Break Clauses and Rent Payments
What happens to rent when a tenant serves notice to end the lease on a date that falls before the next rent payment date?
Rent is paid quarterly and the tenant serves six months’ notice in accordance with the terms of their lease, to bring the tenancy to an end on 12th February.
Under the lease terms of the lease the tenant will be due to pay rent on 25th December for the quarter ending 24th March. When the tenant comes to pay rent on 25th December do they make a a payment up to the Break Date – so just rent at at the daily rate from 25th December to 12th February – or the full quarter?
The answer is the full quarter. A failure to pay the full quarter’s rent due on 25th December will be regarded as a breach of the lease terms and probably a breach of the conditions of the tenants break clause. Failure to pay the full quarter may mean the landlord is entitled to refuse to accept the Break Notice.
Unless the lease includes an express clause stating that the landlord must refund the proportion of rent paid for the period from the Break Date up to the next rent payment date, then the Supreme Court has now confirmed that there is no such implied term and there is no right at common law for the tenant to demand a refund.
So, where rent is payable in advance, the tenant must pay a full quarter’s rent in order to comply with conditions that require payment of all rent due prior to the break date.