UK: Taking Control - Commercial Rent Arrears Recovery

Last Updated: 29 July 2014
Article by Henry Shinners and Mark Webb

The remedy of distress (an ancient common law remedy) has been abolished with effect from 6 April 2014. Distress was the landlord's right to enter leased premises without notice, to seize the tenant's goods and to sell them to recover rent arrears.

Distress has been replaced by commercial rent arrears recovery (CRAR); the landlord's statutory right to recover rent arrears. The right also extends to a landlord's mortgagees but in both cases it applies to commercial premises only.

The CRAR scheme is set out in the Government's Taking Control of Goods Regulations 2013 and we provide some further detail below.

Overview of the reliefs

  • CRAR does not apply to premises occupied or let wholly or in part as a dwelling. For example, the lease of a property comprising a shop with a flat is not caught by CRAR, if the flat is used as a dwelling or the lease requires it to be used as such.
  • A property which is part-occupied by a dwelling will be caught by CRAR, if the occupation as a dwelling is in breach of the lease or of a superior lease.

Which leases?

  • All leases of commercial property (legal or equitable), including tenancies at will are caught by CRAR.
  • The lease must be in writing.
  • Licences to occupy are not caught by the scheme.
  • Tenancies at sufferance are not caught by the scheme. (A tenancy at sufferance is where a tenant continues to occupy after the lease has expired but without confirmation that the landlord is willing for the tenant to remain).

What amounts can be covered?

  • Amounts relating only to rent paid for the possession and use of the premises (plus VAT and any accrued interest) may be recovered using CRAR.
  • Sums in respect of rates, council tax, services, repairs, maintenance or insurance cannot be recovered under the CRAR scheme; even if these are reserved in the lease as rent (previously a landlord could distrain for these).
  • A minimum of seven days' net rent must be outstanding. Net rent is the amount unpaid less any VAT, interest and any deductions or set-off that a tenant may be able to claim.
  • The bailiff can only seize goods actually owned by the tenant and can only take the tenant's 'tools of trade' up to the value of £1,350.


  • The landlord must serve a written notice of enforcement on the tenant seven clear days before exercising the remedy. Previously, a bailiff could arrive with no notice or warning.
  • Only an enforcement agent, authorised in writing by the landlord, can seize the goods; landlords can no longer distrain themselves.
  • Enforcement can take place on any day of the week between 6am and 9pm.


  • The requirement for notice is considered by many to be the most controversial aspect of CRAR; as it gives tenants the opportunity to remove goods during the notice period.
  • As a consequence, CRAR may only be truly effective against single site operations or those with business models preventing the quick movement of goods to other premises.
  • A landlord can apply to court for a shorter period of notice if he considers that a tenant may deliberately remove goods during a notice period, but the mechanics of such an application are as yet unclear. Presumably, the application would be without notice to the tenant but the procedure would impose an administrative and cost burden on the landlord.

Rent redirection and sub-tenants

  • From 6 April 2014, where the superior landlord has the right to exercise CRAR against his tenant and there is a sub-lease in place, the superior landlord may, instead, serve notice on the sub-tenant, requiring the sub-tenant to pay its rent direct to the superior landlord.
  • Notices to sub-tenants to redirect rent will only take effect 14 clear days after service. The notice will transfer to the superior landlord the right to recover, receive and give a good discharge for any rent which is paid by the sub-tenant under the sub-lease.
  • If the sub-tenant makes a payment under such a notice, he may deduct that amount from the rent that he would otherwise pay to his immediate landlord i.e. the defaulting intermediate tenant. If there is a chain of under-leases the deduction is passed up the chain.
  • If the sub-tenant who has been served with notice fails to pay the amount claimed in the notice the landlord may exercise CRAR against the sub-tenant. However, the landlord cannot seek to recover the amount due from the sub-tenant by serving a further notice on an inferior tenant of the sub-tenant.

We have taken great care to ensure the accuracy of this publication. However, the publication is written in general terms and you are strongly recommended to seek specific advice before taking any action based on the information it contains. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. © Smith & Williamson Holdings Limited 2014. code: 14/739 exp date: 30/10/2014

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