Coronavirus has had a significant impact on almost every business in the United Kingdom. For many businesses, it means their business premises are surplus to requirements. However, there are many reasons, not directly related to Covid-19, that may mean you wish to exit a commercial lease. Perhaps your operations have downsized or expanded and thus, the place is no longer fit for purpose. Regardless of the circumstances, there are several remedies that may be applicable to you to end your commercial lease early.

Surrendering a commercial lease

It may be the case that you have an amicable relationship with your Landlord and therefore, the Landlord may be sympathetic towards your situation and allow you to surrender the lease. However, if the Landlord is unwilling to come to such an arrangement, there are more formal legal remedies available.

A break clause in the lease

A break clause is a provision in a lease which enables either the landlord or the tenant (in some cases, both) to end the lease early. It may arise on one or more specified dates or be exercisable during any time during the term on a ‘rolling’ basis.

If there is a break clause in your lease, you will need to adhere to its terms which may stipulate a period of notice and how you should notify your landlord. For example, you may need to provide your landlord with several months’ notice in writing, or you may need to notify your landlord at a specific address. These requirements must be met as failure to do so could invalidate your exit from the lease.

The assignment of a commercial lease

The process of assignment of a lease is the transfer of a lease by the current tenant to a new tenant. To do this, you will need to find a potential new tenant yourself. The landlord will expect this new tenant to meet the same expectations that were originally set for your business and it is likely that the landlord’s consent will be required before the assignment can be completed.

Whilst your landlord cannot reasonably withhold their consent for the assignment, they are under no obligation to give their consent if the new tenant does not meet the terms set out in the contract. The landlord shall likely impose restrictions around the assignment, for example, not allowing lease assignments if the contract is for a short period and not allowing the lease to be assigned if the lease is ending within a few years.

Upon the lease being assigned, the assignee will become the new tenant and will be responsible for ensuring compliance with all of the tenant’s obligations in the lease.

Author John Szepietowski

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