Major Changes to Rent Recovery of Commercial Premises

Major Changes to Rent Recovery of Commercial Premises

The introduction of the Commercial Rent Arrears Recovery Regulations will contain the provisions of the Tribunals Court and Enforcement Act 2007 will come into effect on 6^th April 2014.  This will create greater protection for tenants and make it more difficult for landlords to recover rent arrears.  Under the new Scheme, a landlord can still seize and sell the tenant’s goods and offset the sale proceeds against rent arrears, but this will be in more limited circumstances.

This Scheme contains the following conditions, which must be satisfied:-

• This can only relate to commercial leases and not mixed use premises;
• The lease must be evidenced in writing;
• The basic rent arrears plus VAT and interest can only be recoverable – this means that insurance rents and service charges are not recoverable, even if reserved within the Lease as rent;
• The landlord must provide 7 days notice of intention to enforce;
• Enforcement must be an authorised agent and not the landlord personally; and
• The landlord must wait at least 7 days before the selling the goods seized unless the wait would render the goods unsaleable or would substantially reduce their value.

Unfortunately this process will of course make it harder for landlords to recover rent arrears and will alert the tenant as to the imminent enforcement.