Covid regs prevent landlords taking action to recover rent for more than 500 days

01 Apr 2021

The Covid-19 pandemic has resulted in significant constraints being placed on landlords’ ability to recover unpaid rent. Pre-Covid, landlords could utilise the Commercial Rent Arrears Recovery procedure (“CRAR”) if just seven days’ rent was unpaid, by instructing a bailiff to enter a tenant’s property to seize and sell goods to the value of the debt.

However, the seven day threshold has been increased several times under the Taking Control of Goods and Certification of Enforcement Agents (Amendment) (Coronavirus) Regulations 2020. As of 25 March 2021, the minimum amount of unpaid rent will need to reach 457 days’ rent before notice of enforcement is given or goods are taken control of for the first time on or before 23 June 2021, and 554 days’ rent before notice of enforcement is given or goods are taken control of for the first time on or after 24 June 2021 until 30 June 2021.

The restrictions apply equally to landlords wanting to pursue recovery from a sub-tenant when its own tenant is not paying, as the same minimum amount must be owing before CRAR can be exercised.

Whilst these restrictions may provide tenants with “breathing space” in which to pay their rent, they also temporarily deprive some landlords of an often effective recovery method.

Many landlords and tenants will already have come to an arrangement on deferred rent payment and other concessions, but given that the extension effectively defers rent payments for as many as six Quarter days, landlords might want to consider the other options available to them. These could include debt recovery proceedings, recovering monies due from guarantors or previous tenants, or drawing on rent deposits (depending on the terms of the deed and how it is held).

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