Real Estate Tip of the Week: CRAR – Pay the Piper
Published 3 February 2014
A new regime (CRAR) comes into force on 6 April, regulating the recovery of rent arrears from commercial tenants by bailiffs. The penultimate set of regulations have now been issued dealing with the costs that the bailiff can recover from the tenant (the final set of regulations will deal with bailiff licensing).
Under CRAR a bailiff will be able to recover £75 for serving a seven day warning notice, which is required under the new legislation, and then £235 plus 7.5% of the debt over £1,500 if they have to visit the premises to enforce the debt. The bailiff will also be able to recover £110 plus 7.5% of the debt over £1,500 if a sale or disposal is necessary.
Landlords should bear in mind that these limits apply to the costs which the bailiff itself can recover from the tenant, but do not restrict the recovery of any administration fees or legal fees incurred in pursuing arrears which are recoverable under the terms of the lease. Therefore, check the cost recovery clause in your leases to ensure that tenants pay the full cost of default.