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Getting out of a lease

What to do when it's time to go

Have you ever had to deal with the unexpected? Say your business grows faster than you'd anticipated, or, less positively, you find yourself in the opposite situation. Whatever happens, it means your rented premises are no longer suitable. How do you escape and find somewhere more suitable?

Quote�Even if your lease has 'break' clauses, these may only be applicable some years in.�End Quote

Will your landlord understand? If the experiences of many small businesses are indicative, perhaps not. Moving may not be easy. Even if your lease has 'break' clauses, these may only be applicable some years in.

Whatever your circumstances, be warned – moving may cost you, with penalties for ending the lease sooner than agreed. Your landlord may be willing to negotiate and compromise, but you can't bank on it. They are almost certainly under no obligation to agree to anything you ask.

Make sure everything is in writing when you take out your lease. It's that same small print that binds you to you want to end it.

Turning your planned move into reality relies on the:

Terms of your lease

Current state of the commercial property market

Willingness of your landlord to negotiate

You can try to find another tenant to take your place. This is called assignment – and though it sounds like something you had to do at college, it's fraught with many more potential pitfalls than a missed academic deadline.

This assignment 'halfway house' still depends on your landlord agreeing to the new tenant – and you then have to guarantee they will pay their rent on time. Another option may be to sub-let to a new tenant.

Either way, you'll have some heavy duty responsibilities. The landlord still has to be paid by you or the new tenant. Make sure that the new tenants are entirely trustworthy and able to pay.

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Getting advice

"Any tenant facing the prospect of getting out of a lease is extremely unwise to try and tackle it without the relevant legal advice," says John Kelly of Ferdinand Kelly.

"For the business looking to get out of a lease, the real issue is to escape the financial burden or to limit it – not to escape at any cost. Ideally they may even make a profit on their departure.

"Consult the right solicitor as soon as the issue arises or may arise. Tenants who think they've found an assignee and start negotiation before getting advice will mostly find that this 'get out of jail card' is plucked from their grasp."

When things go right

Paul Gooderham, Gailey PotteryLandlords don't always deserve a bad press. Paul Tebble of Antiques At The Lane says "Your landlord will often be entirely accommodating: he doesn't want an empty property, or an expensive court case either". When faced with a sudden 60% rise in rent during a rent review, Paul researched other local shops and found out that a much lower increase was the norm. "I negotiated the rise down to 25% and rescheduled some back-payment too. With most landlords anything is possible".

"I entered a two-year lease on a small unit and it didn't take long to realise I needed more space as my business was taking off very rapidly," says Paul Gooderham of Gailey Pottery. "I stayed about a year before deciding I really had to make the jump. It turned out my landlord was expecting it anyway – as he could also see how my business was growing.

"I was completely honest and up front and luckily he was very laid back. I can imagine some landlords try and make it as awkward as possible but I don't see why anyone should stay anywhere against their wishes and my landlord agreed."

Paul Gooderham's top tips for escaping a lease are:

Don't rush into a lease in the first place. Take time to get a measured view of a place – and the landlord

Ask other tenants about the landlord. Check out their background

Always read the small print

Be honest and talk to each other. Gauge your landlord's reaction to a possible move in a face-to-face conversation and take it from there

What next?

The Law Society has a downloadable document (PDF, 44KB) which explains your rights and responsibilities when taking on leased premises.

We've got advice on finding the right rented property.

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