Ministry of Justice response to Transforming Bailiff Action – Key Recommendations

 

The Ministry of Justice published its response to the consultation, Transforming Bailiff Action, on 25 January 2013. To read the full response click here.

The response sets out 19 recommendations, which include:

  • Banning bailiffs from entering premises where there are children, or any premises after 9pm
  • Introducing a fee structure for bailiffs
  • Setting competency criteria and mandatory training for bailiffs

What will, however, be of most importance to landowners and property litigators is confirmation that the law on distress will be abolished and Commercial Rent Arrears Recovery (CRAR) will finally be introduced.

This will be achieved by implementing Part 3 of the Tribunals Courts and Enforcement Act, which received Royal Assent back in 2007 but is not yet in force.

In place of distress, CRAR will allow a landlord to enter and seize goods but on the following conditions:

  • It can only be used in respect of “pure” rent arrears cases (i.e. excluding sums reserved as rent such as service charge and insurance)
  • The landlord must first serve an enforcement notice on the defaulting tenant giving it seven days’ notice
  • Following expiry of the notice period, the agent can then enter the premises and remove goods
  • The current proposal is that CRAR will only be available where there are at least seven days’ rent arrears
  • The landlord will be able to apply to Court to shorten the notice period
  • Where the enforcement agent has concerns that the tenant will remove goods to avoid enforcement, the agent will be able to secure the premises
  • The minimum period before sale will be 7 days from removing the goods unless the goods would become unsaleable or their value would be substantially reduced.

Whilst the law of distress is considered by many to be anachronistic, it has nonetheless proven a very useful tool for commercial landlords over the years. These changes will undoubtedly make life more difficult for landlords seeking to recover rent arrears, as it may give tenants an opportunity to remove goods prior to them being seized and/or enter into insolvency prior to the date of entry.

The reforms are expected to be implemented later on this year and we will provide an update in due course.