Warning reforms to bailiff industry may cost landlords more

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THE cost of recovering commercial rent arrears could soar for landlords if new legislation to transform the bailiff industry goes ahead.

The proposals aim to deal with the perceived heavy treatment of tenants at the hands of bailiffs in their pursuit of effective recovery of arrears.

Alison Oldfield, a partner at Eversheds law firm in Leeds, said while tenants would welcome new proposals, which are currently out for consultation, landlords may find themselves having to pursue more expensive routes to recover rent arrears.

The Ministry of Justice has published a consultation paper on part three of the Tribunals, Courts and Enforcement Act 2007 intended to overhaul the bailiff industry and set out a new transparent procedure for recovery of rent arrears.

The draft regulations replace the ancient law of distress, which allows bailiffs to seize goods and sell them to recover rent arrears without prior notice to the tenant or permission from a court.

Ms Oldfield said: “The use of bailiffs to seize goods from tenanted property is a legal remedy which has been available to landlords for many centuries as a swift and cheap method of recovering rent arrears.

“Tenants will see these proposals as long overdue reform of an inequitable and antiquated law.    

“The concern for landlords, however, will be that they remove the element of surprise which is often so important for maximising his chances of recovery. 

“One of the consequences of this reform  may be that landlords are more often forced to consider alternative more expensive routes of recovery such as litigation or insolvency.”

Under the proposals, landlords will need to serve a notice of enforcement on tenants, which is designed to provide protection to tenants and increase the accountability of bailiffs.

Ms Oldfield said the notice requirements would limit the benefit of the current surprise element of distress and pre-warn tenants of enforcement action.

The current proposals set the length of notice required at 14 days, giving the tenants potentially two weeks to get rid of their stock and goods.

The proposals will only apply to commercial premises. Premises that are part let as residential will not fall under commercial rent arrears recovery.

The deadline for comments is May 14, 2012.