Commercial landlords were deeply affected by the COVID pandemic including other businesses. The Government imposed restrictions on commercial landlords to protect the tenants who were in financial difficulties. The landlords were legally bound and could not use Forfeiture or CRAR to evict their tenants, seize their goods and sell them to recover their unpaid rent. The UK Government ruled out emergency legislation in June 2022 to protect the commercial tenants who were not being able to trade and therefore not being able to pay the rent.
Commercial Rent (Coronavirus) Act 2022
The government believed that the new regulation would safeguard enterprises from insolvency as well as employee layoffs, resulting in a favourable outcome for rent arrears during this time. Further extensions to this emergency legislation took effect on September 29, 2020.
As life returns to normal in this new year March 25th, 2022, brings in a new ray of hope and much-needed relief for the commercial landlords. The UK Government removed all the previous restrictions from the pandemic and has introduced The Commercial Rent (Coronavirus) Act 2022.
The new act defines a new arbitration procedure for rent arrears ‘Protected Rent Debt’. This arbitration will protect tenants who were forced by the law to close down their operations between 21st March 2020 and 19th July 2021.
The amount of rent these tenants must pay will be determined by an arbitrator. For this debt, the forfeiture option is prohibited.
This does not apply to commercial rent arrears incurred before March 21, 2020, or any incurred after July 18, 2021.
These restrictions also do not apply to any businesses that were not ordered by the government to close. Takeaways, factories, offices, critical retail, and other businesses fall under this category.
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What is the Commercial Rent Arrears Recovery (CRAR) process?
CRAR is a special power available to the commercial landlords who can use Certificated Bailiffs, or Certificated Enforcement Agents as they are called now to execute warrants on behalf of landlords to recover outstanding rent from a commercial tenant by seizing, removing, and selling goods. This is CRAR statutory procedure.
What we can say from our experience as enforcement specialists is that we offer a professional, quick, and simple Commercial Rent Arrears Recovery (CRAR) solution. If you want us to help you then instruct us today and then we could start the process to recover your rent today.
The Commercial Rent (Coronavirus) Act 2022
With CRCA now a law it brings a great relief for the commercial landlords who were faced with difficult financial situations due to the coronavirus pandemic.
The CRCA sets out a binding rent arbitration scheme, where a tenant who has a protected rent debt can take advantage of the arbitration scheme within six months of 25th March 2022. Landlords or tenants will now have until the 25th of September 2022, to apply through an arbitration process, on how the rent arrears will be managed and this end date may itself be extended if the Government consider it necessary.
If a tenant does not fit into one of the protected categories described above, their landlords will be able to employ the traditional methods of commercial rent recovery, such as CRAR, forfeiture, winding up, or obtaining a judgment or order, after March 25, 2022. CRAR and Forfeiture remain the quickest and most straightforward ways for a business landlord to reclaim overdue rent among these options.
This will prevent commercial landlords from using typical enforcement solutions from recovering protected rent debt for 6 months (25th September 2022) or until the arbitration process is concluded.
Outside of the “protected rent debt” period, the new processes outlined in the Act will not apply to the following cases:
- outstanding rent incurred before March 2020
- outstanding rent incurred since the 18th of July 2021
- for premises not required to close by the Government’s Coronavirus restrictions.
In summary, the Act will impact the following eventualities:
- arrears are protected by the Act if accrued during a period of compulsory closure due to Government’s Coronavirus restrictions.
- if a tenant was not subject to any compulsory closures (i.e. essential retailers) the Act plays no part in resolving any outstanding arrears.
Summing-up
If you’re a commercial landlord hoping to recover the outstanding rent through the CRAR option post 25th March 2022, we offer a FREE review service for any lease or tenancy situation to get you on track. We can review your situation and help you recover your commercial rent arrears and offer the service of our dedicated enforcement team to help you through the process. This service is provided at no extra cost to the landlord; the renter is responsible for the legal fees as well as those of our Certified Enforcement Agents. So, to get started reach out to us through our contact channels.
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