Commercial landlords often find themselves in a difficult position when a business tenant stops paying rent. Arrears can escalate quickly, cashflow becomes strained and you may need to decide, often quickly, how best to protect your position. Historically, landlords relied on the common law of distress, but that system was criticised for being unpredictable and intrusive. In 2014, Parliament replaced it with a modern, regulated enforcement regime: the Commercial Rent Arrears Recovery (CRAR).
CRAR gives you a statutory right to recover unpaid rent by instructing certificated enforcement agents, formerly known as bailiffs, to take control of goods of non-paying business tenants. However, CRAR is not available in every situation. The statutory requirements must be followed precisely. A single procedural error can invalidate the process, expose you to claims or inadvertently waive your right to forfeit.
This guide explains how CRAR works, when you can use it, what you can recover and how enforcement agents take control of goods. It explores the strategic considerations you should weigh before instructing enforcement agents, including the risk of waiving forfeiture, the limitations on what can be seized and the importance of complying with statutory notice periods. It also incorporates the key changes introduced on 1 May 2026, which affect notice periods and enforcement fees. Finally, it considers the alternatives to CRAR, helping you choose the most appropriate route for your circumstances.
The aim is to give you a clear, practical, and legally accurate guide to CRAR. With the right preparation and a sound understanding of the process, CRAR can be a powerful mechanism for recovering unpaid rent.
Summary
This guide covers:
- CRAR Explained: What It Is and the Statutory Framework
- When CRAR Is Available: Eligibility, Minimum Arrears and Preconditions
- What Can Be Recovered: Pure Rent vs Other Sums
- The CRAR Process Step-by-Step
- Taking Control of Goods: What Enforcement Agents Can and Cannot Seize
- Landlord Strategy and Pitfalls: Compliance Errors and Waiver of Forfeiture
- Costs and Fees: Who Pays and What to Expect
- Alternatives to CRAR: Forfeiture, Court Action, Statutory Demands and Others
CRAR Explained: What It Is and the Statutory Framework
Commercial Rent Arrears Recovery (CRAR) is the statutory procedure that allows you to recover rent arrears from a non-paying business tenant by instructing certified enforcement agents to take control of their goods. It replaced the historic law of distress. Parliament introduced CRAR through the Tribunals, Courts and Enforcement Act 2007, supported by the Taking Control of Goods Regulations 2013, to create a modern, regulated and more balanced enforcement regime.
Certificated Enforcement Agents, formerly known as Bailiffs
CRAR can be exercised only through certificated enforcement agents. You cannot take control of goods yourself and you cannot instruct an uncertificated agent. The regulations set out how notices must be served, when entry is permitted, what goods can be taken and how sale proceeds must be applied. Because the process is tightly regulated, any procedural defect can invalidate enforcement or expose you to allegations of wrongful interference.
Court Proceedings Not Required
When used correctly, CRAR gives you a direct enforcement route against a non-paying business tenant without issuing court proceedings or terminating the lease. It is designed to balance your right to recover rent with the tenant’s right to fair treatment. The key is to follow the statutory framework precisely and to ensure that CRAR aligns with your wider strategy, particularly if you wish to preserve your right to forfeit.
When CRAR Is Available: Eligibility, Minimum Arrears and Key Preconditions
Before you instruct enforcement agents or take any steps toward recovering rent arrears, you must ensure that each precondition is satisfied.
Written Lease of Commercial Premises Requirement
CRAR is available only where you have a written lease of commercial premises. You cannot use CRAR where the tenant occupies under an oral agreement or informal arrangement. The premises must also be used wholly for commercial purposes. If any part is used as a residential dwelling, CRAR is not permitted unless that residential use breaches the lease.
Pure Rent Only
CRAR allows you to recover only pure rent, meaning the principal rent reserved by the lease. It does not extend to recovery of service charge, insurance contributions, interest, VAT, or other sums unless the lease expressly reserves those items as rent. If sums other than pure rent are owed, you must consider alternative remedies. This limitation ensures CRAR is used only for its intended purpose and prevents it from becoming a general debt-collection tool.
Minimum Rent Arrears Threshold
A minimum of seven days’ net unpaid rent must be outstanding at the time you serve the enforcement notice and at the time enforcement agents take control of goods. Net unpaid rent means the arrears after deducting any payments or set-offs the tenant is entitled to make. If the arrears fall below the seven-day threshold at any point before goods are taken, CRAR cannot proceed.
Right to Forfeit
You must ensure that you have not waived your right to forfeit. Certain actions, such as demanding rent or accepting rent after knowledge of a breach, can waive forfeiture. Because CRAR is inconsistent with forfeiture, using CRAR can itself amount to a waiver. This means you must decide at the outset whether your priority is to recover rent arrears or to preserve the option of terminating the lease.
Enforcement Notice Requirement
You must serve a statutory enforcement notice on your tenants before enforcement agents can attend. From 1 May 2026, under changes introduced by The Taking Control of Goods (Miscellaneous Amendments) Regulations 2026, the minimum notice period is 14 clear days, excluding Sundays and Bank Holidays. This replaces the previous seven-day requirement and introduces a longer lead-in time before enforcement can begin.
What You Can Recover: Pure Rent vs Other Sums
Understanding what qualifies as pure rent is essential before instructing enforcement agents. CRAR is limited to recovering pure rent. Even if your lease defines rent broadly, the statutory definition prevails. Pure rent does not include service charge, insurance contributions, interest, VAT, or any other sums unless the lease expressly reserves those items as rent.
Service Charges
If the lease reserves rent and service charge as a single undivided sum, you cannot use CRAR. The pure rent element must be identifiable. This can create practical difficulties where service charge arrears are substantial or where the lease structure blends different payments into a composite figure. In those situations, you must consider alternative remedies such as court proceedings, statutory demands, or forfeiture.
VAT and Contractual Interest on Rent
You can recover VAT on rent only if it is properly chargeable because it forms part of the rent debt itself. For example, if rent is £2,000 plus 20 percent VAT, the full £2,400 counts as rent arrears for CRAR purposes.
You may also recover contractual interest on rent if the lease expressly reserves that interest as rent, although this is uncommon.
Net Unpaid Rent Calculation
Where the tenant has made part payments, you must calculate the net unpaid rent. Payments must be allocated in accordance with the lease or, if the lease is silent, in accordance with general principles. You cannot allocate payments to non-rent items to increase the amount recoverable under CRAR.
The CRAR Process Step-by-Step: Enforcement Notice, Taking Control, Removal and Sale
The CRAR process is highly structured. Each stage must be followed precisely and any deviation can invalidate enforcement or expose you to challenge.
Step 1 – Calculate the Net Unpaid Rent
The first step is to calculate the net unpaid rent. You must confirm that at least seven days’ pure rent is outstanding and that the arrears relate solely to rent. If the arrears fall below this threshold at any point before goods are taken, CRAR cannot proceed. This calculation must be accurate and precise.
Step 2 - Instruct a Certificated Enforcement Agent
Once eligibility is confirmed, you may instruct a certificated enforcement agent. Only certificated agents can act under CRAR.
You must provide evidence of the written lease, the rent schedule, and the calculation of net unpaid rent. Enforcement agents cannot rely on estimates or informal figures; they must have a clear and accurate arrears position before acting.
Step 3 – Serve the Notice of Enforcement
The next step is the service of the enforcement notice on non-paying business tenants. Any defect in the notice or the calculation of the notice period can invalidate the entire process.
From 1 May 2026, you must give the tenant at least 14 clear days’ notice, excluding Sundays and Bank Holidays. The notice must be served correctly and must contain the prescribed information.
Step 4 – Taking Control of Goods
After the notice period expires, enforcement agents may attend the premises to take control of goods. They may enter through any usual means but cannot use force to enter commercial premises unless specific statutory conditions are met. Their role is regulated and must be carried out proportionately, with minimal disruption to the tenant’s business.
Taking control of goods can occur in several ways. The agent may secure goods on the premises, enter into a controlled goods agreement with the tenant, or remove goods for sale.
A controlled goods agreement allows the tenant to retain possession of the goods on condition that the arrears are paid. If the tenant does not pay, the agent may remove and sell the goods.
Sales are usually conducted by public auction and must comply with the Taking Control of Goods Regulations. The proceeds are applied first to the agent’s fees, then to the rent arrears, with any surplus returned to the tenant.
Taking Control of Goods: What Enforcement Agents Can and Cannot Seize
The powers of enforcement agents are strictly regulated by the Taking Control of Goods Regulations. The scope of what they can seize is narrower than many landlords expect. Understanding these limits is essential to assessing whether CRAR is likely to be effective against a non-paying business tenant.
The Tenant Must Own Goods
Enforcement agents may take control of goods that belong to the tenant, but ownership must be clear. Goods belonging to third parties cannot be seized. This includes items owned by suppliers, goods held on consignment, equipment subject to hire-purchase agreements and personal belongings of employees or customers. If ownership is disputed, agents must act cautiously and may require evidence before proceeding.
Goods Exempt from Seizure
Certain categories of goods cannot be seized. Tools of the trade up to a prescribed value cannot be taken, as removing essential equipment would prevent the tenant from carrying on business and undermine the proportionality of the process. Essential items required for the tenant’s business, and goods necessary for basic domestic needs where the tenant resides unlawfully at the premises, are also protected. Perishable goods may be seized but must be sold quickly to avoid loss of value.
Fixtures cannot be taken. Items that are fixed to the premises, such as built-in machinery or fitted furniture, form part of the property and are outside the scope of CRAR. Similarly, goods that are in active use at the time of the visit may not be taken unless the agent can do so without breaching the regulations.
Enforcement agents must also consider the value of the goods they intend to seize. They cannot take items of excessive value where lower-value goods would be sufficient to cover the rent arrears and associated fees.
Assessing the value of goods before instructing enforcement agents can help you determine whether CRAR is the most appropriate enforcement route. In practice, the effectiveness of CRAR depends on the nature and value of the tenant’s assets. A tenant with limited stock, leased equipment or minimal on-site goods may offer little opportunity for recovery. Conversely, tenants with valuable inventory or equipment may provide a realistic prospect of clearing rent arrears through the sale of goods.
Your Strategy and the Main Pitfalls: Compliance Errors and Waiver of Forfeiture
CRAR can be an effective way to recover rent arrears from a non-paying business tenant, but it must be used strategically. Before instructing enforcement agents, you should consider how CRAR fits within your wider objectives and whether it is the most appropriate route for your circumstances. A clear understanding of the risks, combined with accurate compliance at each stage, will help you use CRAR effectively while protecting your wider position.
Waiving Your Right to Forfeit the Lease
Forfeiture and CRAR are inconsistent remedies. If you take steps that affirm the continuation of the lease after becoming aware of a breach, you may lose the right to forfeit. Using CRAR can itself amount to a waiver because it treats the lease as continuing. This means you must decide at the outset whether your priority is to recover rent or to preserve the option of terminating the lease. If forfeiture remains a realistic or desirable outcome, you should take advice before commencing CRAR.
Defective Notice
The enforcement notice must be served correctly and must give the required period of notice (minimum 14 clear days). Any defect in the notice, the calculation of the notice period or the information provided can invalidate the entire process. This includes errors in the arrears’ calculation, incorrect identification of pure rent or failure to provide the enforcement agent with accurate documentation.
Timing
If the tenant is on the brink of insolvency, CRAR may be ineffective. Once an insolvency process begins, restrictions on enforcement may apply and enforcement agents may be prevented from taking control of goods. Acting too late can limit your options. Conversely, acting too early without considering the tenant’s wider financial position may lead to unnecessary costs or disruption without improving recovery prospects.
Goods’ Value
You should also consider the practical value of the tenant’s goods. CRAR is most effective where the non-paying business tenant has stock, equipment, or other assets of sufficient value to cover the rent arrears and enforcement fees. If the tenant has limited goods on site, or if most items are leased or owned by third parties, CRAR may not produce a meaningful recovery.
Pure Rent Arrears Only
You should ensure that the arrears relate solely to pure rent. Attempting to recover service charge, insurance contributions, or other sums through CRAR will invalidate the process and may expose you to claims.
Costs and Fees: Who Pays and What You Should Expect
The costs of CRAR are regulated and follow a prescribed structure. This ensures transparency for both landlords and non-paying business tenants and prevents enforcement agents from charging unregulated or disproportionate fees. Understanding how these fees work is essential when deciding whether CRAR is the most cost-effective route for recovering rent arrears.
Fees Recoverable from the Tenant
Enforcement agents charge fees in accordance with the Taking Control of Goods (Fees) Regulations. These fees are recoverable from the tenant and are added to the rent arrears. This means that, in most cases, the financial burden of enforcement does not fall on you as the landlord.
Percentage-Based Fees From 1 May 2026
Under the Taking Control of Goods (Miscellaneous Amendments) Regulations 2026, the minimum threshold for percentage-based fees increases from £1,500 to £1,900. Where arrears are £1,900 or below, a fixed fee of £247 applies. Where arrears exceed £1,900, fees are calculated as £247 plus 7.5 percent of the sum above £1,900.
In addition, all CRAR enforcement fees increase by 5 percent from 1 May 2026. The compliance fee is now £79, the enforcement stage fee is £247, and the sale stage fee is £116. These figures should be reflected in your internal arrears processes, precedent letters, and any guidance you provide to property managers or enforcement agents.
Considering the Tenant’s Financial Position
Although the tenant is responsible for paying enforcement fees, you should still consider the commercial reality. If the tenant has limited goods or is close to insolvency, the fees may not be recoverable in practice. In such cases, CRAR may still be worthwhile as a pressure mechanism, but it may not result in full recovery of arrears or costs. Assessing the tenant’s financial position and the likely value of goods on site can help you determine whether CRAR is proportionate.
Alternatives to CRAR: Forfeiture, Court Action, Statutory Demands and Other Recovery Routes
Each alternative to CRAR has its own advantages and limitations. The right approach depends on the nature of the arrears, the tenant’s financial position, the value of goods available for seizure and your long-term strategy for the property. A careful assessment of these factors will help you choose the most effective and commercially sensible route.
Lease Forfeiture
Forfeiture remains one of the most powerful remedies available to commercial landlords. It allows you to terminate the lease for non-payment of rent and regain possession of the premises.
Forfeiture may be appropriate where the tenant is persistently in arrears, where the business has ceased trading or where you wish to re-let the premises. However, forfeiture is a decisive step. Once exercised, the lease ends and you lose the ability to recover future rent.
Court Action
While court proceedings can be slower than CRAR, they provide a clear and enforceable outcome and may be necessary where the lease structure prevents the use of CRAR. They also avoid the risk of waiving forfeiture, provided you act consistently with your intention to preserve that right.
Court proceedings offer a broader route to recovery, particularly where arrears include service charge, insurance premiums, or other sums not recoverable under CRAR. A county court claim can result in a judgment for the full amount owed, including interest and costs.
Statutory demands and insolvency proceedings can be effective where the tenant is a company with assets. A statutory demand requires payment within 21 days and can be a powerful pressure mechanism. If the tenant fails to pay, you may petition for winding-up. However, insolvency routes must be used carefully. They are not appropriate where the debt is genuinely disputed and misuse can lead to allegations of abuse of process. These remedies are most effective where the arrears are undisputed and the tenant has the means to pay but is choosing not to.
Agreements with Tenant
Negotiated settlements, payment plans and mediation may also be appropriate, particularly where the tenant’s business remains viable and the relationship is worth preserving. A structured payment plan can provide certainty and avoid the costs and disruption associated with enforcement. In some cases, a short-term concession or re-gearing of the lease may be commercially preferable to formal enforcement.
Conclusion: Choosing the Right Enforcement Route
CRAR provides you with a modern, regulated, and effective mechanism for recovering unpaid rent. When used correctly, it can deliver swift results without the need for court proceedings. However, its limitations and procedural requirements mean that it is not suitable in every case. If you are unsure whether CRAR is the right route, or if you want to preserve your right to forfeit while still taking steps to recover arrears from a non-paying business tenant, early legal advice will help you avoid missteps.
Witan Solicitors can guide you through each stage of the process. Our Commercial Debt Recovery team advises landlords across England and Wales on CRAR strategy, enforcement notices, waiver risks, forfeiture options and the full range of the law of distress. We can review your lease, assess your evidence, liaise with certificated enforcement agents, and help you choose the most effective and commercially sensible approach. Whether you need urgent action against a non-paying business tenant or a broader strategy for managing rent arrears across your portfolio, we can provide clear, practical advice tailored to your objectives.
You can contact us through our enquiry form or by calling 0300 303 2071.
FAQs
1. Can you use CRAR if your tenant has already vacated the premises?
No. You can only use CRAR while the tenant remains in occupation of the commercial premises. If the tenant has vacated, you must consider alternatives such as forfeiture or a debt claim.
2. Can you use CRAR to recover service charge or insurance arrears?
No. CRAR is limited to recovering principal rent, plus VAT and contractual interest on that rent. You cannot use it to recover service charge, insurance contributions, business rates, or other sums, even if your lease labels them as “rent”. Those must be pursued separately.
- What is the minimum amount of arrears you need before starting CRAR?
You must be owed at least seven days’ net unpaid rent at the time the enforcement notice is served and at the time goods are taken. If the arrears fall below this threshold at any stage, CRAR cannot proceed.
4. Can you use CRAR if the premises include any residential accommodation?
No. CRAR is available only where the premises are let wholly for commercial use under a written lease. If any part of the premises is used as a residential dwelling under the same lease, CRAR is not permitted unless that residential use is unlawful.
5. Do you have to use a certificated enforcement agent to carry out CRAR?
Yes. You cannot enforce CRAR yourself or through an ordinary debt collector. Only a certificated enforcement agent can serve the enforcement notice, take control of goods and conduct any sale. Using an uncertificated agent will invalidate the process.
