Landlords: How do you end a commercial lease early?

Admin Property Law September 21, 2023 | 0

Commercial leases are helpful legal contracts which ensure that all parties agree on how long the tenant can inhabit the property.

However, ending a commercial lease early can be a stressful and confusing process for the landlord.

Here, the process of ending a lease with and without a break clause can be achieved.

Ending with a break clause

A break clause is a section in a commercial contract which states that both the tenant and the landlord are allowed to end the lease early without any penalties.

When drawing up a contract, if you believe that you may need to use a break clause in the future, it is important that you include it at the outset.

If there is already a break clause within your lease with the tenant, then you can end the lease provided that you have adhered to the notice period in the lease and that any additional conditions are met.

Ending without a break clause

Ending a lease early without a break clause as a landlord can be more problematic.

The only way in which you as a landlord are allowed to end a lease early is if the tenant does not pay rent or fails in the other lease requirements.

If there is a forfeiture clause in the lease (a clause where the landlord is allowed to end the lease if the tenant is in breach of the contract), then you as the landlord are allowed to enforce it.

However, it should be noted that should this be disputed in court, then the tenant may still be allowed to remain in the property until it is resolved.

Fixed-term tenancy

In a fixed-term tenancy, the lease will come to an automatic end.

If the tenant wishes to stay afterwards without a new lease being issued, then they can do so long as the landlord agrees.

If no new fixed-term tenancy is signed but the lease is continued under the previous conditions, then the notice period for the landlord to give to the tenant is six months.

This is covered in the Landlord and Tenant Act 1954 so long as the lease is protected by it.

For help and advice on matters relating to the commercial and residential property sector, contact Gunduz Misiri on gunduz.misiri@mackrelt.com or at 020 7240 0521.