Your questions answered: Is it possible to end a commercial lease early?

Leases are usually for a fixed length of time (a ‘term’) of typically between 3-7 years. Unless a lease contains a break clause allowing a tenant to unilaterally bring the lease to an end earlier than the end of the term (usually on a certain date and on 3 or 6 months’ previous notice), then the only other alternatives open to a tenant would be:

1)      To sell or transfer the lease (often referred to as ‘assignment’), or;

2)      To surrender the lease back to the landlord.

Both options would require the consent of the landlord, who would be reluctant in the case of a proposed sale, unless the incoming tenant(s) can show that they would be able to pay the rent etc. (and the selling tenant would, in any event, need to guarantee this by way of an AGA – an Authorised Guarantee Agreement). However, a landlord must act reasonably in these circumstances. A landlord is unlikely to agree to a surrender of a lease where this would mean getting back an empty property along with the responsibility for outgoings such as business rates, insurance, utilities etc. A landlord would likely only consent to a surrender if they had another tenant lined up and ready to take the premises on at least the same terms as the existing tenant; which is understandable.

Break clauses are becoming more acceptable and early break options can be invaluable to a tenant – especially one who is just starting out in the relevant business – so this is an extremely important consideration when negotiating the terms of a new lease with a landlord.

For more information on any of the above issues, call our Commercial Property team on 0113 201 4900 or email commercial.property@emsleys.co.uk for a free, initial consultation.

Kelly Sanderson

Written by

Kelly Sanderson

Head of Commercial

Kelly has many years of experience in dealing with all aspects of commercial property law; acting for individuals, companies, pension funds, partnerships and their lenders in the purchasing, selling and leasing of commercial property.  Kelly also specialises in business sales and purchases (whether by way...

Back to Blog