As a commercial tenant, you may wish to leave your lease early. There are four ways to do this, via lease surrender, lease assignment, subletting and through a break clause.

In this Q&A, Ben Cobb, Commercial Property Partner at Frettens, answers your questions on ending your lease early using the above options.

What is a break clause and how does it work?

A break clause is a term within a lease which gives the landlord or tenant the ability to terminate the lease before it would usually end.

A fixed break clause allows you to do so on a specific date, whereas a rolling break clause allows you to end the lease after a certain period (e.g. after 3 years of the lease).

More on break clauses here.

What is lease surrender and how does it work?

Lease surrender involves effectively giving up your right to the lease by negotiating termination with the landlord.

If the landlord agrees, surrender can take place. Surrender would take place either through written deed (a simple document signed by both parties) or conduct (where both parties act as if the lease has been surrendered). There may be a premium involved in lease surrender.

What is lease assignment?

Lease assignment involves the tenant transferring the lease to a third party, once certain requirements have been met and usually with the landlord’s consent.

Depending on the terms, the existing tenant may have to become guarantor for the new tenant, meaning they’ll remain ‘on the hook’ until the lease term expires.

More on lease assignment here.

What is subletting?

Subletting involves the tenant granting a second lease below theirs, where a subtenant lets the property from the tenant who in turn lets from the landlord.

Under this arrangement the tenant would still be liable to the landlord for the payment of rent and the tenant would collect the rent from the subtenant.

Again, the landlord will usually have to consent for subletting to occur.

More advice on subletting, how it works and the benefits, here.

What’s the best way to end a commercial lease early as a tenant?

There isn’t necessarily a ‘best way’ to end a commercial lease early, as it depends on your circumstances.

Ben Cobb, Commercial Property Partner, said: “The best way of ending a commercial lease will depend on what your lease says and if you have a landlord that is willing to negotiate.

Break clauses can be an effective means of ending a lease if your lease has the benefit of one but it  may be that you can do this at a specific time if you do not have a rolling break.

You may have to look into assigning or subletting the lease but, again, this may only be possible if permitted by your lease.”

Expert Commercial Property solicitors for Lease Termination

Ultimately, we would suggest that you get in touch with Frettens’ bright and experienced Commercial Property Team to discuss your individual circumstances.

We can check your lease to see which of these lease termination options are available to you, which would work best for you, and assist you in completing the lease termination.

Similarly, we can also represent commercial landlords through lease termination.

Call us on 01202 49255, or fill out the form for a free initial consultation.