Real Estate Focus ' October 2022
|02 November 2022
|Real Estate and Construction, Real Estate, Landlord & Tenant - Leases
|Norton Rose Fulbright
|Mr Wasim Khan and Sian Skerratt-Williams
A round-up of some key legal developments in England and Wales for the real estate sector.
In this edition we look at tenants' claims for pandemic-related business interruption losses; real estate tax proposals and policy; changes to smoke and carbon monoxide alarm requirements in the private and social rented housing sector; and the Building Safety Act 2022: who pays for defective cladding?
COVID-19: what next for tenants of commercial premises?
In previous editions we have reported on a number of cases between landlords and tenants relating to arrears of commercial rent accrued as a result of measures taken in response to the pandemic. Generally these did not go well for the tenant. The deadline for applications to refer a pandemic rent dispute to arbitration under the Commercial Rent (Coronavirus) Act 2022 has also now expired.
So what next for tenants with pandemic-related losses? Three recent court cases focus on insurance claims by tenants for business interruption losses. A skim through the transcripts highlights the complexity of the issues - as do press reports which claim success for both insurers and tenants. But one of the cases does appear to secure a significant victory for tenants.
The tenant had over 2,200 stores across the UK and claimed that each of these stores suffered interruption or interference as a result of COVID-19 and its consequences. The tenant closed all its stores in March 2020, resulting in significant losses. There was then a phased re-opening from May 2020, but further restrictions imposed by government in one or more of the four nations in the UK led to additional losses. The tenant sought to recover those losses, which amounted to a sum in excess of '150 million, under its insurance policy which insured against, amongst other things, business interruption losses.
The insurer argued that all the tenant's business interruption losses arose from, or were attributable to, a 'single occurrence' and should therefore be aggregated as one single business interruption loss. Under the terms of the policy, each business interruption loss was subject to a limit of liability of '2.5 million.
The tenant, on the other hand, contended that each of the numerous governmental announcements and measures amounted to a separate 'single occurrence', each triggering a separate business interruption loss with its own limit of liability.
The judge agreed with the tenant: "The informed observer, in the position of a policyholder such as the...
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