Lease End / Tenant Break Options

Both a lease expiry or a tenant break option provide a good opportunity to re-assess current premises requirements.

Early planning is essential to ensure a coherent and workable strategy is established and signed off internally.

Break Options:
Break options will have strict procedures to be adhered to – in most cases, formal Notices have to be served within prescribed time limits. In addition, close attention needs to be paid to other conditions that may exist with the break clause - failure to comply with these could invalidate the break option.

Obtaining early professional advice will ensure that all liabilities relating to a break notice are properly assessed and solicitors provided with early written instructions to serve appropriate Notices within any specified time limits.

Lease End:
A lease end, on the face of it, is broadly similar to a break option in that the tenant has the opportunity to relocate, albeit in many cases, many simply wish to renew. However, there are a number of important differences.

For example, the Landlords may wish to redevelop the site or re-occupy the premises. In such cases, it may be impossible for the tenant to renew.

In the UK, the situation is further complicated by prevailing legislation relating to commercial leases where some leases provide statutory security of tenure (in property parlance, a lease ‘inside the Act’).

Whether or not a lease is ‘inside or outside’ the Act dictates whether there is any security of tenure. This in turn will strongly influence any renewal / vacation strategy.

With lease ends and break clauses, accrued dilapidations is likely to be an important consideration, both from a financial and strategic perspective. In the UK particularly, commercial leases often contain extremely onerous provisions relative to those in other countries.

At Square Foot Consulting, we understand the variables that need to be considered in order to ensure that clients either agree best renewal terms or obtain the smoothest possible exit.

Case Studies

Imperium, Reading
Office renewal – 5,000 sq/ft
CC Group

Imperium, Reading

Units 1/4, Gastons Wood, Basingstoke
Warehouse renewal – 14,000 sq/ft
Pilkington Plc

Curson Street, Mayfair

Chertsey Road, Woking
Office renewal – 7,000 sq/ft
Reach
Read more

Chertsey Road, Woking