SolicitorA break clause is a provision in a lease that allows the tenant, landlord or both to end a tenancy early in certain circumstances. These can vary widely so it is prudent for parties to seek the advice of a commercial lease solicitor in London to be fully informed about break clauses.

A commercial lease solicitor in London, like Saracens Solicitors, can help tenants negotiate the terms of a break clause when drawing up a lease or to understand the implications if there is one contained within a lease they are taking over.

Pros for a tenant

  • Flexibility – 30% of new businesses fail within the first two years. Losing a business is bad enough, but if someone is then tied into a lease that they cannot get out of, it can drive them deep into debt or lead to a poor credit rating and other financial penalties if they cannot pay. Having a break clause means that they have a chance to escape if the worst happens;
  • Attractive terms for passing on the lease – if someone wants to pass their lease along to someone else, then a break clause can be an attractive selling point. This might happen if their business has failed or because their circumstances have changed.

Cons for a tenant

  • Higher rent – adding a break clause is a financial risk for the landlord in two ways. Firstly, they could end up without a tenant sooner than they would with a fixed-term lease. Secondly, if they want to sell their property, having a sitting tenant with a lease would normally increase the value of the property. If there is a break clause within the lease, this is not the case. For these reasons, the landlord is likely to want a higher rent from the tenant to offset against potential losses;
  • Potential prior conditions – while a landlord may agree to a break clause in order to attract a commercial tenant, they will often set a series of preconditions in order to protect themselves. These should be considered carefully by a commercial lease solicitor in London to ensure they are not too onerous for the tenant. Common conditions include being up to date with rental payments and restoring a property to its original condition.
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