Property Fire - Still Paying Electricity Standing Charge On Vacant Property.

[Thimbles]

Hello,

Last year there was a fire in the premises of the shop adjacent to my wife's shop that then spread through the roof making my wife's shop unusable. The Fire Brigade deemed the fire to be accidental.

My wife has since then restarted her business in another leased business premises. However, the landlord of the fire damaged premises has not terminated the lease as they would like the business to return when the shop has been refurnished. No rent is being paid on this lease.

Before the fire a new agreement was "signed" with British Gas for the supply of electricity. British Gas maintaine that we continue to pay the standing charge for electricity because the lease has not been terminated and as such it is still contnuing to be paid even though there is no access to that shop.

My wife does not want to return to the old premises after the building has been refurbished. The landlord is intending to convert the three shops in the row to just two if that affects matters.

What can the experts advise.

[atticus]

Does your wife have insurance that might cover this, and specifically business interruption cover?

As to the lease of the damaged premises, check whether this contains terms as to what happens if the premises become unusable through events such as fire. It is more common that the lease will be suspended rather than terminated - it resumes after the property has been repaired and is made useable. Your wife may need to negotiate a surrender of the lease.

[Thimbles]

Thank you very much for responding.

Does your wife have insurance that might cover this, and specifically business interruption cover?

Yes the business was fully insured. Insurance has paid out for business interrution, damage to fixtures and fittings and loss of earnings.

It's the continuing to pay the electricity standing charge we would like to end.

The copy of the lease was held in the premises and has long gone. Smoke, fire and water damage destroyed most of the shops content.

[Thimbles]

Actually, I have the lease in my files at home. It expires 18th May 2026 and is for three years.

I'll read it now.

[atticus]

Given the May 2026 expiry date, resumption of the lease may not be a problem.

Terminate the electricity supply contract! Check whether insurance will cover the outstanding charges.

[Thimbles]

4. PROVIDED IT IS HEREBY FURTHER AGREED as follows:-

4.4 If the building is damaged or destroyed by an Insured Risk sa as to make the Premises unfit for occupation and use, then, unless the policy of insurance in relation to the building has been vitiated in whole or in part in consequence of any act or omission of the Tenant, any undertenant or their respective workers, contractors or agents or any other person at the building with the actual or implied authority of any of them, payment of the ASnnual Rent, or a fair proportion of it according to the nature and extent of the damage, shall be suspended until the building has been reinstated so as to make the Premises fit for occupation and use or until the end of the three years from the date of the damage or destruction, if sooner.

4.5 If following damage to or destruction of the building, the Landlord considers that it is impossible or practical to reinstate the building the Landlord may terminate this lease by giving notice to the Tenant. On giving notice this lease shall determine but shall be without predujice to or any right or remedy of the Landlord in respect of any breach of the tenant covenants of this lease. Any proceeds of the insurance shall belong to the Landlord.

[atticus]

Clause 4.4 is much as I predicted in my first reply. The lease obligations are suspended until the premises can be occupied again.

[Thimbles]

Thanks again.

Just to clarify - when you state suspended, is the lease is still counting down to it's expiry?

They landlords builders still have not started any work on this row of shop's and any work is expected to take at least six month's. There were gas canister's in the property next door and they exploded. I was under the impression the lease expired 3 years after the start date of 18th May 2023.

Sorry for the additional question.

[atticus]

Just to clarify - when you state suspended, is the lease is still counting down to it's expiry?

Sorry: Yes, expiry date is still May 2026.