Termination of an Office Lease
How to terminate an office lease
As a tenant, there are many reasons why you might choose to terminate your office lease. You may need a bigger office, an alternative location, or a lease on better terms. Whatever your reason, you need to fully understand your rights as a tenant, and also those of the landlord so that you know where you stand and can enjoy your tenancy.
Depending on the terms of your specific lease, you may be able to terminate the lease when it expires or at a given break point (usually half way through the lease). A lease can be terminated by mutual or independent agreement between both parties, assignment of the lease to another party or violation of lease terms.
When negotiating a new lease, it is important to negotiate a break point so you have the option to re-evaluate your options and relocate if necessary.
Termination by the tenant
If the lease falls within the Landlord and Tenant 1954 Act, you have the right to exercise your option at the expiry date, and the landlord has no choice but to extend the lease. If you need to get out of the lease prior to expiry and outside the break clause, you may need negotiate carefully with the landlord.
For example, if you need to terminate the lease because of financial difficulties, you may want to be open and honest with your landlord as they may grant you termination on the basis that you are unable to pay their rent.
Whatever stage in the lease you want to terminate, you may be liable to pay for dilapidations - repairs and redecoration - if the lease requires you to return the premises to their original condition.
Termination by the landlord
If the landlord wishes to terminate the lease, he will also have to rely on the break clause, or agree a surrender with the tenant on the grounds of the tenant’s failure to fulfill his obligations under the terms of the lease.
These grounds include the tenant’s failure to maintain or repair the premises, persistent delays in paying rent, or the landlord’s genuine wish to demolish or rebuild.
If you, as a tenant, decide to terminate the lease, you must do so in writing and in accordance with the terms set out in the lease.
Make sure you make a note of your expiry date when you take on a new lease so you can evaluate your options well in advance and make an informed decision whether to move premises or sign up for another term.
If you are negotiating a new office lease, make sure you are represented by a property agent who will ensure your best interests are negotiated within the lease terms. Any new lease should be reviewed by a property solicitor before signing on the bottom line.
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