The relationships between landlords and tenants can be complicated, which is why it’s vital that leases and tenancy contracts are drafted correctly.
When entering into a commercial or residential lease the circumstances of either party may change later down the line. To offer improved flexibility, it can be useful to include a break clause as part of a tenancy agreement.
If you’re a landlord or a tenant and you’d like more information about break clauses, get in touch with our property solicitors at HPLP. You can call us on 020 7553 9000 or fill in our enquiry form, and we will call you back.
In this article, we’ll discuss the key information about break clauses, supporting you to make well informed decisions about your commercial or residential leases.
What is a break clause?
A break clause refers to a term in a lease or tenancy contract, the clause gives either the landlord or tenant the permission to end the lease early, depending on various conditions.
For example, a break clause might confirm that either party can break the tenancy agreement 6 months into the contract. The idea is to provide both parties with improved flexibility.
Not every tenancy agreement has a break clause. If you’re looking for a more flexible agreement consult a property solicitor, they can assist you to draft this clause into your contract.
Before signing a commercial lease, or entering into a residential tenancy agreement, it is vital that you understand your legal obligations.
What should be included in a break clause?
A break clause should include the following:
- When the landlord or tenant is permitted to give notice, i.e at 5 months, at 12 months etc
- The amount of notice required
- Any other conditions associated with using the break clause
What are the pros and cons of using a break clause?
One of the main advantages of using a break clause is that these terms offer improved flexibility for the tenant and the landlord. If either party needs to exit the contract due to a change of circumstances, the break clause permits this, providing certain conditions are met.
Including a break clause means that one party may exit the contract at a time that is inconvenient for the other. Including a break clause can be a risk, depending on the landlord’s or tenants’ situation at the time.
How do you use a break clause to end a tenancy agreement?
The break clause should be drafted with terms and conditions that define how the clause can be used. For instance, a break clause will usually include information such as:
- A given notice period to use the break clause
- How the tenant or landlord should provide the notice
If you are unsure about activating a break clause it’s advisable to seek the advice of a landlord and tenant solicitor.
What are the common pre-conditions to a break clause?
There are often pre-conditions in place which determine when a break clause can and cannot be used, for instance:
- A tenant is obligated to follow the lease covenants. If the tenant has previously breached the lease, they may not be able to use the break clause
- To use a break clause the tenant must provide vacant possession, removing any fixtures and fittings that they added, and ensuring subtenants have also vacated the property
Can a tenant end their tenancy if there is no break clause?
A business or residential tenant may be able to end their tenancy without a break clause. If the landlord is in agreement, they may have the option to surrender the tenancy. The tenant may also be permitted to leave if they can find a suitable replacement.
If the tenancy is periodic with no pre-defined end date, the tenant will be able to terminate the tenancy so long as they give notice.
Can a break notice be withdrawn?
Once a break notice is served it is not possible to withdraw the notice. This is why both landlords and tenants must be certain that they would like to end the lease.
If you need advice about ending a tenancy agreement, it’s useful to get in touch with a solicitor. Receiving legal advice on your lease can afford you the confidence that you are making well informed decisions.
Contact our property solicitors today
If you’d like to discuss break clauses or any other lease and tenancy agreement related matters, get in touch with our property solicitors at HPLP today.
We have much experience working with both commercial landlords and tenants, and residential clients. You can call us on 020 7553 9000 or fill in our enquiry form, and we will call you back.