Ending your lease with a break clause: a guide

A break clause is a clause within a tenancy agreement that gives either the landlord or the tenant (or both) the right to end the tenancy before the expiry of the contract term. The break clause will, among other things, usually set out who has the right to exercise the break, any conditions that must be met before doing so, and the notice period that must be given to the other party.

Before serving a break notice

Before serving a break notice, there is some preparatory work to be done to ensure your break is successful.

Firstly, make sure that you have the right to break the lease. If the clause doesn’t specify, it will usually be only the tenant who has the right to exercise the break. If there are joint tenants/joint landlords who all an interest in the lease, then they must all serve notice together.

Then, you’ll have to find out when you can exercise the break clause – this will be set out within the clause wording. There are two main types of break, these being:

1. Rolling break – the lease can be terminated at any time
2. Fixed break – notice can only be served on one or several fixed dates throughout the contract term.

You must strictly observe any time limits that apply in order to successfully exercise the break.

Finally, and as previously stated, you should understand and have complied with any relevant conditions before exercising the break. These may include:

1. Being up to date with rental payments and any other sums due
2. Giving up occupation or giving vacant possession (i.e., giving up possession of a premises and removing all belongings and equipment so a landlord can repossess straight away)
3. Leaving the property in a fit state of repair
4. There being no substantial breaches of covenants or lease terms.

If you haven’t complied with the conditions set out in the lease, then you will not be able to exercise the break clause (unless your landlord waives the break conditions). In this case, the lease will continue until the term has expired.

How to exercise a break clause

Next, you need to serve a break notice.

This will need to be set out using the precise language and requirements set out in the lease. This can be complex so, in order for your break notice to have the maximum chance of success, it’s recommended that you instruct a solicitor to assist you with this. For example, there are several statutory routes to exercising a break, so if a particular route or piece of legislation is mentioned in the clause, this will have to feature in the break notice.

Take the case of Siemens back in 2012. Siemens’ solicitors wrote to the landlord expressing their wish to terminate the lease as per the break clause. Unfortunately, the terms of the break clause stipulated that the notice must be served under section 24(2) of the Landlord and Tenant Act 1954. However, Siemens made no mention of the Act in its break notice; therefore, appeal court held the notice to be invalid and Siemens were bound to the lease until the end of the fixed term.

There may also be a specific way in which you must serve the notice in order for it to be valid. For instance, the break clause may stipulate that the break notice must comply with certain legislation (let’s say section 196 of the Law of Property Act 1925). In which case, the notice must be served in writing via registered post, recorded delivery or by personal delivery to the landlord’s premises or registered office in order to be valid.

You’ll also have to provide your landlord with plenty of notice (typically no less than six months).

Commercial property expertise at your fingertips

The process of exercising a break clause is complicated and requires legal assistance to ensure it is done correctly. Whether you are a landlord or a tenant, we can assist throughout the process to ensure all conditions are complied with and that the break notice is as precisely written as possible. 

To get started, simply call our Commercial Property team on 0203 871 0049 or email adam.perin@attwaters.co.uk.