The Commercial Rent Arrears Recovery (CRAR) procedure allows landlords in England and Wales to recover qualifying principal rent, VAT on that rent, and contractual or statutory interest on that rent only by taking control of the tenant’s goods and selling them to cover the arrears. CRAR does not cover service charges, insurance rent, business rates or other sums, even if reserved as rent in the lease.
CRAR was introduced by the Tribunals, Courts and Enforcement Act 2007 and has applied since April 2014 via the Taking Control of Goods Regulations 2013 and related regulations, replacing the former common law remedy of distress. It is a prescriptive statutory regime requiring service of a compliant Notice of Enforcement by a certified enforcement agent, strict time limits, and adherence to limits on goods that may be taken into control. CRAR is available only where there is a written commercial lease and the premises are not mixed use under the same lease.
Used properly, CRAR provides a direct route to recover qualifying rent without court proceedings, although misuse risks claims and costs and insolvency can restrict use or require court permission.
Section A: Understanding Commercial Rent Arrears Recovery (CRAR)
1. What is Commercial Rent Arrears Recovery (CRAR)?
CRAR is a statutory remedy that enables a commercial landlord to instruct a certified enforcement agent to take control of a tenant’s goods from relevant business premises and sell them to satisfy net unpaid rent. It cannot be used for residential tenancies and is unavailable where the demise is mixed residential and commercial under the same lease. Separate residential and commercial leases in the same building do not of themselves bar CRAR against the commercial demise.
2. The legal framework for CRAR
CRAR is created by the Tribunals, Courts and Enforcement Act 2007 and operated through the Taking Control of Goods regime. The Act defines net unpaid rent, when CRAR may be exercised and the premises at which entry is permitted. The Regulations set out procedural steps, notice content and timing, exempt goods, entry hours, controlled goods agreements, removal, storage and sale requirements, and the fee regime for enforcement agents.
3. Legal prerequisites for initiating CRAR
a. Written commercial lease. The lease must be in writing. CRAR does not apply to licences.
b. Commercial premises only. The premises must be let entirely for commercial use under the same lease. CRAR is unavailable where the same lease includes a dwelling.
c. Rent arrears only. CRAR recovers principal rent, VAT on that rent and interest on that rent. It does not recover service charge, insurance or other sums.
d. Minimum arrears. At the time of the Notice of Enforcement and at enforcement, net unpaid rent should be at least the amount of seven days’ rent.
e. Notice of Enforcement. A certified enforcement agent serves the notice giving at least seven clear days before taking control of goods. Sundays, Bank Holidays, Good Friday and Christmas Day are excluded when calculating clear days. Prescribed particulars are required.
f. Certified enforcement agents. Only agents certified under the Taking Control of Goods (Certification) Regulations may act.
g. Insolvency restrictions. CRAR is restricted where the tenant is in administration or subject to a statutory moratorium, and may require court permission or administrator consent.
h. Exercise after lease end. CRAR can be exercised within six months after lease expiry in defined circumstances where the landlord still owns the immediate reversion, the arrears relate to that lease and the tenant remains in possession.
Section B: CRAR process step-by-step
Step 1. Notice of enforcement
The enforcement agent serves a compliant Notice of Enforcement for net unpaid rent of at least seven days’ rent. The notice gives at least seven clear days before any attendance to take control, excluding Sundays and specified holidays. Payment in full before the attendance halts CRAR.
Step 2. Attendance and taking control of goods
If payment is not made, the agent may attend the relevant premises. First entry should be peaceable. Attendance is permitted between 6am and 9pm or during the tenant’s normal business hours if different. The agent may enter into a Controlled Goods Agreement listing goods taken into control that the tenant must not remove or dispose of.
Exempt goods include, for individual tenants, tools, books, vehicles and other items necessary for personal use in employment, business or education up to an aggregate value of £1,350. Corporate tenants cannot rely on the tools-of-the-trade exemption. Goods owned by third parties or subject to valid retention of title are not available to satisfy rent, subject to proof.
Step 3. Removal and sale
If the arrears remain unpaid or a Controlled Goods Agreement is breached, the agent may remove goods for sale. Before sale, a Notice of Sale should be given and the prescribed minimum period allowed, usually at least seven clear days unless goods are perishable. Sale proceeds are applied to fees and costs first and then to net unpaid rent, with any surplus returned to the tenant.
Section C: Rights and responsibilities under CRAR
1. Rights and obligations of landlords
a. Right to recover rent arrears where CRAR is exercised lawfully.
b. Duty to ensure a compliant Notice of Enforcement served by a certified agent within prescribed timelines.
c. Duty to use certified agents and comply with permitted hours, entry rules and sale procedures.
d. Duty to avoid taking exempt goods and to respect third-party title where evidenced.
2. Rights and obligations of tenants
a. Right to receive the Notice of Enforcement allowing time to pay before attendance.
b. Protection for exempt goods for individuals up to the statutory cap. Companies cannot rely on this exemption.
c. Right to any surplus from sale after fees and rent are satisfied.
d. Obligation to pay rent as per the lease.
3. Protections for tenants
a. Minimum seven clear days’ notice before attendance.
b. Exempt and third-party goods protected by the Regulations, subject to proof.
c. Peaceable first entry and prescribed attendance hours or business hours.
4. Restrictions on landlords
a. CRAR is limited to principal rent, VAT and interest on that rent. It cannot recover service charge, insurance rent or other sums.
b. Only certified enforcement agents may exercise CRAR.
c. No attendance on Sundays, Christmas Day or Good Friday. Attendance is usually between 6am and 9pm or during business hours.
Section D: Case studies
Your examples are fine in principle. Ensure any analysis reflects the seven-day net rent threshold, clear-days calculation, permitted hours, tools-of-the-trade exemption for individuals only, and third-party title considerations. In corporate tenancies, the tools-of-the-trade exemption does not apply.
Section E: Advice for tenants to avoid CRAR
Tenants should review rent clauses and payment dates, engage early where arrears arise and explore a structured payment plan where cash flow is temporary. Identify goods owned by third parties or under finance and collate title evidence promptly. Use the seven-day notice window to pay in full if possible or agree a Controlled Goods Agreement where appropriate. Consider professional advice where the business is under financial pressure.
Section F: Alternatives to CRAR
Mediation or direct negotiation can agree time-limited concessions or staged repayment. Litigation for a debt judgment may be appropriate where CRAR is unsuitable. Forfeiture can be considered, subject to waiver and relief risks. Applying the rent deposit and pursuing a contractual guarantor are practical alternatives where the lease permits.
FAQs
What is CRAR and how does it work?
CRAR is a statutory process allowing a landlord of commercial premises to recover principal rent, VAT and interest on that rent by taking control of and selling the tenant’s goods, subject to strict notice, timing and procedure rules.
When can CRAR be used?
Only for written commercial leases of unmixed commercial premises. A minimum of seven days’ net unpaid rent should be outstanding at notice and at enforcement.
What notice is required?
At least seven clear days after a compliant Notice of Enforcement, excluding Sundays, Bank Holidays, Good Friday and Christmas Day. A further Notice of Sale is required before selling goods.
Are tools or equipment exempt?
For individuals, tools, books, vehicles and similar items necessary for personal use in employment, business or education are exempt up to £1,350 in aggregate. Corporate tenants cannot rely on this exemption.
Can CRAR recover service charge or insurance?
No. CRAR is limited to principal rent, VAT and interest on that rent.
Does insolvency affect CRAR?
Yes. CRAR may be restricted during administration or a statutory moratorium and may require court permission or consent.
Can CRAR be stopped?
Paying the arrears in full before sale stops CRAR. Parties can also agree alternatives, such as a payment plan or a Controlled Goods Agreement, subject to compliance.
Does CRAR affect credit rating?
CRAR itself is not a court judgment, so it does not directly register on credit files. Subsequent litigation or insolvency could affect credit status.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing Agency for the Professional Services Sector.
