April 9, 2014 1:52 pm

House Rules: property law and unpaid rent

Recovering arrears, converting commercial buildings to housing, and grants for repairing flood damage
Illustration by James Ferguson depicting property law©James Ferguson

1. Getting back unpaid rent

I own a few commercial units, let to tenants. If a tenant gets behind with the rent, I usually send in the bailiffs and they pay up pretty quickly. But hasn’t the law just changed? Yes. New rules came into force on April 6, introducing a new scheme for commercial rent arrears recovery (often called CRAR).

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Can I still send someone in to seize the tenant’s goods? Yes, but only once at least seven days’ rent is owing and only if the premises are solely commercial. If there is a residential element, you can no longer go in and seize goods, unless the residential part (like a flat above a shop) is let by a completely separate lease.

Is the procedure different too? Yes. You have to appoint an “enforcement agent” (in practice, a bailiff by another name) who must give the tenant seven clear days’ notice in writing before going in.

So I completely lose the ‘shock value’ I had with a bailiff? Yes, although the notice itself may be enough to get the tenant to pay up.

If I do seize goods, are there restrictions on how I go about selling them? You can only sell them at public auction, unless you get a court order allowing some other sort of sale. You must give the tenant seven clear days’ notice of the proposed sale and if the tenant pays up, you must allow them to collect their goods.

Anything else I should know? Yes – you can only use CRAR to recover money that is actually rent, not any money charged to cover the cost of services, insurance or expenses like rates. If you let premises with an all-inclusive rent, you should now note in the lease the amount that you are charging as payment for the possession and use of the premises.

2. Relaxed rules on residential conversions

I’m keen to convert a few commercial buildings in my area to housing. Can I do it without planning permission? Possibly. From April 6, shops and other buildings used for businesses that are smaller than 150 sq m may be converted into homes, without planning permission, under new “permitted development rights”. The conversion can be to a single house or a maximum of four flats, but not to a house in multiple occupation. There is a similar new right to convert agricultural buildings to homes, up to a maximum of three units and with a total floor space no more than 450 sq m, if the relevant site is not solely used for agricultural purposes.

What are permitted development rights? They are planning rules that allow defined categories of development to take place without the need for planning permission. They can still impose conditions – for example, the new right to convert small commercial buildings to residential doesn’t apply in conservation areas.

Do I need any approval at all? Yes. You will still need to give details of your proposals to the local authority. The information they need depends on the type of development. For example, if you are planning to convert a shop into a home you will need to provide evidence about any economic impact this may have on the local area.

What if they don’t like my plans? You can still apply for planning permission in the normal way.

Anything else to look out for? In the recent 2014 Budget, the Chancellor announced that the government plans to consult on further extension of permitted development rights, to allow light industrial buildings to be converted to homes.

You can find more a bit more detail on the latest rule change in this earlier House Rules column, made at the consultation stage.

3. Help with repairing flood damage

My home was damaged by the recent floods. Are there any grants I can apply for? The government’s Repair and Renew grant scheme opened for applications on April 1. It is operated by local authorities and offers up to £5,000 to homeowners and businesses that suffered flood damage between December 1 2013 and March 31 2014.

What can I get money for? The scheme covers measures to improve a property’s resistance to flooding (keeping water out) and resilience (reducing the scope for damage by flood water). These are things that go beyond simple repair and replacement.

I’ve already claimed under my insurance policy. Does that make a difference? It might, if your insurer has already covered the cost of repairing/replacing damaged items with a more resilient alternative. The scheme won’t cover anything which has been paid for in some other way.

Where can I get information on what improvements are right for my property? You can get a tailored report from Property Protection Adviser. Examples range from watertight covers for airbricks at £20 to £40, to driveway barriers at £2,000 to £3,000 and installing plastic kitchen units instead of chipboard ones at around £5,000. Local authorities may take different views about whether they will pay money in advance of work being done but bear in mind that you will need to produce receipts and invoices.

Are there any exclusions? The scheme applies only in England. Local authorities are free to set their own criteria and there will be differences, depending on where you live. For example, some councils will reject claims if the property will benefit from a wider community flood defence scheme due to be completed before winter 2014. Other councils are ignoring the impact of schemes like this. You should find full details of your local scheme and an application form on your local authority’s website.

Fiona Larcombe is a solicitor in the Real Estate team at King & Wood Mallesons SJ Berwin

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