Recovery of Rent Arrears in Commercial Premises – Update

It has been confirmed that the new rules which abolish a landlord’s remedy of distress will come into force on 6 April 2014.  Until then, landlords of commercial premises whose tenants are in arrears can still exercise distress.

From 6 April 2014 landlords of commercial premises whose tenants are in arrears must now serve a notice on their tenants advising them that in no less than 7 days the landlord intends to go to the premises to seize tenant’s goods to the value of the outstanding rent.

The new rules prohibit seizure of goods for sums owing for anything other than basic rent e.g. service charges or insurance premiums are excluded for the purpose of the calculation.  There must also be a minimum amount owing of 7 days’ rent, otherwise recovery is not permitted.

The new rules introduce more onerous responsibilities on landlords, who may expose themselves to a claim by their tenant if the ‘checklist’ of steps is not fully observed.

The abolition of the current law of distress and implementation of this codified procedure will reduce the effectiveness of this remedy to secure payment of commercial rent.  It will also likely lead to more expense.

In the future landlords of commercial premises may be better placed relying upon guarantees and rent deposits at the outset of a tenancy.

Written by Helen Williams, Associate Solicitor Litigation Team