Lease breaks: top tips (and traps for the unwary)

In times of economic decline or uncertainty, businesses may want to rid themselves of surplus property to reduce rental commitment and liabilities. The pandemic, and the consequential surge in home- and flexible-working, has also demonstrated that many businesses can operate effectively with much less rented commercial space. Clinics need space to consult and deliver treatments, but some activities, those that are administrative in nature, can be done elsewhere.

While the cost savings involved in a rationalisation exercise can be significant, so, too, can the risks. Once the decision has been made to bring a commercial lease to an end, the failure to serve a valid break notice can have drastic consequences. The clinic may lose the opportunity to break the lease and may, therefore, remain liable and tied into the property with unwanted long-term commitments.

In 1997, the point was well made in the leading case on the subject, Mannai Investment versus Eagle Star (parliament.co.uk, 1997a). In the ruling, Lord Hoffmann famously said: