CRAR and CODE OF PRACTICE
Mark Banham, Associate in the Property Litigation team, provides an update on commercial rent arrears recovery (CRAR) and the latest press release from the Ministry of Housing Communities and Local Government relating to a new and imminent code of practice for landlords and tenants.
Commercial Rent Arrears Recovery (“CRAR”)
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 have enacted temporary provisions preventing a landlord for enforcing by way of the CRAR process unless the “minimum net unpaid rent” has been outstanding for 90 days. This protection is set to remain in place while business tenants are protected from forfeiture proceedings.
The Regulations also have the following effects on enforcement agents:
- Enforcement agents are prevented from taking control of goods at residential properties and on highways while people are prevented from leaving their homes due to the current “lock down” restrictions. It has been commented, however, that enforcement agents can seek recovery of the debts by contacting the debtor by making phone calls. Enforcement agents are also permitted to take control of goods at business premises.
- Some time limits that enforcement agents must comply with have been automatically extended by the Regulations. These include extensions of time in relation to the period for taking control of goods and the certificates of enforcement agents.
Code of Practice re: rent payments
On 29 May 2020, the Government published a press release that detailed their intention to publish a new code of practice that aims to support high street businesses further through COVID-19. The code is currently being drafted in cooperation with leading business and trade associations, and intends to cover:
- Providing landlords and high street businesses with clarity and reassurance in relation to rent payments.
- Encouraging Landlords and tenants to work cooperatively to protect viable businesses. The Government has said that the code will help guide all parties in this respect.
- Encouraging landlords and tenants to have fair and transparent discussions over rent payments.
- Providing guidance as to rent arrear payments, sub-letters and suppliers.
These provisions are intended to be temporary, however it may become a mandatory requirement to comply with them. Although the code is still being reviewed, tenants will be hoping that it will be published before the next quarterly rent payment date (24 June 2020). A further update shall follow once the code is published but it is unlikely to be welcomed by those landlords who already feel the current measures go too far to safeguard commercial tenants.
If you have any questions in relation to the above, please do contact the Property Litigation team.