Break clause Vs Shorter lease

[amorgan]

I have dug my heels in with regards to having a break clause. Having refused initially the agent is now suggesting that rather than have a 6 year lease with a break clause at year three (which we want) , we just have a three year lease.

I'm not sure why they are so anti a break clause and wonder why they want to offer a shorter lease instead.

Is there anything I should be aware of?

For example, would we have to pay solicitors fees all over again if we wanted to renew? Would we definitely have the right to renew? Are there any advantages to me in their suggestion?

Thanks, in advance.

[jeffrey]

I have dug my heels in with regards to having a break clause. Having refused initially the agent is now suggesting that rather than have a 6 year lease with a break clause at year three (which we want) , we just have a three year lease.

I'm not sure why they are so anti a break clause and wonder why they want to offer a shorter lease instead.

Is there anything I should be aware of?

For example, would we have to pay solicitors fees all over again if we wanted to renew? Would we definitely have the right to renew? Are there any advantages to me in their suggestion?

Thanks, in advance.

1. Shorter lease does have risks.
2. L may initially be excluding business tenancy protection. If so, you as T would have no further rights on term expiry. L might renew or he might not.
3. Renewal = new lease, so L's legal fees will again be payable by you.
4. Only advantage to you, if lease is 3 yrs., will be ability to walk away on expiry (as opposed to having to operate break clause in 6 yr. lease).
5. Rent might be different (3 yr. v. 6 yr.+break clause). I do not know which would be higher- anyone else able to answer this?

[amorgan]

Hi Jeffrey

Thanks for the swift response. I take it with regards to point 4 that there would normally be costs associated with operating the break clause?

I am also guessing that should it be necessary, it will be much harder to find an alternative tenant if we need to assign the lease after year one?

Andy

[jeffrey]

Hi Jeffrey

Thanks for the swift response. I take it with regards to point 4 that there would normally be costs associated with operating the break clause?

I am also guessing that should it be necessary, it will be much harder to find an alternative tenant if we need to assign the lease after year one?

Andy

No costs should be necessary on your exercising break clause (because nothing for L's solicitors to do) but that doesn't guarantee that L might have inserted a charge clause in the lease.

As to second point, an assignee would be taking-over what you have. The less security, the fewer potential assignees there will be.