Surrendering your lease
Surrendering your lease is the process of terminating your lease early and handing this back to your landlord. This is not an automatic right which is granted to tenants. Instead, this will only be possible in rare circumstances, the most likely of which is obtaining agreement from your landlord.
If your landlord agrees to you surrendering your lease, this would likely be drawn up in the form of a Deed of Surrender. This is an important document to obtain legal advice on whether you are a landlord or a tenant.
Assigning your lease
Assigning your lease is the most common approach for a tenant to withdraw from a lease early. This does not actually bring a lease to an end (hence the word “withdraw”) but rather the tenant is replaced by another party, who takes over the role of the tenant under the lease.
This will also require the landlord’s consent, however, the reason this is the most common approach is because landlords will be subject to statutory obligations preventing them from unreasonably withholding or delaying the consent. Landlords are entitled to have certain requirements, which commonly include having a guarantee provided by the existing tenant and the incoming tenant being of sufficient financial standing.
This option is commonly linked with a sale of the business that operates from the premises.
If a tenant sells their business to a buyer, they will also need to assign the lease to the buyer to ensure the right to occupy the premises is transferred to them.
Subletting
This option is less common than assigning because it doesn’t actually involve the tenant ending or withdrawing from the lease. The tenant remains as the tenant under their lease.
With this option the tenant is able step back from occupying the premises. Instead, the subtenant will occupy the premises and pay rent to the tenant. In this scenario, a sublease, also referred to as an underlease, is made between the tenant and a subtenant meaning that the while tenant remains as a tenant under their lease, they also become a landlord under the sublease. The tenant will still have to pay rent to their landlord, but they can recoup this by charging rent to the subtenant.
Break Clauses
Some leases contain break clauses. This will only appear in leases where this has been agreed between the landlord and the tenant during the negotiation stage prior to entering into the lease.
Should your lease contain a break clause, you can terminate the lease on the date specified in the break clause. It is important as a tenant that you obtain advice on the break clause if you are thinking of using it because break clauses are subject to certain conditions. If those conditions are not met, the landlord can decline the break and the lease will continue.
