Legal lifeline: breaking your retail lease

Q: Two years ago, we signed a five-year lease on a retail store. Since then, with the decimation of the high street, we are paying way over the odds on our contract. How do we get out of it?

A: Firstly, check the provisions of your lease. It is unlikely that a five year lease will contain a tenant’s break option, if it does; check whether the time for serving the notice has passed.

Next, check if the lease contains provisions enabling you to assign/sublet the premises to another tenant. You would need to find a suitable tenant to assign/sublet the lease to. The landlord may require you to guarantee that any new tenant performs all their obligations under the lease.

You can also ask your landlord to consider agreeing to an early surrender of your lease in exchange for a payment. You would need to think how much you can afford and it should be less than the total rent payable for the rest of your lease. The landlord may well agree to this as he would obtain a lump sum now, and could still re-let the property thereby “double recovering” rent! 

If the landlord agrees to this, you will need to consider the dilapidations at the premises, which will need to be dealt with on termination of your lease, whenever that is. The landlord will instruct his surveyor to prepare a schedule of dilapidations and you would need to negotiate an amount due in respect of dilapidations. You can also instruct a surveyor to act on your behalf when negotiating dilapidations. You should consider whether any savings you may make by taking a cheaper lease elsewhere are not eaten up by the sum you pay the landlord for early surrender.

Finally, it’s worth asking the landlord to reconsider the terms of your lease, including rent, to encourage you to stay at the property.

Lisa Simmons is an associate solicitor in the property litigation team at national law firm Weightmans LLP: Lisa.Simmons@Weightmans.com

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