There is a quick and simple way for landlords to collect commercial rent arrears. The Commercial Rent Arrears Recovery (CRAR) process is a free service for landlords, with no need to go to court.
The Commercial Rent (Coronavirus) Act 2022
Following the lifting of restrictions on the use of CRAR during the coronavirus pandemic, the Government introduced the Commercial Rent (Coronavirus) Act 2022.
This was part of the Government’s Living with Covid-19 Plan and put in place a protected period of rent arrears for certain businesses. This applied to those businesses that were forced to close during the Covid-19 lockdown. If it applied, there was a legislated for arbitration period that both the landlord and the tenant must engage with.
For those businesses where the Code of Practice applied, both CRAR and lease forfeiture were prohibited for the protected rent arrears. Businesses and landlords had a six month period in which to begin the arbitration process. If this process wasn’t started, then the pre-Covid regulations now apply. Anything that fell outside of the legislation, including periods of rent arrears and businesses that weren’t covered, reverted back to their pre-Covid regulations from 25th March 2022.
Starting the Commercial Rent Arrears Recovery (CRAR) process
If you are a commercial landlord who has a tenant with commercial rent arrears, it’s important to act quickly to prevent the problem getting worse. You don’t want to allow tenants to build up a large amount of arrears that then become uncollectable or the business goes into administration.
The commercial rent recovery process is a free service to landlords, which can quickly collect the arrears you are owed. It can be used for all commercial premises, but not where there is any residential element to the lease. CRAR can only be used for pure rent, not for any additional elements that are paid to the landlord (such as utilities, insurance etc).
In order to start the commercial rent arrears process the rent needs to be at least seven days late. A certificated enforcement agent (bailiff) can then send out a compliance notice to the tenant. This provides them with seven clear days in order to pay the arrears in full.
Where the debt is not settled within this time and the tenant hasn’t made contact, an enforcement agent will attend at the premises without notice. They can then take control of goods at the site up to the value of the debt, which can be put up for sale if the arrears are not paid.
Can you use CRAR?
If you answer yes to the following questions, then it is likely that your rent arrears fall within the CRAR rules.
- Is it purely a commercial property, with no residential elements?
- Is the rent more than seven days in arrears?
- Does the property have an existing lease or proof of tenancy?
- Is the tenant still operating from the property?
- Have you not started any other legal proceedings against the tenant?
Help with commercial rent recovery
At CEA Limited, we support commercial landlords with every step of the CRAR process. We have a nationwide network of enforcement agents and will act immediately on your instructions. This enables us to quickly recover the rent arrears.
For more information on the CRAR process, contact our commercial property team today at office@cealimited.co.uk or call 0113 532 8350.
More Information
Collecting utility and service charges with commercial rent arrears
What’s the next step if a CRAR doesn’t work?