Commercial property landlords must get to grips with imminent changes in the law that will dramatically change the regulations surrounding the collection of rent arrears, according to CBRE Bristol.
The new legislation, Commercial Rent Arrears Recovery (CRAR), comes into force from April 6th 2014, and CBRE is warning landlords of the need to take swift action to recover any outstanding arrears under their leases before the new rules come into force.
Under the new statutory regime, landlords will no longer be able to collect sums reserved as rent under the lease outside of pure rent, VAT and interest, such as service charges or insurance payments.
Michael Ware, Senior Director in CBRE Bristol’s Property and Asset Management team, believes the new guidelines has the potential to affect the way many landlords operate and run their businesses. He said: “CRAR will be available for commercial premises only and will not apply in cases where part of the property is used for residential purposes. Landlords may therefore want to look at existing agreements that include flats above shops or commercial properties and consider drawing up separate leases.
“The new system will have a major effect and we are advising commercial landlords to get to grips with the imminent changes as soon as possible and make any necessary changes to the way they run their operation. Our specialist team is on hand to offer advice and support to anyone that may be affected by the introduction of CRAR and we would urge people to get in touch with us particularly if they have commercial property and tenants who are in arrears.”
CRAR only comes into force when rent arrears (less interest and VAT) exceed a minimum amount which is equivalent of seven days rent, and tenants who are in arrears must also be given seven days’ notice of enforcement (not including Sundays and bank holidays) to pay.
