Generally, a tenant is not prevented from temporarily closing his trading premises unless there is a specific covenant in the lease or tenancy which requires him to stay open for trading. The tenant will not, therefore, usually be in breach of the lease or tenancy as long as the rent continues to be paid.
However, tenants should be aware that there will usually be covenants requiring them to comply with the terms and conditions of the landlord’s buildings insurance. Where premises are vacant for longer than a certain period, the insurer may have to be notified and additional steps taken to secure the premises from vandalism or other risks. Additional insurance premiums may have to be paid. The tenant will need to be aware of such steps and comply with them when making arrangements to close, otherwise insurance cover may be lost and the tenant may become liable to pay the landlord’s costs out of its own pocket.
Where so-called keep-open covenants apply, the tenant’s obligation to remain open for trading at the premises will need to be considered against the tenant’s general obligations to comply with the law relating to any Government requirements for shut-downs/lockdowns arising from the Covid-19 outbreak.
Landlords should think carefully about seeking to enforce these types of covenants in such circumstances. Providing the landlord is continuing to receive the rent, it may be difficult to show real loss arising from breach of the covenant – though there may be other surrounding factors. It is advisable for landlords to seek legal advice before taking steps to enforce any covenants.
This note is for general information and guidance and is not legal advice.