Can I End My Commercial Tenancy Early?

Posted by the Property team on 22nd November 2023

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Navigating the complexities of ending a commercial tenancy early can be challenging, especially when considering the legal intricacies involved.

Understanding the available options is essential, whether prompted by personal or business circumstances.

If renting in England, tenants could face challenges when seeking an early termination of their leases.

This blog aims to demystify the process, providing valuable insights into negotiation strategies with landlords and exploring legal avenues such as assignment and sub-letting.

What Does Your Contract Say?

In the first instance, reviewing your lease thoroughly could be a crucial step.

There might be a break clause, which could offer the opportunity to terminate the lease before the end of the term, although this may be subject to specific conditions.

Break clauses are key elements that can empower tenants with flexibility in their l arrangements.

They should be fairly easy to spot, but if you’re unsure, our team would be able to help you understand any legal jargon.

Options For Ending A Tenancy Early

If there are no break clauses in your lease, you could explore several other avenues to end the tenancy early.

Deed of Surrender

You could approach the landlord directly to see if they would be willing to accept a surrender of the lease.

If accepted, your lease would end once a Deed of Surrender has been agreed upon and completed.

However, the Landlord has no obligation to accept a surrender of the lease.

And unless they are confident they can quickly find a suitable replacement tenant, it is unlikely that they would accept it.

Assigning the lease

Your next option would be to try to assign the lease.

To successfully navigate this route, tenants must cover various aspects, including legal costs, securing a suitable replacement tenant, and obtaining the Landlord’s consent.

Understanding Legal Costs and Responsibilities
The first crucial aspect of lease assignment is understanding the financial implications, including legal costs for the existing tenant and the landlord. We would be able to help explain the obligations and considerations related to covering these costs, ensuring transparency in the financial aspects of the assignment process.
Securing a Suitable Replacement Tenant: Working with Agents
Finding a new tenant is a pivotal step in the lease assignment process. How would you go about finding a suitable replacement? Our team could help you engage with agents to streamline the search and ensure a new tenant is found.
Obtaining Landlord Consent: Navigating the Approval Process
Gaining the landlord’s consent is a critical aspect of lease assignment. Here, we would delve into the specifics of the approval process, discussing the information landlords may request, such as the new tenant’s financial details. Understanding the terms of your lease is crucial, as landlords normally cannot unreasonably withhold consent to a proposed assignment.
Authorised Guarantee Agreement (AGA): Ensuring Continued Compliance
As part of the lease assignment process, tenants may be required to enter into an Authorised Guarantee Agreement (AGA). This is where the existing tenant guarantees the performance of the new tenant’s obligations in the lease. Clear insights into the implications of an AGA empower tenants to make well-informed decisions regarding their ongoing responsibilities.

Sub-letting

Sub-letting the property is a third option that requires your landlord’s consent.

With this option, you would still be responsible under the lease and obligated to comply with all its terms. However, a sub-tenant would occupy the property and would enter in to a new lease with you, which would require them to make rent payments to you and effectively pass on obligations to the sub-tenant to cover costs of other outgoings and be responsible for repairs and maintenance of the property.

While sub-letting provides a way to maintain your lease and potentially find a temporary solution, navigating this process carefully is crucial.

Summary

Ending a tenancy early is a decision that should be approached thoughtfully and with a clear understanding of your options.

While each option has its challenges, seeking professional advice and exploring these avenues diligently can help you make an informed decision.

If you’re considering ending your tenancy early, Bennett Griffin LLP is here to assist.

Our experienced commercial property team can provide tailored advice and guide you through the legal complexities involved in these processes.