If you Rent or lease a property or are considering doing so, you might be wondering exactly when to collect your tenants’ debts related to housing, such as their rent and service charges. This is a particularly pertinent issue if you are intending debts to be paid on a quarterly basis. You may be aware that many rent contracts and service charge agreements state that monies are payable on ‘the usual quarter days’. This refers to the old English system of Quarter Rent Days.
For centuries in the United Kingdom, Quarter Days have traditionally been considered those upon which debts, such as rent, are settled. The dates of Quarter Days are:
- 25th March (Lady Day)
- 24th June (Midsummer Day)
- 29th September (Michaelmas)
- 25th December (Christmas Day)
Although many landlords use the traditional Quarter Days for the purposes of collecting rent and service charges, it is also common nowadays for landlords in the UK to use the first day of the months of January, April, July and October as a more modern alternative.
Quarter Rent Days: Commercial Rent Arrears Recovery
If you are a landlord who uses the Quarter Rent Day system, you may also wonder when you are entitled to begin the process of recovering arrears if your tenants do not pay their rent or service charges by the due date.
There is a common misconception that a landlord cannot recover overdue rent without a court order. However, landlords can recover debts without needing to go through the time and expense of acquiring a court order, through the terms of the Commercial Rent Arrears Recovery procedure.
Commercial Rent Arrears Recovery (CRAR) was introduced as part 3 of the Tribunals Courts and Enforcement Act of 2007. It can be used to recover rent and VAT in commercial premises, but not service charges, insurance or any other type of payment.
In order to use CRAR:
- You must have an existing (i.e. not terminated) rental agreement or lease in place
- The rent must be seven days in arrears
- A seven days’ notice of enforcement (not counting Sundays and bank holidays) must have been sent to the client
Once all of these factors are in place, certified enforcement agents will enter the premises and take control of the tenant’s goods. These will either be left under a controlled goods agreement (if a payment plan has been formally agreed) or removed until the areas are paid.
It is possible to shorten the seven day notice period if you suspect that the tenant will remove goods to prevent the enforcement agents from taking them. In the event that the goods do need to be sold, you must give the tenant seven days notice of sale.
Should you need to recover your property as well as the unpaid rent, ensure that you do not forfeit your lease until after the CRAR process, as CRAR can only take place under a valid existing lease.
If it is more important for you to recover the property immediately than to recover the arrears, you are not compelled to make use of CRAR. The date at which you can legally recover the property is set out under the terms of the lease, and it is often 21 days after the Quarter Rent Day.
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