How Can I End My Commercial Tenancy?

The current climate has forced many tenants to review their property requirements and all of the liabilities that come along with it. In some cases, tenants may even need to consider how to exit their current tenancies/leases and ease the financial burden.

Firstly, it’s important to understand the type of tenancy you have. You may be occupying the property under a tenancy at will, a licence to occupy, holding over under the terms of an expired lease or occupying under a traditional lease.

If you’ve concluded that you’re occupying under a tenancy at will, licence or holding over – it could simply be a case of serving notice on the landlord to terminate. If, however, you’re occupying as a tenant under an existing lease, more thought will need to be given to terminate the fixed term contract.

Further reading: A Commercial Tenant’s Exit Options.

If the tenancy/lease can be terminated, the tenant will then need to consider the logistics of leaving the property and any ‘end of term’ obligations. Such ‘end of term’ obligations (particularly with a lease) may even be a condition of the termination i.e. if those obligations are not fulfilled, the lease will not terminate.

For example, in the context of exercising a break clause in a lease and as mentioned in our previous article (linked above), the ability to break could be conditional on various factors (serving prior notice, giving vacant possession, paying all rents in full and even paying a penalty to the landlord).

One additional factor that should not be overlooked, is the condition that the tenant is required to give the property to the landlord back in. The tenant, at the end of the term, may be obliged under its tenancy/lease, to carry out repairs, decoration, remove its rubbish and stock. So, when making the decision to initiate termination, a tenant should ask itself: are contractors, surveyors, removal companies available to facilitate this? Do I have enough time to vacate? Do I have available space to store stock, materials and fittings? The practicalities of leaving a property are often the last thought.

As at the date of this blog, the government has not announced any measures allowing for commercial tenancies/leases to be terminated early by either party as a result of Coronavirus so care will need to be given by a tenant to properly understand their status, options and timeframes when making the difficult (and reluctant) decision to terminate.

For advice regarding your commercial lease and potential exit options, contact our commercial property team on 0116 289 7000 or email info@bhwsolicitors.com.