The time might have come when your commercial lease is no longer working for you and it’s natural to feel trapped.
We see many people assume they have no choice but to follow through with their lease until the end.
However, there are some options that allow you to leave early and you need to know which one best suits you and the terms in your lease agreement.
Why might you consider ending your lease?
You may be facing financial pressure and your rent and overheads might be becoming harder to justify.
It could be that your business is growing and the space can no longer support your operations.
Alternatively, you may be downsizing or restructuring your business, which may mean your current premises are too large.
It is easy to assume that breaking or surrendering your lease is not possible or that the consequences will be too costly to consider.
However, many leases do offer more flexibility than businesses realise.
What are your options to end a commercial lease?
Here are a number of common options for ending a commercial property lease:
Break clauses
Some leases will include a break clause and this gives you the right to end the lease early.
If you want to break your contract, you must provide written notice of around six months before you intend to leave.
You must also comply with any other requirements set out in your clause, such as ensuring rent is fully paid or complying with repair and dilapidation obligations.
Assigning your lease
An assignment allows you to transfer your lease to another business. This often requires your landlord’s consent.
You may be asked to guarantee the new tenant’s performance. This may include some level of risk after you leave the property, such as being liable for certain breaches of the lease.
Negotiating a surrender
A surrender is when you and your landlord agree to bring the lease to an end early and this is usually documented in a deed of surrender.
This can offer a clean break, but it does sometimes involve negotiations with your landlord.
Landlords are not obliged to accept a surrender and they may expect a financial payment or other terms in return.
Subletting the property
If a full exit is not immediately possible for you, then subletting can provide some breathing space.
Subletting allows you to remain the tenant, while another business occupies the property and contributes towards the rent.
This can ease some of the financial pressure when you consider your next step, but you may still be responsible for the lease obligations.
What are the risks of getting it wrong?
Trying to exit your lease without fully understanding your legal position can sometimes create more problems than it solves.
You could be putting your business at risk of ongoing costs or disputes if you have invalid break notices or unclear agreements.
This is why getting early advice can help ensure you serve your notice correctly.
Our professional team has supported many companies looking to end their lease early.
We can help manage the negotiations with your landlord and ensure you leave on terms that are fair.
Let us protect you from any risks that ending your lease could bring, so that you can focus on moving on.
If you want further advice on ending your lease, contact our commercial property team today.
