If your rented premises no longer suit your business needs, you may be wondering what you can do about your commercial lease. You will need to check your lease to see what you are permitted to do.
Below are a few points you should consider:
- Break – you may have an option to break your lease (typically the 3rd or 5th anniversary of the lease, but could be at any time). You will be required to provide the landlord with notice, which is usually 6 months. You should check this option as soon as possible to make sure you have sufficient time to serve the requisite notice.
- Assignment – if you are permitted to assign your lease you could transfer the remaining term of your lease to a new tenant. This is quite common, especially if you are selling your business at the same time. There will usually be landlord requirements such as references for the new tenant and/or rent deposits. You should check with your landlord what their requirements are and get these from the incoming tenant as soon as possible to avoid delays.
- Underletting – you may be able to grant a sub-lease of the property to a new tenant. You would charge a rent to the new tenant and then continue to pay your rent to your landlord. If you needed to reduce the size of your premises, you may be able to sub-lease part so that you retain a smaller part of the property and, therefore, get an income from the rent of the sub-lease.
- Surrender – if none of the options above are available then your last resort is to surrender your lease. The landlord is not obliged to agree to this, but with the right incentive (a premium) they may be prepared to agree it.
Whichever route you decide to take, we strongly recommend that you seek legal advice to make sure that the requirements are dealt with or notices are served correctly within the required timescale.
If you would like help with reviewing your lease or wish to discuss this with a legal adviser, please call our commercial team on 01329 822 333.