27 April 2020
Property COVID-19 FAQs
1. Can we still move house during the pandemic?
Government guidance is to delay moving house while emergency measures are in place. Where contracts have already been exchanged, the parties are still legally required to complete the transaction in accordance with the terms of the contract. Parties to the contract are encouraged to reach agreement to delay completion although a transaction may still proceed if there is nothing to prevent this subject to current public health guidelines.
2. What actions can tenants take if they are struggling to pay rent in respect of either residential or commercial premises?
The rent will continue to be payable under the lease. A tenant should seek to open a dialogue with a landlord to discuss a rent concession or rent deferral arrangement.
Commercial tenants should also check relevant insurance policies which they hold for business interruption to ascertain what cover they have.
3. Can a Landlord prevent access to tenants to a building or shopping centre?
The short answer is ‘no’. The lease will usually include a quiet enjoyment covenant which will be implied if not expressly included and this prevents a landlord from disrupting a tenant’s use and enjoyment of premises. The landlord would be in breach of that provision if it prevents access to tenants.
However, the lease may provide for the landlord to issue regulations and, following advice from the Department of Health and Social Care and Public Health England (‘PHE’), the landlord may consider amending regulations, for example, to limit access during Government restrictions.
Equally, a keep open covenant in a lease will still subsist. However, the covenant to comply with statutory and Government requirements is likely to override this.
4. Can a lease be terminated if there is a force majeure clause or can rent be suspended under the rent suspension clause?
Force Majeure clauses are unusual in leases but if there is a force majeure clause, it seems unlikely that COVID-19 will fall within this without express wording. Force majeure clauses are construed restrictively, and it will very much depend on the precise wording of the clause in the lease.
In relation to rent suspension, commercial landlords and tenants should carefully consider the wording of the rent suspension clause in the lease. Again, the standard rent suspension wording is unlikely to extend to COVID-19 but this will depend on the express wording.
5. Can a lease be forfeited if the tenant does not pay rent during the period of emergency measures?
Under the Coronavirus Act 2020, with effect from 26 March 2020, no right of re-entry or forfeiture for non-payment of rent may be enforced in relation to a relevant business tenancy until 30 June 2020 (or later date as may be specified). During this period, the landlord’s conduct will not be regarded as waiving a right of re-entry or forfeiture, unless the landlord gives an express waiver.