Tenants’ Exercise of Break Clauses in Leases

Updated September 2025

Introduction

This briefing note should not be relied upon as legal advice and you should contact us for advice on your specific circumstances.

What is a break clause?

 A break clause can be included in a fixed-term lease allowing either a landlord or a tenant to terminate the lease early.

• Exercising a break clause brings the lease to an end. However, where the landlord breaks the lease, there is legislation in place that may allow a business tenant to remain in the property after the lease has ended. In these circumstances, a statutory notice may be required to end the lease and there are only limited grounds on which such a notice can be served.
• Depending on how the lease has been drafted, the right to break the lease may arise on one or more specified dates, or it may be exercisable at any time during the term of the lease on a rolling basis.
• A break clause may only be exercised if any conditions attached to it have been satisfied (for example, providing vacant possession or complying with certain covenants in the lease). A break clause will be strictly construed by the courts and any conditions must be strictly performed.

Practical issues for a tenant to consider when exercising a break clause

Once a break notice has been served it cannot be withdrawn unilaterally, so make sure that you are certain that you intend to break the lease. Any mutual waiver of the notice will be deemed to constitute the grant of a new lease, which takes effect from the date of expiration of the break notice.

• Make sure you comply with all the relevant requirements in the break clause and also the notice clause regarding how notices should be served, and keep evidence of your compliance to help protect your position.
• Ensure that you serve the break notice in good time and strictly in accordance with the terms of the lease. We strongly recommend that you consult us before taking any action and well in advance of the earliest date on which a notice can be served.
• Keep evidence of the method of posting or delivery of the notice. If there are no service provisions in the lease, you could request that your landlord acknowledges receipt.
• If the notice is being served by an agent, make sure your landlord is aware of the existence of the agency and its authority.
• Consider carrying out a compliance audit with your surveyor’s advice before serving the break notice. You can then take steps to remedy any breaches to ensure compliance with the lease covenants.
• Consider paying any outstanding sums due, even if these are in dispute. This is often a condition of exercising a break option. In most cases, rent should be paid for the whole of the quarter or rent period within which the break date falls to avoid the Landlord being able to claim that all of the rent has not been paid by the break date. A well drafted rent review clause will provide for the Landlord to repay any overpayment.
• Ask your landlord for confirmation of the steps you need to take to comply with any conditions. Your landlord may prepare a schedule of dilapidations in relation to any repair works the landlord considers are necessary before the lease ends. A schedule of dilapidations is a list of items that are in need of repair and for which you have responsibility, due to the repairing obligations under a lease.
• If you agree to carry out works to the property before the break date, be careful to ensure that the works are completed and vacant possession is given by the break date, and any other requirements of the lease are adhered to.
• In some circumstances, the landlord may accept the break notice on payment of an agreed amount as liquidated damages in relation to any outstanding breaches of covenant, such as the repairing covenants. Liquidated damages are a fixed or determined sum agreed by the parties to a contract to be payable on breach by one of the parties.
• Ensure that any waiver of a condition by your landlord is not made “without prejudice” and that it is clear to which condition(s) the waiver applies.
• Be aware that the early termination of a lease under a break clause can become contentious because often the landlord’s and tenant’s interests are not aligned – the tenant wants to end the lease, whereas the landlord may very well want the lease to continue. Accordingly, we strongly recommend that tenants take advice at the earliest opportunity should they want to exercise a break clause, and landlords take advice upon receipt of a break notice.