Distress for rent abolished
As from the 6th April 2014, The Tribunals Courts and Enforcement Act 2007 (TCE Act) has abolished Distress for Rent and has been replaced with a new regime of Commercial Rent Arrears Recovery (CRAR).
The TCE Act is set to revolutionise the enforcement industry which provides clarity, simplification and uniformity of the law. It provides a single, staged fee structure and introduces certification and competence requirements for all enforcement agents.
After years of preparation the statutory instrument allowing the implementation of Part 3 of the TCE Act was published on the 15 July 2013 and provided for Part 3 of the Act to come into force and as a result:
- The landlords common law right to levy on goods has been abolished
- Recovery of insurance and services is no longer allowed
- Distress without notice is no longer available
- Complicated fee scales & structures have been removed
- Pound breach has disappeared
- Landlord and Tenant Act 1904 no longer applies
Under Section 71 of the TCE Act, the landlord's right to levy on good is abolished along with the old process and case law of rent distraint.
There is the abolition of reserved rent to ancillary services, preventing the use of CRAR for utilities, rates, insurance, legal fees and other charges and in addition, Section 85 prevents any attempts to bypass the regulations with secondary contractual agreements.
Distress without notice has now been removed from the landlord's remedy. Schedule 12 Part 2, 7 (1) states ‘an enforcement agent may not take control of goods unless the debtor has been given notice.’ Meaning, that the enforcement agent (EA), must give 7 clear days’ notice to the tenant that they intend to attend the address to take control of the goods, if the pure monetary rent amount due under CRAR is not paid.
The main aim of the Ministry of Justice (MOJ), in conjunction with the whole industry, is to gain transparency and clarity on costs.
The proposed structure aligns more closely with the cost of the activities carried out by the EA and will alter incentives to encourage more appropriate enforcement behaviour and in the process, be both clear and fair to debtors along with the EA.
The abuse of unregulated fees added to actions has been eradicated with the use of trigger points and set amounts as laid down in regulation.
Walking possession agreements are now called ‘controlled goods agreement’ and the EA has to leave a detailed inventory of the goods taken under their control.
Although pound breach has been abolished, if the tenant interferes with the process or the secured goods, they commit an offence under para.68 of Sch. 12. There is a further offence where a person intentionally interferes with controlled goods without lawful excuse.
Under Sch.12, enforcement agents may take control of goods ‘only if they are goods of the tenant’. Landlords have lost the advantage they enjoyed in relation to the wide range of goods that could be taken under the Law of Distress Amendment Act 1908.
There are clear definitions of commercial premises in relation to what constitutes a lease and where CRAR can be used. CRAR ensures that it can only be used in circumstances where the main terms of the lease are clear and in writing and the sums payable are clearly defined and identifiable.
The above is only a snap shot and brief overview of the new regulations on enforcement and we are sure there are to be challenges and further clarification once implementation takes effect.