Be it an expanding business or changes to income, there are many reasons you may wish to end your commercial lease or decide not to renew.
Can I end my tenancy early?
It depends both on your landlord, and the terms that you agreed to in your lease; tenants are advised to consult a solicitor. Ways in which you may be able to opt out of a tenancy earlier include:
- Your landlord accepts the termination of the lease.
- You find someone else to take over your lease. You should note that your landlord is within their rights to ask you to be the guarantor for the new tenant, meaning that continuing liability to the landlord is a prospect.
- Your lease includes a ‘break clause’ which would allow you to end your lease early.
- You are able to sublet, although you will still be liable for the rent.
What happens if I do not wish to renew my commercial lease?
The first thing to do is check whether your lease states that you are subject to The Landlord and Tenant Act 1954. If your lease is ‘outside The Act’ then your lease will not automatically be renewed anyway and you therefore you just need to tell your landlord that you do not plan on staying. If you are ‘inside The Act’ then you have two options:
- On the contractual expiry day vacate the property and the lease will come to an end.
- You can serve a section 27(1) notice on the landlord, giving a minimum of three months’ notice, expiring at the lease end, that you are intending to vacate. However, if you do this and then do not leave, you will become a trespasser.
Note that you, as a tenant, have no obligation to inform your landlord that you are intending to vacate. If your landlord asks you whether you plan on staying, his only option is to begin proceedings for the grant of a new lease.
What if I want to end my lease shortly after the renewal date?
You must give a minimum of three months’ notice and serve a section 27(2) to the landlord. Please note that previous rules where the notice had to end on a quarter day no longer apply and so the notice can end on any day; but there are rules for apportioning any rent that has been paid in advance.