373.This section sets out the conditions that must be met for the right to CRAR to become exercisable. The conditions are:
the tenant is in arrears of rent before notice of enforcement is given;
the amount of the arrears owed by the tenant is certain, or capable of being calculated with certainty; and
the “net unpaid rent” equals or exceeds a set amount to be prescribed in regulations.
374.The requirement that the net unpaid rent must equal or exceed the prescribed minimum is a condition that must be satisfied at two stages: first, before the landlord gives notice of enforcement and, second, before he takes control of goods under Schedule 12. This means that the landlord will need to recalculate the “net unpaid rent” immediately before he takes control of goods. If the recalculated figure is lower than the prescribed minimum, it will not be permissible for the landlord to proceed to take control of goods.
375.The “net unpaid rent” is the amount of unpaid rent less any interest or VAT that may be payable on that amount and less any “permitted deductions”. Permitted deductions from rent are deductions that a tenant is presently entitled to make from his rent under statute, at common law and in equity. Examples include sums that may be deducted or recouped from, or set off against, rent:
under the terms of the lease;
in respect of damages for the landlord’s breach of his obligations to repair (or the cost of repairs, if carried out at the tenant’s expense);
in respect of damages for the landlord’s breach of the covenant of quiet enjoyment;
in respect of statutory compensation for improvements under section 11(2) of the Landlord and Tenant Act 1954.
376.The amount of rent that a landlord is entitled to recover by CRAR is the amount of unpaid rent less any permitted deductions that the tenant is entitled to make against that rent.