A break clause, also known as a break option, provides an opportunity for one or both lease parties to exit without penalty before the agreed end date.
It acts as a safety net for both landlords and tenants if circumstances change and offers welcome flexibility in an unpredictable economic environment.
Reasons to include a break clause
Tenants may request a break clause for a variety of reasons, including:
- The business may not be performing as expected and they may need to move to a smaller space.
- The business is growing, so they may soon need larger premises.
- They want to limit the financial risk to the business, especially in the early years.
- They want to test the suitability of the location before committing to it long-term.
- They might obtain greater leverage should they wish to renegotiate the lease terms.
Whilst less common, a landlord may be keen to include a break clause in the lease.
For example, they may want the option to terminate early in order to redevelop the building before the lease naturally expires. In some cases, the relationship between landlord and tenant may deteriorate to the point that taking the property back becomes desirable.
A break clause can also provide flexibility where market conditions change. If rental values have risen since the lease was granted, a landlord may wish to regain possession so the property can be re-let at a higher rent.
Break clauses are useful; however, they are fraught with potential pitfalls. They are subject to strict conditions and notice requirements, and any failure to comply can invalidate the break entirely, which would prove costly.
Serving of notice
To use a break clause, the party ending the lease must formally serve notice. The length of a notice period can vary and is determined by the provisions of the lease agreement.
Any failure to serve notice within the specified timeframe could result in the lease continuing to the original end date, with both parties remaining bound by their obligations.
Watch out for additional conditions
Break clauses often include extra conditions that must be met precisely. For example, all rent and other costs must be paid in full, any alterations made to the property may need to be removed or reinstated, and all repair obligations must be properly fulfilled.
The property must also be completely vacant on the break date, as even leaving behind furniture or rubbish could breach the requirements.
Failing to comply with any of these conditions can invalidate the break option, leaving the party unable to end the lease.
Be prepared!
When dealing with a lease with a break option, it is essential to plan ahead and make sure you’re ready for each requirement. You should always:
- Record the break date and the start of any notice periods as soon as the lease is signed.
- Check the exact wording of any additional conditions that are pivotal to the break clause so there are no surprises.
- Allow plenty of time for repairs, reinstatement, or financial checks before the break date so that the option is not invalidated.
Both landlords and tenants should seek legal advice from a commercial property solicitor before serving a break notice or relying on a break clause as the rules can be surprisingly technical and easy to get wrong.
Even a brief discussion with a solicitor who regularly deals with commercial leases can highlight issues you might not have considered and give you much greater clarity about the steps involved.
Published 10 December 2025
