Lease expiry or break clause coming up during coronavirus restrictions?

Tenants are ever aware of the strict requirements around satisfying vacant possession for break clause purposes, requiring all tenant fixtures to be removed so as not to invalidate any break. Additionally, failure to remove possessions at the end of the term can allow the landlord to recharge the tenant for storing the possessions until such removal.

What’s the current legal position?

There is unfortunately no statute, guidance or current documented precedent to provide that landlords should relax the requirement to give vacant possession on the expiry of the lease or on a break date in light of coronavirus. Therefore, finding a solution for each matter will be dependent on the individual circumstances, specific lease provisions and the approach of the landlord. Legal support can be particularly helpful therefore to ensure you protect your position and strike the best possible deal with landlords.

Removing possessions at the end of the lease term

It is important to note that, generally, the tenant will have given vacant possession at the lease expiry even if it has left some chattels at the premises, but there are no hard and fast rules. The specific lease provisions will determine how strict this requirement is – for example you may see reference to a tenant covenant to “remove the Tenant’s fixtures (if requested by the Landlord)….”  in the yield up clause. The best advice by far is to try and establish a channel of communication with the landlord to set out the position and try to establish whether a workable solution can be found. We have dealt with numerous scenarios where landlords have been understanding of the position that the coronavirus restrictions place tenants in with regards access to their office spaces and their ability to undertake removals. In several cases we have advised on, we have successfully ensured that there has been no argument by the landlord that the lease is continuing because chattels and fixtures have been left behind and the landlord has agreed that the tenant can go back into the premises once the lockdown has eased to remove a couple of items that have been left behind. 

If you have a lease imminently expiring, it would be prudent to review your lease terms on providing vacant possession at the end of the term. We are very well placed to assist in liaising with the landlord to agree a solution to ensure the lease expires notwithstanding any tenant chattels that may be left in situ.

Vacant possession on a break clause

With regard to break notices in general, there is long established authority to say that the tenant must strictly comply with break conditions. If the tenant hasn’t given vacant possession and the break notice is conditional on VP being given, then landlords have grounds to allege an ineffective break. In these circumstances, it is important you seek legal advice as a full lease review is advisable to allow a lawyer to correspond with a landlord’s solicitors on a without prejudice basis, to seek a workable solution. We have been involved in several negotiations where tenants have requested to remain in occupation of premises beyond the break date (but still effectively exercise their break option). This can be dealt with by way of a surrender of the lease before the break date and then the grant of a new short term tenancy. Each case will be at the discretion of the landlord and will be dependent on the individual circumstances, but it is crucially important to seek advice if you have any concerns over the compliance with break clause conditions as failure to exercise a break option can leave tenants locked into lease for considerably longer than envisioned.