Ending a commercial property lease early

A commercial property lease usually continues until its end date unless you include a clause to end it earlier.

Break clause

This is an official date in the lease, agreed by the landlord and tenant, where the lease can be ‘broken’ without anyone facing a penalty. As a tenant, you need to give your landlord 2 months notice that you are using the break clause. As a landlord, you can only use it if your tenant agrees.

Tenants and ending a lease

As a tenant, you can also end your lease early if:

  • the landlord agrees
  • you pass the lease on to someone else (though the landlord may want you to provide a guarantee)
  • you’re allowed to sublet (you’ll still remain responsible for the rent, even if you’re not trading from the premises)

If these situations don’t apply you must continue to pay rent for the whole tenancy period.

Landlords and ending a lease

As a landlord, you can only end a lease when the tenant fails to pay rent or meet other lease obligations.

If you have included a ‘forfeiture clause’ in the lease, you can use it in these situations to end the lease. However, if the tenant can challenge this in court they may be allowed to stay in the property.

Fixed-term tenancy

A fixed-term tenancy means the lease automatically comes to an end when the term is up. If you are a tenant and you want to stay on after this term, you can do so if your landlord agrees. However, staying on past a fixed term marks a ‘continuing obligation’ to pay rent. You’ll then need to give 3 months notice when you want to leave.