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Property decisions are an intrinsic part of business

The momentum behind hybrid working, hugely accelerated by the pandemic, continues to be felt by businesses and has a major impact on property needs.

And, that’s why property decisions are an intrinsic part of business.

With one eye on staff retention and the other on serving the best needs of the business, office occupiers are unsure how much space they will need.

A break clause in a commercial lease can be an opportunity to renegotiate terms, even if you plan to stay in the property, providing flexibility to ensure your property needs are aligned with your business needs. It could also be an opportunity to negotiate a period of rent free leasing.

How to take advantage of a break clause – a word to the wise

  • Break notices always need to be served before the break date. Check the critical dates of your lease. Do not leave it until the last minute.
  • Get in touch with the landlord and show serious intent that you are considering moving out – it has to be credible and timely.
  • If you plan to leave the property, understand the precise process for the break notice to be served. Pay attention to the timing and the detail.
  • Ensure absolute compliance with the lease conditions. For example, ‘to yield up the space unoccupied’ means to leave the building and remove all your belongings.

The phrase ‘vacant possession’ is more easily understood – do not leave any of your belongings in the property, which by definition can mean carpets, partition walls and wires in the wall. 

There have been cases where the tenant has left a partition wall which means they have not left the property according to the exact terms of this lease; this oversight can be costly.

Landlords are under no obligation to help the tenant serve a break clause and are more likely to be motivated to frustrate the break clause: it might take months or years for the landlord to re-let the property.

Remember to review your leases, scrutinise the critical dates and seek professional advice.

For more advice and support get in touch with SBM.

Published: 22nd August 2022

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