Major changes to the system formerly known as distraint, that archaic system of removing a defaulting tenant’s property for sale as a means to recovering rent arrears, are imminent.
Although there is no definite date by which the new Commercial Rent Arrears Recovery system will come into effect, this note is intended to prepare you for the inevitable.
Not only has the phraseology has been updated but also the system of seizing goods has been completely overhauled. The following is an indication of the likely new provisions: -
Bailiffs are now known as Enforcement Agents and Distress is now known as Taking Control of Goods. Only Enforcement Agents can take control of goods;
Taking control of goods cannot occur at a property that is let or occupied as a dwelling, unless that use is in breach of the lease or any superior lease.
Taking control of goods can only occur where the lease, either legal or equitable, is recorded in writing.
Taking control of goods can only occur in relation to actual rent, as opposed to other sums reserved as rent and, in the case of Agricultural Holdings, only for rent that is due in the 12 months preceding the service of the Notice.
Before control can be taken of goods, a Landlord must serve a Notice on his defaulting tenant detailing the procedural and financial consequences of failing to remedy the situation. The Notice will be valid for 3 months and it is suggested that the period of Notice will be 14 days, but formal regulations remain incomplete.
The notice period can be shortened if there are reasonable grounds to believe that the tenant may relocate or dispose of the goods. To secure such an order, it is likely that proof will be required that the tenant has so acted in the past.
Regulations will also set a minimum level of rent arrears that may be recovered under the scheme. This limit is likely to be set around the £200 mark.
These reforms are arguably long overdue, especially given the current Human Rights climate, although they erode a valuable ‘self-help’ remedy available to the Landlord. We will be able to comment more authoritatively once the regulations have been published.
If you have any queries regarding the new or current procedures, please contact Jane Senior.
This article was first published in the Spring 2008 edition of NewsBrief.
