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You have just paid the last quarter’s rent and the bank balance is looking a lot smaller. Maybe you could downsize or maybe there are cheaper options. That nice unit just down the road has just been let at a fraction of the rent you are paying!
You are a landlord and you have not received the rent yet or the tenant wants to leave.
Now is the right time to dust off that lease you signed several years ago and see what you can do.
Many leases negotiated in the last few years have ‘break clauses’. If these are overlooked or not implemented correctly it can be a very expensive mistake.
These clauses are often expressed to be conditional on the tenant having paid the rents reserved, observed and performed the tenants covenants and given vacant possession. Time limits in break clauses are always ‘of the essence’ so if you are even one day late in serving your notice it will be invalid. Unfortunately the courts will strictly construe a break clause and any conditions attached to it.
A salutary lesson was given in a recent case, the break clause said that the tenant had to pay all sums due under the lease before the break date. The tenant had occasionally been late in paying the rent and therefore interest of £130 was owed and had not been paid. As a result the tenant’s notice to break was held to be invalid. This was the case even though the amount due was small and the landlord had not issued a demand for it – the result was that the tenant remained bound by the lease for the remaining term of five years paying the rent of £67,000 per annum!
In another case it was held that the tenant’s notice to break was invalid as they had not paid the rent due. Instead of paying the whole quarters rent on the quarter day they had apportioned the rent. Without specific wording in the break clause the whole quarters rent must be paid and there is no obligation on the Landlord to refund any overpayment.
'Alienation' means your right to deal with the lease by either selling it on to someone else or alternatively subletting. These provisions tend to vary from lease to lease and again it is essential you understand what you have the right to do before you embark on the search for someone to take the premises off your hands. Landlords also need to be advised on their rights if a tenant wishes to assign or underlet the premises.
Approach your landlord for a rent reduction. Many landlords will prefer to agree to this or a rent payment holiday to enable the tenant to trade through a bad period rather than force the tenant into bankruptcy or liquidation. In the current climate the premises could be difficult to re-let and landlords also have to face paying business rates on empty properties.
Glanvilles Commercial property team will be very happy to advise you on the terms of your leases and the options open to you whether you are a tenant or a landlord.