Occupiers: are you capitalising on your lease breaks?

Lease breaks give tenants flexibility in their occupational property strategy and there may be significant benefits from considering your options. Lease breaks can have value even if you don’t want to move.

The risk of loss of income is of paramount importance to landlords. Tenants can negotiate favourable terms on new leases, including rent free periods. As break dates approach, there is no reason why existing tenants cannot use market conditions to negotiate similar incentives from their landlords.

Our lease advisory team provides comprehensive advice to our clients on the opportunities from forthcoming breaks whether this is to successfully exercise the break or to gain financial or other benefit in return for not exercising the break. 

For any break it is important to:-

• Plan early by looking at the options at least six months before notice needs to be served.
• Where exercising a break, make sure you understand the requirements of the break clause such as conditions on notice periods, payment of rent and compliance with lease covenants.
• Where necessary seek professional help as the cost of advice will be small compared to extra occupational costs due to incorrect operation of a break.
• Even if you have a requirement to remain in the space, look at the local market conditions to establish whether there an opportunity to negotiate improved lease terms.
• Appoint an agent to undertake negotiations with your landlord to give greater credibility to the threat of relocation.