Commercial landlords facing non-paying tenants have a powerful statutory remedy available. Commercial rent recovery through the Commercial Rent Arrears Recovery (CRAR) procedure allows landlords to seize and sell a tenant’s goods to satisfy unpaid rent arrears without first obtaining a court judgment.
This guide explains how commercial rent arrears recovery UK legislation works, the CRAR process from notice to enforcement, tenant rights and protections, and the strategic decisions landlords must make to recover commercial rent lawfully and efficiently.
Commercial Rent Arrears Recovery (CRAR) is a statutory enforcement mechanism established under the Tribunals, Courts and Enforcement Act 2007, which came into force on 6 April 2014. CRAR replaced the ancient common law remedy of distress, introducing regulated procedures, strict qualification criteria, and enhanced tenant protections.
Key principle: CRAR allows commercial landlords to recover unpaid rent by instructing certificated enforcement agents to take control of the tenant’s goods at the commercial premises and, if necessary, remove and sell those goods to satisfy the arrears.
Understanding Commercial Rent Arrears Recovery requires recognising that this remedy is available only in specific circumstances and follows mandatory procedures that must be executed precisely to remain lawful.
Commercial rent arrears recovery legislation imposes strict qualifying conditions. All must be satisfied simultaneously for CRAR to be available.
1. Purely commercial premises: The property must be occupied entirely for business purposes. Mixed-use premises containing any residential element (such as a flat above a shop) do not qualify for CRAR without obtaining a court order first.
2. Written lease agreement: The tenancy must be documented in a written lease. Oral tenancies, tenancies at will, or informal arrangements cannot use CRAR.
3. Tenant in occupation: The tenant must physically occupy the premises when enforcement occurs. CRAR cannot be used against tenants who have vacated, though limited exceptions exist for recently ended leases.
4. Minimum arrears threshold: At least seven days’ worth of net rent must be outstanding both when the Notice of Enforcement is served and when enforcement action is taken.
5. Principal rent only: CRAR recovers only principal rent payments (plus VAT on rent and interest on rent if specified in the lease). Service charges, insurance premiums, utilities, and management fees cannot be recovered through CRAR even if described as “additional rent” in the lease.
CRAR is limited to pure rent. It does not cover:
Landlords seeking to recover these amounts must use separate debt recovery procedures or court action.
The CRAR enforcement process follows a structured sequence mandated by commercial rent arrears recovery legislation.
Before instructing enforcement, landlords must confirm:
Calculating “seven days’ worth of rent” requires dividing annual rent by 365, then multiplying by seven. For monthly rent of £3,000, seven days equals approximately £577.
Landlords cannot execute CRAR personally. Only certificated enforcement agents holding valid County Court certification can carry out CRAR enforcement. These agents operate under the Taking Control of Goods Regulations 2013 and must comply with detailed procedural requirements.
Most commercial landlords instruct specialist property solutions providers who manage the entire CRAR process, ensuring legal compliance and maximising recovery prospects.
The enforcement agent must serve a Notice of Enforcement on the tenant, providing minimum seven clear days’ notice (excluding Sundays and bank holidays) before enforcement action begins.
The notice must specify:
This mandatory notice period gives tenants an opportunity to pay the arrears, challenge the calculation, or negotiate payment arrangements before goods are seized.
If the tenant does not pay within the notice period, the enforcement agent attends the commercial premises to take control of goods. The agent may only:
Forced entry is not permitted for initial CRAR enforcement. If the agent cannot gain peaceful access, the landlord must apply to court for a warrant authorizing forcible entry.
Once inside, the agent creates an inventory of goods sufficient in value to cover the rent arrears plus enforcement fees and costs.
Rather than immediately removing goods, agents typically create a Controlled Goods Agreement (CGA). This legal document:
Breach of a CGA is a criminal offence. If the tenant breaches the agreement or fails to maintain payments, goods can be removed immediately without further notice.
If the tenant still does not pay after a CGA is established, or if no agreement is reached, the agent may remove goods and arrange their sale at public auction.
Important timing requirement: Goods cannot be sold until at least seven clear days after removal, giving the tenant a final opportunity to pay and reclaim their possessions.
Sale proceeds are applied:
CRAR fees are governed by the Taking Control of Goods (Fees) Regulations 2014. As of 2025, standard fees include:
Compliance stage: £75 (covers Notice of Enforcement and administrative work)
Enforcement stage: £235 plus 7.5% of debts exceeding £1,500 (covers attendance at premises and taking control of goods)
Sale stage: £110 plus 7.5% of debts exceeding £1,500 (if goods must be removed and sold)
Additional disbursements may include storage costs, locksmith fees (if court authorizes forced entry), and valuation fees for specialist goods.
These costs are recoverable from the tenant and added to the rent arrears total.
Commercial rent arrears recovery legislation includes significant tenant protections designed to prevent abuse.
Tenants must receive minimum seven clear days’ notice before enforcement agents attend and seven clear days after goods are removed before sale. These notice periods provide reasonable time to pay arrears, seek legal advice, or challenge improper enforcement.
Certain items cannot be seized under CRAR:
Tenants may apply to court to challenge CRAR enforcement if:
Tenants can propose Controlled Goods Agreements that allow them to continue trading while paying arrears over time. Agents must consider reasonable proposals, particularly where immediate removal would destroy the tenant’s business.
CRAR can sometimes be used even after a lease has terminated, provided specific conditions are met:
Time limit: The lease must have ended within the last six months
Not by forfeiture: The lease must have ended through expiry or surrender, not forfeiture
Arrears pre-date termination: The rent arrears must have accrued before the lease ended
Goods remain on premises: The tenant’s goods must still be present at the commercial premises
Right of reversion retained: The landlord must have retained an immediate right of reversion
These provisions prevent tenants from avoiding CRAR simply by vacating at the last moment while leaving unpaid rent behind.
Commercial landlords often must choose between CRAR enforcement and lease forfeiture.
During the COVID-19 pandemic, understanding CRAR became essential because CRAR remained available while forfeiture was restricted by emergency legislation protecting pandemic-affected businesses.
As of 2025, most pandemic restrictions have ended, though ring-fenced rent debts from specific lockdown periods may still face enforcement limitations.
When a superior landlord faces rent arrears from a head tenant, CRAR can sometimes target the sub-tenant instead.
The landlord serves notice on the sub-tenant requiring them to pay rent directly to the superior landlord rather than to the head tenant. This diverts the sub-tenant’s rent payments to cover the head tenant’s arrears.
Important differences:
This strategy proves effective when head tenants default but sub-tenants remain solvent and willing to pay.
How to recover commercial rent arrears lawfully requires understanding both CRAR and alternative remedies.
CRAR is most effective when:
Court action for debt: Recovers service charges and other non-rent amounts CRAR cannot touch. Requires County Court judgment before enforcement.
Lease forfeiture: Terminates the lease and recovers possession when the landlord no longer wants the tenant. Requires legal proceedings and strict compliance with procedures.
Statutory demand and insolvency: For debts over £750, landlords may serve statutory demands warning of winding-up proceedings. Creates significant pressure but appropriate only for clear-cut debts where genuine insolvency exists.
Rent deposit enforcement: Many commercial leases require tenants to provide rent deposits at lease commencement. Landlords can apply these deposits to arrears under the lease terms, avoiding enforcement entirely.
Negotiated payment plans: Sometimes negotiating a structured arrangement proves more effective than aggressive enforcement, preserving the tenancy and providing certainty about payment timing.
Effective commercial rent recovery requires strategic thinking beyond simply choosing CRAR enforcement.
Contact tenants immediately when rent becomes overdue. Many late payments result from administrative issues, disputed service charges, or temporary cash flow problems that resolve quickly with communication.
Maintain comprehensive records:
Accurate documentation is essential if CRAR is challenged or court action becomes necessary.
Before instructing CRAR, consider:
Aggressive enforcement may recover immediate arrears but destroy the ongoing tenancy relationship. Where tenants face temporary difficulties but remain fundamentally viable, structured payment arrangements preserve rental income while supporting tenant recovery.
Commercial Rent Arrears Recovery through specialist providers ensures:
Most providers offer fixed-fee pricing, making costs predictable and manageable.
CRAR enforcement frequently encounters obstacles. Understanding common problems helps landlords adapt their approach.
Solution: Apply to court for permission to use CRAR on mixed-use premises. Courts grant permission where the residential element is minimal and enforcement can be conducted without affecting residential occupiers.
Solution: Conduct thorough inspection of premises. Businesses often possess more valuable assets than initially apparent—computers, equipment, stock, vehicles, furniture. Professional valuers can assess goods accurately.
Solution: Require proof of ownership. Finance agreements, hire purchase documentation, and invoices establish ownership. Third parties claiming ownership must apply to court for goods’ release.
Solution: CRAR enforcement is stayed (suspended) once formal insolvency proceedings begin. Landlords become unsecured creditors in the insolvency process. However, CRAR completed before insolvency remains valid.
Solution: CRAR cannot recover service charges. Pursue separate court action for service charge debt while using CRAR for rent arrears. Combined pressure often produces settlement covering all amounts.
Following the COVID-19 pandemic, temporary restrictions protected businesses from commercial rent recovery during lockdown periods.
Ring-fenced rent debt: Rent arrears accumulated during specific pandemic periods (generally March 2020 to March 2022) became subject to special protections under the Commercial Rent (Coronavirus) Act 2022.
Mandatory arbitration: For qualifying pandemic rent debts, landlords and tenants were required to use binding arbitration before pursuing CRAR or other enforcement.
As of 2025, the arbitration scheme has closed, and most pandemic-specific protections have ended. However, landlords should verify whether any outstanding arrears fall under ring-fenced debt provisions before instructing CRAR enforcement.
Strategic approaches improve CRAR outcomes.
The sooner CRAR enforcement begins after arrears arise, the better the recovery prospects. Prompt action prevents asset dissipation and demonstrates serious intent.
Ensure rent calculations include only recoverable amounts (principal rent, VAT on rent, interest on rent if contractually specified). Including non-recoverable service charges invalidates CRAR and exposes landlords to legal challenges.
Keep tenants informed throughout the process. Many tenants cooperate once they understand enforcement will proceed unless payment occurs.
If tenants offer immediate partial payment, evaluate whether accepting provides better recovery than continuing full enforcement. Partial payment plus a secured payment plan often delivers better outcomes than expensive enforcement yielding uncertain results.
Once current arrears are recovered, consider:
Commercial rent recovery through CRAR (Commercial Rent Arrears Recovery) is a statutory process allowing commercial landlords to recover unpaid rent by seizing and selling a tenant’s goods without first obtaining a court judgment. The CRAR process involves serving seven days’ notice, attending the premises to take control of goods, creating a Controlled Goods Agreement, and if necessary removing and selling goods to satisfy arrears plus enforcement costs.
CRAR requires at least seven days’ worth of net principal rent to be outstanding at both the time the Notice of Enforcement is served and when enforcement action is taken. This threshold prevents CRAR being used for trivial amounts or disputed rent. For example, if monthly rent is £3,000, arrears must exceed approximately £577 before CRAR becomes available.
No. Commercial rent arrears recovery legislation permits CRAR only for principal rent recovery, plus VAT on rent and interest on rent if specified in the lease. Service charges, insurance premiums, utility bills, management fees, and other lease-related costs cannot be recovered through CRAR. Landlords must use separate debt collection procedures or court action to recover these amounts.
Enforcement agents may seize most goods belonging to the tenant that have sufficient value to cover arrears, except protected items. Exempt goods include tools and equipment reasonably necessary for the tenant’s business (up to £1,350 aggregate value), items belonging to third parties, goods under hire purchase agreements, and perishable items. Agents must not seize more goods than necessary to satisfy the debt.
CRAR is strictly for purely commercial premises. Mixed-use properties containing any residential element (such as a flat above a shop) do not qualify for CRAR without first obtaining court permission. Courts grant permission where the residential element is minimal and enforcement can be conducted without affecting residential occupiers. Landlords should seek legal advice before attempting CRAR on mixed-use premises.
Once formal insolvency proceedings begin (administration, liquidation, bankruptcy), ongoing CRAR enforcement is stayed (suspended). The landlord becomes an unsecured creditor in the insolvency process and must prove their debt through the formal procedure. However, CRAR enforcement completed before insolvency commenced remains valid, and the landlord retains funds or goods already recovered.
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