrears Recovery could reconvene, after a long two years of waiting for landlords came to an end.

Commercial landlords haven’t been rubbing their hands together in anticipation of getting their money or their properties back, as they know that the protective measures were needed, but it would be fair to say that their collective patience has all but run out by now.

Whilst it may seem from the outside, that enforcing CRAR is solely about looking after the interests of the landlord, the whole process is set up to treat both parties fairly and appropriately.

As it’s been two years, it’s probably a good idea to provide a reminder about what CRAR actually is...

Commercial Rent Arrears Recovery is the legal process which must be followed by landlords, when they are looking to recover outstanding rent from their former tenants or any guarantors. The whole CRAR procedure is covered in Section 72 of the Tribunals, Courts and Enforcement Act 2007. Our involvement, as enforcement agents, is covered in this documentation too, with regards to our procedures, as well as the types of rent which may be recovered.

As the name suggests, only commercial landlords can look to use CRAR, and rent of at least a minimum of 7 days’ must be outstanding. It’s also vital that a lease be in writing too.

Our part in the process is quite simple, as we follow the instructions on an instruction form, by giving the tenant seven days’ notice, after which we may look to enter the property to take control of goods towards the value of the outstanding debt.

There are three stages which all CRAR cases must follow: the compliance stage, the enforcement stage and the sales stage.

It’s good for landlords to know that fixed fees are set for each stage of the process, and that in some cases, these fees are recoverable from the tenant themselves as part of the enforcement arrangements.

Up until the 25th March, and owing to the economic impact of the coronavirus pandemic, a minimum of 554 days’ worth of outstanding rent needed to be involved, before any CRAR proceedings could begin. This has now come to an end, and ‘normal service’ has been resumed.

It’s crucial to remember though, that it’s been anything but ‘normal service’ for every kind of commercial tenant for the last two years, and so it’s not going to be as easy as one, two, three to successfully enforce every single case.

Whilst landlords know that the extra safeguarding during and after the pandemic was necessary to protect vulnerable tenants (and to give them the breathing space to get back on their feet) they also know that they can’t wait too much longer to get back what they are owed.

It’s therefore vital that the procedures involving CRAR are fully understood, if they are to be used appropriately and fairly.

Also from the 25th March, the Government have introduced the Commercial Rent (Coronavirus) Act 2022, which defines a new arbitration procedure for what it calls ‘protected rent debt’.

This ring fenced debt refers to any arrears that came about between March 2020 and the 18th July 2021, the worst period of the pandemic economically, with any arrears from this period being assessed through an arbitration period.

The arbitration will assess the tenant or debtor’s ability to pay back this money, based on the impact of the pandemic on their business’s finances.

Whatever the decision of the arbitration, The Act will prohibit enforcement on any protected rent debt for a period of 6 months (up to the 25th September 2022).

Critics will call it yet more breathing space for businesses who should have already closed.

That’s a harsh view of this in reality though, as all other arrears from outside this period can be enforced against as of the 25th, as can any businesses and premises which were not forced to close as a result of the pandemic and the various lockdown restrictions.

So, to conclude, CRAR is active again and Court Enforcement Specialists can help landlords follow the rules to the letter.

All you have to do is get in touch with the team here at #TeamCES, and we’ll talk you through everything we can and cannot do.

The bottom line though, simply has to be, that it’s time to get back what is owed.

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