What can you do about unpaid service charges?
By David Asker on
Service charges can be quite a significant proportion of the amount payable for commercial properties.
Prior to April 2014, landlords could recover unpaid services charges at the same time as unpaid rent, using Distress for Rent, which did not require a court order.
CRAR (Commercial Rent Arrears Recovery) replaced distress in April 2014 and, whilst a court order is still not required, service charges are specifically excluded. Also, if the tenant has already moved out, then CRAR may not be used to recover the rent either.
This leaves landlords with two options – write the service charges off or go to court.
Going to court
If you do go to court, you will need to obtain a CCJ (county court judgment) for the amount owed. You can also use a CCJ to make a claim for unpaid rent if the tenant has moved out.
If your CCJ is for £600 or more, you can transfer it to the High Court to obtain a writ of control to be enforced by a High Court Enforcement Officer. You will also be able to claim judgment interest. If enforcement is successful, the enforcement fees and court costs are recoverable from the tenant.
Before taking court action, it is worth checking that the tenant’s business is still active and that they have assets. If they have already moved out, make sure you have a new address for them.
David is an authorised High Court Enforcement Officer and our Director of Corporate Governance