Can I get out of my lease now that I need to reduce overheads?

“Can I get out of my lease now that I need to reduce overheads?” is a question that faces many tenants after the impact of COVID-19.

The last couple of years have proved very difficult trading times for many tenants especially those with expensive overheads such as rental payments.

A lease is a contract for a fixed term. There might be a

‘break clause’

in the lease which allows the tenant to serve notice to come out of the lease early but if there is not, the tenant is tied into the lease until the end of the fixed term. There could be many years left to run on the lease.

What are my options?

If you are tied into a lease which you no longer want or can afford to pay for, what can you do?

1. Talk to your landlord

The best thing to do is to discuss the situation with your landlord. A lease can be surrendered early by agreement which basically means the tenant and the landlord both agree to terminate the lease early. Simply closing your business down and leaving the premises does not bring the lease to an end. You will still be responsible for paying the rent until the end of the term stated in the lease.

If you are a landlord with a tenant who wants to leave the building, be careful about accepting the keys back from the tenant as this can amount to a surrender of the lease regardless of whether you intend for this to happen. It is best to take some legal advice if youfind yourself in this situation. If a surrender of the lease is to be agreed, this should be properly documented to avoid any uncertainty and confusion about the implications of the surrender.

2. Assignment of the lease

Leases can be assigned to a third party so that the third party takes over the remaining term of the lease which is left to run. Again, this must be done with the landlord’s permission. This commonly happens when a tenant has decided to sell their business and the new owner wants to continue running the business from the same premises to ensure continuity of the service to the business ‘customers.

3. Notice to quit

If you do not have very long left to run on your lease and you do not wish for the lease to continue after the fixed term, you should be aware you may need to give notice to quit. You should have your lease reviewed to check if a notice to quit is required.

Get in touch with Jordans Solicitors’ Commercial team

If you needCompany Disputes or Debt Recovery advice in relation to this topic, or anything else in relation to your business, then get in touch with the team here at Jordans Solicitors.