Commercial landlords seeking to recover rent arrears from tenants have lost their right to send in bailiffs and have to follow a new statutory regime instead.
Commercial Rent Arrears Recovery started from April 6, 2014 and only applies to landlords and tenants of commercial property with a written lease.
Semi-commercial properties, like office or shops with flats in the same property and part of the same lease are not included.
The new arrears regime also only applies to rent, VAT and interest – so service charges and insurance are recovered under a separate process.
The Commercial Rent Arrears Recovery rules now mean landlords have to go to court to enforce collection of unpaid rents after serving a seven-day enforcement notice.
The seven day notice excludes Sundays and bank holidays.
The only option to act quicker is if the landlord can prove to the court that the tenant is likely to remove assets from the premises to prevent recovery if the enforcement notice is served.
The minimum arrears for seeking a recovery order are seven days rent.
The agent enforcing the order must be certificated and can only seize goods or assets belonging to the tenant. Anything necessary for the tenant’s personal use or in connection with employment, business, trade, profession, study or education are exempt up to a total value of £1,350.
Goods the tenant is using cannot be seized if the action is likely to lead to a breach of peace.
The agent must not seize anything worth more than the value of the debt plus costs.
Another seven clear days must pass before selling any seized items and the tenant should have seven days’ notice of the sale unless the delay would make the goods unfit for sale or significantly reduce their value.
If the property has a sub-tenant, the main landlord can serve a notice requiring rent is paid direct.
Should a sub-tenant fall into rent arrears under this arrangement, the main landlord can start Commercial Rent Arrears Recovery proceedings against them.