Leading property firm, CBRE, is urging commercial property landlords in the North West to get up to speed with new changes to the law that have dramatically changed the regulations on the collection of rent arrears.
The new legislation, Commercial Rent Arrears Recovery (CRAR), came into force on 6th April 2014 meaning that landlords are no longer able to collect sums reserved as rent under the lease outside of pure rent, VAT and interest, such as service charges or insurance payments. CRAR applies to all leases of commercial premises.
Sophie Weinmann, Associate Director of Property and Asset Management at CBRE’s Manchester office, believes the new guidelines have the potential to affect the way many landlords operate and run their businesses. She said:
“CRAR is 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 could have a major effect and we are advising commercial landlords in the region to get to grips with the changes as soon as possible and make any necessary changes to the way they run their operation.”
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.
