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Commercial Rent Arrears Recovery

Commercial Rent Arrears Recovery, commonly known as CRAR, allows a commercial landlord to recover qualifying rent arrears by instructing an enforcement agent to take control of the tenant's goods. CRAR came into force on 6 April 2014 and replaced the former common-law remedy of distress for Rent. Unlike under the old procedure, a landlord cannot personally enter the premises and seize the tenant's property without warning. The procedure is governed principally by the Tribunals, Courts and Enforcement Act 2007 and the Taking Control of Goods Regulations 2013.

When Can CRAR Be Used?

CRAR may generally be used where:

• There is a lease of commercial premises;
• The lease is evidenced in writing;
• The tenant owes qualifying Rent under that lease;
• The arrears amount to at least seven days' net unpaid Rent;
• The minimum amount remains unpaid when enforcement takes place; and
• A certificated enforcement agent follows the statutory procedure.

CRAR does not normally require the landlord to obtain a court judgment before beginning enforcement. However, the landlord must make sure that the legal conditions are satisfied. An invalid attempt to use CRAR may expose the landlord to a claim by the tenant.

Commercial Premises Only

CRAR applies only to premises used wholly for commercial purposes. It cannot normally be used where any part of the leased premises is lawfully occupied as a residence. This can make CRAR unavailable for mixed-use premises, such as a shop with residential accommodation included within the same lease. The rules can be complicated when the lease prohibits residential occupation but, in practice, is not enforced, or when the commercial and residential parts are let under separate agreements. Legal advice should be obtained before proceeding.

What Arrears Can Be Recovered?

CRAR can be used to recover Rent payable for possession and use of the commercial premises. For this purpose, Rent does not include sums relating to:

• Business rates;
• Council tax;
• Services;
• Repairs;
• Maintenance;
• Insurance; or
• Other ancillary charges.

Describing service charges, insurance contributions or other payments as "rent" in the lease does not necessarily make them recoverable through CRAR. When calculating the minimum seven days' net unpaid Rent, interest, VAT and permitted deductions are excluded. A landlord wishing to recover service charges, insurance, interest or other contractual payments may need to bring a debt claim or use another remedy.

The Notice of Enforcement

Before goods can be taken into control, the tenant must receive a formal Notice of Enforcement. From 1 May 2026, the notice must normally provide at least 14 clear days before enforcement begins. "Clear days" means that the day on which notice is given and the day enforcement begins are not included when calculating the period. The notice must contain prescribed information, including:

• The tenant's name and address;
• Details of the debt;
• The amount outstanding;
• Information about enforcement costs;
• The deadline for payment; and
• Details of how payment can be made.

The court can permit a shorter notice period where there is a real risk that the tenant will remove or dispose of goods to prevent enforcement. Evidence will normally be required.

Who Can Enforce CRAR?

A landlord cannot personally enter the property and remove goods under CRAR. The procedure must be carried out by an enforcement agent authorised under the legislation. The landlord will normally provide the agent with written authority confirming the lease, the premises and the amount of qualifying Rent owed. The landlord should give the agent accurate information. The enforcement agent's involvement does not remove the landlord's responsibility for confirming that CRAR is legally available.

Taking Control of Goods

If the tenant does not pay or agree to an acceptable arrangement during the notice period, an enforcement agent may attend the commercial premises. Goods may be taken into control by:

• Entering into a controlled goods agreement;
• Securing goods at the premises;
• Immobilising a vehicle where legally permitted; or
• Removing goods for storage and eventual sale.

A controlled goods agreement allows the tenant to retain and use specified goods, but prevents them from selling, removing or otherwise disposing of those goods while the agreement remains in force. Breaching the agreement can allow the enforcement agent to return and remove the goods.

When Can an Enforcement Agent Attend?

An enforcement agent may generally take control of goods on any day between:

• 6 am and 9 pm; or
• The tenant's normal business hours, where those hours fall outside that period.

Entry must usually be through a normal means of entry, such as an unlocked door. The enforcement agent's powers of entry and re-entry depend on the circumstances, and separate rules apply where a controlled goods agreement has already been made.

Which Goods Can Be Taken?

CRAR generally permits control of goods that:

• Belong to the tenant;
• Are located at the leased commercial premises or on a highway where the legislation permits; and
• Are not legally exempt.

An enforcement agent must not take goods belonging solely to another person, such as leased equipment, goods on hire purchase that remain owned by a finance company or stock owned by a third party. Ownership disputes can be complex, particularly where goods are jointly owned or supplied under finance arrangements. Certain items are protected. For an individual or sole trader, tools, equipment, vehicles, and other items that are personally necessary for work may be exempt up to the statutory value limit. Goods should not be taken where their value is clearly disproportionate to the debt and recoverable enforcement costs, except where there are insufficient lower-value goods available.

Sale of Controlled Goods

If the debt remains unpaid, controlled goods may ultimately be sold. The tenant must receive the required notice before the sale. Goods will normally be sold by public auction unless another method has been approved. The proceeds are applied towards:

• The costs of enforcement and sale;
• The qualifying rent arrears; and
• Any surplus, which should be returned to the tenant or other person entitled to it.

The amount realised at auction may be substantially lower than the replacement or retail value of the goods.

Recovering Rent from a Subtenant

Where CRAR is available against the immediate tenant, the superior landlord may, in some circumstances, serve notice requiring a subtenant to pay its Rent directly to the superior landlord. The notice takes effect after 14 clear days and remains effective until:

• The notified arrears have been paid;
• The notice is withdrawn; or
• It is replaced by another valid notice.

Payments properly made by the subtenant under the notice discharge the corresponding liability to its own landlord. This is a technical procedure, and advice should be obtained before serving or responding to such a notice.

Can CRAR Be Used After the Lease Ends?

In limited circumstances, CRAR may remain available after the lease has ended for Rent that became due before termination. Strict conditions apply, including time limits and requirements concerning occupation of the premises and the tenant’s interest. Landlords should not assume that CRAR remains available after forfeiture, surrender or expiry of the lease.

CRAR and Forfeiture

A commercial lease may give the landlord a right to forfeit the lease for non-payment of Rent. This can involve peaceable re-entry or court proceedings, depending on the circumstances. Using CRAR may affect the landlord's ability to forfeit for the same breach because it can amount to recognising that the lease remains in existence and waiving the right to forfeit. A landlord considering both remedies should obtain legal advice before demanding Rent, instructing enforcement agents or taking any other step that might affirm the lease.

Other Options for Commercial Landlords

CRAR is only one method of recovering commercial rent arrears. Other possible remedies include:

• Negotiating a repayment plan;
• Drawing down money from a rent deposit;
• Pursuing a guarantor or former tenant where legally permitted;
• Bringing a court claim for the debt;
• Serving a statutory demand where appropriate;
• Seeking security or a payment agreement;
• Forfeiting the lease; or
• Agreeing a surrender or restructuring of the tenancy.

The best option will depend on the tenant's financial position, the value of the lease, whether the business remains viable and whether the landlord wants the tenant to remain in occupation. Insolvency procedures or a formal moratorium may restrict enforcement action.

What Should a Commercial Tenant Do?

A tenant receiving a Notice of Enforcement should act immediately. The tenant should:

• Check whether the amount claimed is correct;
• Identify whether the demand includes sums that cannot be recovered through CRAR;
• Check that the premises and lease qualify;
• Contact the enforcement agent before the deadline;
• Consider proposing a realistic payment arrangement;
• Collect evidence showing which goods belong to third parties; and
• Obtain urgent legal and financial advice.

Removing, hiding or disposing of goods after they have been taken into control may have serious consequences.

Obtaining Legal Advice

CRAR is a technical statutory remedy. Errors concerning the lease, type of premises, amount claimed, notice or ownership of goods can make enforcement unlawful or lead to additional costs. Commercial landlords should obtain advice before instructing an enforcement agent, particularly where:

• The premises include residential accommodation;
• The lease has ended or may be forfeited;
• The arrears include service charges or insurance;
• The tenant disputes the amount owed;
• The tenant is insolvent;
• Goods may belong to third parties; or
• A subtenant is in occupation.

To find a Commercial Property or Landlord and Tenant Solicitor, use the search facility at the top of this page. We recommend contacting several firms to compare their relevant experience, proposed approach and fees.