QUESTION:
My retail business is down-sizing due to the financial pressures of the recession and the rent payable for the leases of our shops is one of the key overheads I am looking to reduce. How should I go about getting out of a lease early?
ANSWER:
In the current economic climate you are not alone in finding that the rent on your commercial premises is no longer affordable.
If you would rather not leave the property then a possible option is to try to negotiate more favourable rent arrangements with your landlord. Some landlords may be willing to agree to you paying rent monthly rather than quarterly to assist your cashflow. Make sure any agreement you come to is formally documented for future reference.
If you do want to move out then one of the three following options may work for you:
Use your break option
- Check whether you have an option to end your lease early and that the date hasn’t passed
- Check that you can meet the conditions for exercising the break option (eg give sufficient and correct period of notice, annual rent up to date, are there any penalties?)
- Use the possibility of breaking the lease as an opportunity to negotiate new terms with your landlord
Assign the lease to a new tenant
- Check the lease permits you to do this and the conditions to be met (eg landlord’s consent)
You will be released from your immediate obligations under the lease but beware of who you assign to as you are very likely to be liable if they fail to comply with the lease
Surrender the lease
Landlord’s consent will be needed to end the lease this way
Make sure you agree a full release from all liabilities and be aware of any premium payable by you on surrender.
Try to recover any rents already paid in advance for periods beyond the date of surrender.
