CHANGES TO CONSUMER LAW IN THE UK – CONSUMER CONTRACTS (INFORMATION, CANCELLATION AND ADDITIONAL CHARGES) REGULATIONS 2013
From 13 June 2014 the above Regulations (CCR) came into force replacing the previous law on distance selling and doorstep selling. These rules will apply to contracts between businesses which sell to consumers whether outside of their office / place of business, online, by telephone or any other means and will mean all business will need to review and update their terms of business and cancellation policies.
All contracts entered into will require cancellation rights and a cooling period if they are made outside of the office / place of business.
The cooling off period has been extended to 14 days and a cancellation form must be provided to the consumer when they enter into the contract so that they understand their right to cancel.
Due to this we advise that all businesses review their contract terms and cancellation notices and policies as soon as possible to ensure they are compliant with the new laws. Dutton Gregory has introduced a bespoke service for all property professionals, including Managing Agents and Letting Agents for tailor made terms of business together with the relevant Notice of Rights to Cancel. If you would like more information on this please contact Kate Hallin on 02380 213782 or k.hallin@duttongregory.co.uk
CHANGES TO THE LAW OF DISTRESS - COMMERCIAL RENT ARREARS RECOVERY (CRAR)
The most common and possibly oldest remedy for the recovery of outstanding rent within a Commercial Landlord and Tenant relationship is that of Distress. The Landlord had the self-help remedy of Distress which enabled them to seize a tenants goods if the tenant failed to comply with a lease obligation to make a payment reserved as rent. Distress was a cheap and effective way of recovering rent arrears and the importance of distress was that it took the tenant by surprise.
However there were always objections, primarily based on the interference with the tenants human rights and this led to the changes now know as CRAR
In a nutshell it confirms that the Landlord’s right of distress has been abolished as of the 6 th April 2014. It is felt that CRAR will now be a much less useful remedy for the Landlord than Distress and this is a serious issue for Landlords in view of the effectiveness and regularity of use of distress over the last 300 years.
An explanation of CRAR
1. It is available to written leases of commercial premises only. It is not for mixed use premises (such as a shop with a flat above) or any type of residential premises.
2. CRAR can only be used to recover rent, VAT and interest – not other sums such as insurance or service charges irrespective of whether they are reserved as rent in the Lease.
3. Perhaps the most controversial aspect is that before CRAR can be exercised, 7 clear days notice of enforcement must be given to the debtor. This is the most far reaching change and can obviously open up the possibility that well advised tenants will ensure no “goods” are available after the 7 days is up.
4. The outstanding sums to use CRAR must exceed the minimum of 7 days rent at both the date of the notice and the date the agents move into the property. A certificate agent must be used and the goods must belong to the debtor.
5.The agents cannot take anything worth more than the debt. They must also wait 7 clear days to sell the goods and give 7 clear days notice to the tenant that they will be sold.
It is our view that the requirement for the prior notice has emasculated CRAR and undermined its effectiveness. These statutory changes create a serious issue for the Landlord and it is likely that it will incline Landlords to seek rent deposits on a more regular basis, which they can dip into in the event of a tenant breach.
