Part 3Enforcement by taking control of goods
Chapter 2Rent arrears recovery
Commercial rent arrears recovery
I472Commercial rent arrears recovery (CRAR)
C1C21
A landlord under a lease of commercial premises may use the procedure in Schedule 12 (taking control of goods) to recover from the tenant rent payable under the lease.
2
A landlord's power under subsection (1) is referred to as CRAR (commercial rent arrears recovery).
73Landlord
I51
In this Chapter “landlord”, in relation to a lease, means the person for the time being entitled to the immediate reversion in the property comprised in the lease.
I52
That is subject to the following.
I53
In the case of a tenancy by estoppel, a person is “entitled to the immediate reversion” if he is entitled to it as between himself and the tenant.
I54
If there are joint tenants of the immediate reversion, or if a number of persons are entitled to the immediate reversion as between themselves and the tenant—
a
“landlord” means any one of them;
b
CRAR may be exercised to recover rent due to all of them.
I55
If the immediate reversion is mortgaged, “landlord” means—
a
the mortgagee, if he has given notice of his intention to take possession or enter into receipt of rents and profits;
b
otherwise, the mortgagor.
I56
Subsection (5) applies whether the lease is made before or after the mortgage is created, but CRAR is not exercisable by a mortgagee in relation to a lease that does not bind him.
I57
Where a receiver is appointed by a court in relation to the immediate reversion, CRAR is exercisable by the receiver in the name of the landlord.
I1I68
Any authorisation of a person to exercise CRAR on another's behalf must be in writing and must comply with any prescribed requirements.
I59
This Chapter applies to any other person entitled to exercise CRAR as it applies to a landlord.
I774Lease
1
“Lease” means a tenancy in law or in equity, including a tenancy at will, but not including a tenancy at sufferance.
2
A lease must be evidenced in writing.
3
References to a lease are to a lease as varied from time to time (whether or not the variation is in writing).
4
This section applies for the purposes of this Chapter.
I875Commercial premises
1
A lease (A) is of commercial premises if none of the demised premises is—
a
let under lease A as a dwelling,
b
let under an inferior lease (B) as a dwelling, or
c
occupied as a dwelling.
2
The “demised premises” in this section include anything on them.
3
“Let as a dwelling” means let on terms permitting only occupation as a dwelling or other use combined with occupation as a dwelling.
4
Premises are not within subsection (1)(b) if letting them as a dwelling is a breach of a lease superior to lease B.
5
Premises are not within subsection (1)(c) if occupying them as a dwelling is a breach of lease A or a lease superior to lease A.
6
This section applies for the purposes of this Chapter.
I976Rent
1
“Rent” means the amount payable under a lease (in advance or in arrear) for possession and use of the demised premises, together with—
a
any interest payable on that amount under the lease, and
b
any value added tax chargeable on that amount or interest.
2
“Rent” does not include any sum in respect of rates, council tax, services, repairs, maintenance, insurance or other ancillary matters (whether or not called “rent” in the lease).
3
The amount payable for possession and use of the demised premises, where it is not otherwise identifiable, is to be taken to be so much of the total amount payable under the lease as is reasonably attributable to possession and use.
4
Where a rent is payable under or by virtue of Part 2 of the Landlord and Tenant Act 1954 (c. 56), the amount payable under the lease for possession and use of those premises is to be taken to be that rent.
5
This section applies for the purposes of this Chapter except sections 71 and 85.
77The rent recoverable
I101
CRAR is not exercisable except to recover rent that meets each of these conditions—
a
it has become due and payable before notice of enforcement is given;
b
it is certain, or capable of being calculated with certaintyF2;
c
it is not excluded from recovery using CRAR by paragraph 4 of Schedule 2 to the Commercial Rent (Coronavirus) Act 2022 (temporary moratorium on enforcement of protected rent debts).
I102
The amount of any rent recoverable by CRAR is reduced by any permitted deduction.
I103
CRAR is exercisable only if the net unpaid rent is at least the minimum amount immediately before each of these—
a
the time when notice of enforcement is given;
b
the first time that goods are taken control of after that notice.
I2I114
The minimum amount is to be calculated in accordance with regulations.
I105
The net unpaid rent is the amount of rent that meets the conditions in subsection (1), less—
a
any interest or value added tax included in that amount under section 76(1)(a) or (b), and
b
any permitted deductions.
I2I116
Regulations may provide for subsection (5)(a) not to apply in specified cases.
I107
Permitted deductions, against any rent, are any deduction, recoupment or set-off that the tenant would be entitled to claim (in law or equity) in an action by the landlord for that rent.
78Intervention of the court
I121
If notice of enforcement is given in exercise (or purported exercise) of CRAR the court may make either or both of these orders on the application of the tenant—
a
an order setting aside the notice;
b
an order that no further step may be taken under CRAR, without further order, in relation to the rent claimed.
I3I132
Regulations may make provision about—
a
the further orders that may be made for the purposes of subsection (1)(b);
b
grounds of which the court must be satisfied before making an order or further order.
I123
In this section “the court” means the High Court or F1the county court, as rules of court may provide.
I1479Use of CRAR after end of lease
1
When the lease ends, CRAR ceases to be exercisable, with these exceptions.
2
CRAR continues to be exercisable in relation to goods taken control of under it—
a
before the lease ended, or
b
under subsection (3).
3
CRAR continues to be exercisable in relation to rent due and payable before the lease ended, if the conditions in subsection (4) are met.
4
These are the conditions—
a
the lease did not end by forfeiture;
b
not more than 6 months has passed since the day when it ended;
c
the rent was due from the person who was the tenant at the end of the lease;
d
that person remains in possession of any part of the demised premises;
e
any new lease under which that person remains in possession is a lease of commercial premises;
f
the person who was the landlord at the end of the lease remains entitled to the immediate reversion.
5
In deciding whether a person remains in possession under a new lease, section 74(2) (lease to be evidenced in writing) does not apply.
6
In the case of a tenancy by estoppel, the person who was the landlord remains “entitled to the immediate reversion” if the estoppel with regard to the tenancy continues.
7
A lease ends when the tenant ceases to be entitled to possession of the demised premises under the lease together with any continuation of it by operation of an enactment or of a rule of law.
I1580Agricultural holdings
1
This section applies to the exercise of CRAR where the premises concerned are an agricultural holding.
2
CRAR is not exercisable to recover rent that became due more than a year before notice of enforcement is given.
3
For the purposes of subsection (2), deferred rent becomes due at the time to which payment is deferred.
4
“Deferred rent” means rent the payment of which has been deferred, according to the ordinary course of dealing between the landlord and the tenant, to the end of a quarter or half-year after it legally became due.
5
The permitted deductions under section 77(7) at any time include any compensation due to the tenant in respect of the holding, under the 1986 Act or under custom or agreement, that has been ascertained at that time.
6
In this section—
the “1986 Act” means the Agricultural Holdings Act 1986 (c. 5);
“agricultural holding” has the meaning given by section 1 of the 1986 Act.