3 Important things for tenants to consider before breaking their lease

  • Author: Andy Hellier
  • Date: 21st August 2018

break clauses and moving premises

breaking chain

Do our current premises no longer fit our requirements?

Do we know the procedure to break the lease correctly?

If we break the lease, what are our new property requirements?

Commercial premises are critical to every occupier and one of the largest forms expenditure for businesses.

A break clause gives a tenant the flexibility during the lease to relocate if the premises are no longer suitable for their business needs.

Do our current premises no longer fit our requirements?

For tenants seeking to downsize and requiring smaller premises, a break option provides the opportunity to make a cost saving. Whilst the cost per sq ft on a new unit maybe higher given market conditions, the overall rent for a smaller floor area should be lower.

For an expanding business, relocating to larger, better quality premises can accelerate their growth plans. It is critical to determine the business’s exact needs current and for continued future growth.

Do we know the procedure to break the lease correctly?

It is critical to follow the conditions outlined within the lease. Each lease may vary slightly but the instructions will be explicit on how to break the lease. The most common requirements are to deliver a letter to the registered address of the landlord with at least 6 months’ notice.

At the point of breaking the lease it is common that all rent, service charge and insurance costs are up to date.  If the tenant has not complied with any of these requirements, the break clause can be invalid.

If we break the lease, what are new property requirements?

Relocating to new premises can be time consuming and costly.  It is therefore imperative that a tenant gives themselves sufficient time to secure new premises and to adhere to procedures set out above.  At the outset of the process it is vital to have an outline for the new property requirements.  It can be worthwhile using professional representation to secure new premises to save the company time and negotiating the most attractive terms possible on the new property.

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