Please Note: This Article is 9 years old. This increases the likelihood that some or all of it's content is now outdated.

My business is going belly up but has over two years left on the lease. I want out but the landlord says I will have to pay rent until another tenant is found and the difference in the rent if it’s less than I am paying. Does all this have to be spelled out in the tenancy agreement as it says nothing about this? I did not seek legal advice and did not realise the consequences of signing the lease. Please help as its going to cripple me trying to pay the rent with very little income.

A commercial lease is just another form of contract: whatever you agree to is binding on both parties, including every clause in the lease – you are committed to pay the rent.

This is why it’s so important to get legal advise when signing a lease, but even then, tenants starting a new business are often so carried away with enthusiasm that they fail to consider what will happen if things don’t work out.

It’s doubly important if you are taking on a comprehensive Full Repairing and Insuring lease, one without break clauses, or one that’s contracted out of the 1954 Landlord & Tenant Act.

You have several options here:

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1 – Appeal to the landlord’s better nature and see if you can negoatiate a get out, either by the landlord re-letting and some compensation from you, or a straight cash settlement.

2 – Assign the lease yourself. This means you find another tenant and have the agreement assigned to the new tenant – you are then out of the equation, but you may need to guarantee the assignee’s rent. This means that you will have to meet the re-letting costs yourself and also the legal costs involved in drawing up a deed of assignment. Legally, the landlord cannot unreasonably refuse or delay an assignment, unless this is specifically forbidden in the lease.

3 – Sub-let. This means you let to your own tenant, who pays you the rent. You then pay your own rent, making up any shortfall, or pocketing any premium. This new lease cannot be longer than your own. This option is not always available as sub-letting is often forbidden in the lease, unless you get the landlord to agree.

4 – Walk away from it. In which case the landlord can pursue you for rent through the courts. However, the landlord would be expected to reduce his losses by re-letting ASAP, though there’s no legal obligation on him to do this.

See also:

DCLG – Business Tenancy Guide 

©LandlordZONE All Rights Reserved – never rely totally on these standard answers. Before taking action or not, always do your own research and/or seek professional advice with the full facts of the case and all documents to hand.

Please Note: This Article is 9 years old. This increases the likelihood that some or all of it's content is now outdated.


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