The Road to (Land)Lordship: Phases of the CRAR Process

rentingCommercial rental property is among the most lucrative ventures in today’s markets. Unfortunately, commercial tenants are increasingly defaulting on their rent and this is leading to significant losses for the landlord. This is however not an issue for landlords in the United Kingdomwith the CRAR (commercial rent arrears recovery) act which replaced the conventional laws of distress last 2014

Under CRAR, you should enlist a certificated bailiff for your rent recovery unlike in the past where landlords could recover rent. CRAR only allows recovery of rent, interest, and value-added tax (VAT) unlike the law of distress which permitted insurance and service charge recovery as well.Here are the stages of CRAR.

Compliance Stage

CRAR allows a seven-day period for the tenant to comply with an enforcement notice. During this compliance stage, the tenant can contact the bailiffs and agree on an arrangement on payment of their rent or pay it in full. The bailiffs will not charge you anything for this service, but your tenant will pay an enforcement fee plus VAT.

Enforcement Stage

After a lapse of the seven-day compliance period, bailiffs will seize the tenant’s goods. The enforcement process is similar to the procedure in the law of distress used before. The costs of the enforcement stage are determined by the arrears of the tenant.

Disposal Stage

After the enforcement phase, your tenant will be given a 48-hour notice to settle his/her arrears before removal of their effects from the property. After this period, the bailiff will remove the goods then sell them to recover your rent. The disposal stage fees include storage, reasonable disbursement and the auctioneer’s commission, among other costs.

Throughout the stages, you can be sure that all the bailiff’s actions are legal. Various writs regulate their operations and you can hence be guaranteed of no legal backlash. Now you can invest in commercial property with an assurance that you can efficiently deal with any rent defaulter.