New rent arrears rules are 'still not understood', warn property agents

29-Apr-2014 - Last updated on 30-Apr-2014 at 15:03 GMT

Related tags Renting

Landlords will now be required to give tenants notice before entering the premises

Pub property agents have welcomed new regulations governing the ways in which landlords are able to recover commercial rent arrears, but warned that the changes are “still not understood”.

The new commercial rent arrears recovery (CRAR) procedure, which came into force last month, replaced the 800-year-old common law ‘remedy of distress’, through which landlords can recover rent arrears from their tenants by instructing bailiffs to seize their goods and sell them without going to court or giving the tenant any advance warning.

Under the new regulations, landlords wishing to take control of and sell a defaulting tenant’s goods will be required to give them notice before entering the premises, and only rent up to the date of this notice can be recovered. The notice period must be at least seven clear days, not including Sundays, bank holidays, Good Friday or Christmas Day.

'Pragmatic' changes

Guy Simmonds managing director Stephen Taylor said the new rules are “extremely pragmatic”, especially in light of the “current adverse trading conditions” many publicans are facing.

“The common law ‘remedy of distress’ was archaic and, as the name implied, extremely brutal and stressful to the tenant,” he said.

“I was always in favour of landlords trying to work with their tenants in a reasonable manner and timescale when attempting to recover rent arrears. These new regulations will at least address this scenario in part, by giving the tenant more time and a mandatory notice period.”

Misunderstanding

GA-Select MD Graham Allman said the regulation is an opportunity for landlords and tenants to improve their communications, but said the changes are “still not well-known or understood”.

“It is not in the interest of either party to see a change in tenant, so a sympathetic and understanding approach is essential,” he added.

“It will be interesting to see how the chinks unfold, but here again, the danger is that the lawyers will be the only winners.”

David Morgan, director of licensing chartered surveyors Morgan & Clarke, said there is still “a lot of misunderstanding” about the fact that CRAR only applies to properties in purely commercial use and not for the many pubs where there is also residential use.

Property consultancy firm Bruton Knowles previously warned that the regulations could upset owner-tenant relationships and make the recovery of arrears “a more time-consuming and costly process”.