Can I end my Lease early?
When you enter a lease you are entering into a contract with the Landlord to comply with the terms of the lease for the whole lease term, whether this three years or 21 years.
Unless you have negotiated and agreed specific provisions to allow for early termination (a break clause), then the Tenant will have no right to end the lease early.
If your lease does include a break clause then make sure you know exactly when and how to serve the notice. The lease will set out exactly on what date the lease can be brought to an end and what the Tenant must do to effect this – typically the Tenant will be required to serve at least 6 months’ notice on the Landlord; pay all the rent and any other sums (ie service charge or insurance contributions) up to date; and to hand back the property with vacant possession.
Timing is essential – if you do not give the right period of notice then the notice to break the lease will be invalid. If the lease requires at least six months’ notice then make sure it is a good six months’ notice and not five months and 27 days.
Serving the Notice – make sure you comply exactly with the lease terms which will set out where to serve the notice and how long after posting service is deemed to take place. If the notice is not served in the right way, to the right address then the notice will be invalid.
Payment of all sums is essential – failure to pay everything up to date can enable the Landlord to refuse to accept the break notice. In particular make sure that you pay your full rent payment in the normal way – do not apportion the rent due and just pay up to the break date (unless your lease specifically allows you to) as this will entitle the Landlord to refuse to accept the break on the basis that the rent has not been paid in accordance with the lease terms. Some leases do provide for the Landlord to refund the rent after the break date, others don’t but it is probably better to over pay the rent for one quarter rather than be held liable for the rent for several more years.
Vacant Possession – the property must be handed back with vacant possession in order for the break notice to be valid. Make sure all stock and fixtures and fittings are removed, in particular if you are running late in carrying out repairs or decoration then make sure all workmen and equipment are out of the property and the keys are back with the landlord by the break date.
No break clause?
If your lease does not contain a break clause, or the date has been missed then the only options generally are (subject to your lease terms) to either find someone to take the remainder of the lease over from you – assignment or transfer of the lease – or to sublet the lease, or agree a surrender with the Landlord.
Assignment or Sub-letting
Assigning/transferring and subletting requirements will be set out within your lease and if permitted, will be subject to obtaining the Landlord’s consent. The Landlord is not likely to agree if the new tenant or subtenant is not of good financial standing. In this situation the Landlord may require a rent deposit or guarantors to be put forward as a condition of granting consent. If you are assigning your lease then the landlord will require you, as the outgoing tenant to enter into an Authorised Guarantee Agreement. This means you stand as guarantor for the new tenant for remainder of the lease term, or until the new tenant assigns the lease himself (whichever occurs first).
The Landlord is under no obligation to agree to accept a surrender of your lease and this will be a matter of commercial negotiation. The Landlord may agree to accept a surrender in return for a payment of a premium, typically equivalent to rent for the period of time they anticipate it will take them to find a new tenant. The Landlord will not want to be out of pocket as a result of accepting a surrender of your lease and this will be reflected in the amount of premium they request.
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