CRAR Update

Enactment of the Crime and Courts Act (2013) and the Proposed CRAR (Commercial Rent Arrears Recovery) Reforms 

On 25 January, the Government published its response to the Ministry of Justice consultation paper entitled Transforming Bailiff Action.

The consultation paper considered methods of bringing into force Part 3 of the Tribunals, Courts and Enforcement Act 2007 (the TCE Act). The TCE Act replaces the current law of distress with a modified regime (‘CRAR’) for recovering commercial rent arrears. From April 2014 it is expected that landlords will face restrictions in the way in which they recover commercial rent arrears.

The key reforms under the CRAR regime in the TCE Act are as follows:

  • Abolition of the common law right to distrain for commercial rent arrears and replacement with ‘CRAR’ procedure detailed under Schedule 12 to the TCE Act
  • Minimum period of rent arrears to apply before a landlord can apply the CRAR procedure
  • Requirement to issue written notice to the tenant before attending to seize goods
  • Introduction of court process to allow tenants to stop enforcement action (to set aside the CRAR notice)
  • Removal of landlords right to collect service charges insurance premiums and other charges under the CRAR regime by determining these as ‘rent’ in the lease
  • Changes in the powers of bailiffs; including methods of entry, seizure and sale 

The Crime and Courts Act (2013) made some key changes to the primary legislation (TCE Act) and received Royal Assent on 25th April.

The secondary legislation is expected to be laid before parliament by Summer 2013 and these regulations which will bring the amended TCE Act into force. The changes are expected to come into force in April 2014.