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Commercial Rent Arrears Recovery (CRAR) Upcoming Changes

Commercial Rent Arrears Recovery (CRAR) has been used by many landlords across the country to recoup losses from tenants that refuse to pay rent.

The act allows landlords to take control of the tenants’ goods to cover the value of any outstanding rent arrears that are due.

After two years of the pandemic, the approach now adopted by the government is to learn to live with the virus.

During this time, we saw numerous rules and restrictions put in place, including the Commercial Rent (Coronavirus) Bill. The new measures this bill will set out will finally be passed into law within the coming weeks.

As industry leaders, we want to shed light on the upcoming changes and what to expect regarding commercial unpaid rent.

What Is the Commercial Rent (Coronavirus) Bill?

commercial rent arrears recovery

The bill was announced in November 2021, following the requirement for non-essential businesses to close during lockdowns.

It was put in place for commercial premises tenants to offer additional protection against enforcement action.

The bill was also introduced to encourage a resolution of outstanding debts during the pandemic.

A new arbitration process is being proposed for rent debt claims issued from 10th November 2021. Following this, the Government is ring-fencing debt accrued during COVID.

Landlords and creditors are expected to negotiate and reach an appropriate resolution with their tenants.

The arbitration rule should result in the tenant paying off their arrears alongside usual commercial rent payments.

The Government estimated that 15,500 businesses would be able to use this arbitration process.

Commercial Rent (Coronavirus) Bill Update

On 25 March 2022, the bill is set to be passed into law with the arbitration system being introduced.

The key items stated in this Bill include:

  • Either the landlord or the tenant can initiate the arbitration.
  • The tenancy must be a commercial or business tenancy.
  • The reference for arbitration must be made within 6 months of the day the bill is passed.
  • Any award given has the purpose of preserving the viability of the business of the tenant and the landlord’s solvency.
  • The arbitration procedure involves 3 stages: pre-arbitration, the arbitrator’s eligibility, and the arbitrator’s assessment of relief from payment.
  • Allows a stay of debt of any claims issued between 10/11/21 and the day that the bill is passed.
  • The arbitration process does not apply to businesses that were not required to close during the pandemic, for example, offices.

Additionally, the bill does not apply to rent arrears that were accrued outside of the ringfenced period.

Find the latest Government advice here. 

Commercial Rent Arrears Recovery Changes – What Does This Mean for You and DCBL?

commercial rent arrears recovery

Alongside this, the current embargo protecting commercial tenants from forfeiture and restrictions on the use of CRAR will be lifted.

This will be lifted from the 25th of March 2022 unless any legislation is passed ahead of this time.

This means that you can instruct our certificated enforcement agents to recover rent arrears and enact forfeiture of commercial leases. This will apply if the debt has occurred outside of the ringfenced period.

The ringfenced period was mandated on 21st March 2020 and ended for all sectors in England and Wales on 07/08/21.

Restrictions were lifted throughout this period, for example, non-essential retail was lifted on 12/04/21 (in England) and 07/08/21 (in Wales).

DCBL has over 75 years of collective experience in recovering commercial rent arrears.

We have invested in our people and technology to ensure a swift and favourable result on every occasion.

Our approach protects clients’ and landlord/tenant relationships, as well as acts in an ethical and compliant manner to collect debts.

Learn more about our professional and efficient Commercial Rent Arrears Recovery services alongside our excellent work in High Court Enforcement and Debt Recovery.

If you need more information on the upcoming changes, please feel free to get in touch with one of our specialists.

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