COVID-19 Real Estate: Commercial Rent Arrears Recovery and Lockdown
1 May 20201 May 2020
Prior to this week, landlords could serve notice and then instruct an Enforcement Agent to seize and sell a tenant's goods in order to recover rent (known as CRAR).
However, on 23 April 2020, the government announced it was expanding its emergency measures in respect of enforcement actions by landlords during the COVID-19 pandemic. On 25 April 2020, the Taking Control of Goods and Certification of Enforcement Agents (Amendment) (Coronavirus) Regulations 2020 (the Regulations) came into force.
The Regulations amend the Taking Control of Goods Regulations 2013, a statutory code in relation to taking control of goods in order to sell them to enforce the payment of debts.
Landlords and tenants alike should take note of the three key changes:
For commercial tenancies, where notice of enforcement is given to the tenant between 25 April 2020 and 30 June 2020 (or such later date as may be announced) the minimum amount of net unpaid rent that must be outstanding before CRAR may take place is now 90 days’ rent. Landlords will note this has been increased from the usual equivalent of just 7 days' rent.
As a counter balance to the above, landlords are afforded an extension on the time period for taking control of the tenant's goods. This is usually 12 months from the date of notice of enforcement but, subject to some detail, is now extended for a further 12 months.
In the case of a premises that includes a dwelling-house, the Regulations prevent Enforcement Agents from entering and taking control of goods at a time when a person living at the address would be prevented from leaving without a reasonable excuse. The same applies to Enforcement Agents seeking to take control of goods on a highway. As a result, Enforcement Agents are unlikely to be able to take any action in regards to a premises that includes a dwelling-house until such time as restrictions on movement are relaxed.
Nothing in the Regulations affects any enforcement action taken prior to 25 April 2020.
As always, please do get in touch if you wish to discuss any concerns you may have around any of these changes.