Termination of business tenancies


There are various options for a landlord and tenant to terminate a business lease. The nature of a business lease may give rise to varying options for both a landlord and tenant to explore.

Termination options for Landlord:

  1. Termination procedures under the Landlord and Tenant Act 1954 (“LTA”)

If a business lease is protected by the LTA, the lease will continue at the end of the contractual term unless and until it is terminated pursuant to one of the procedures prescribed by the LTA.

A landlord may terminate a business lease by serving a notice known as a ‘section 25 notice’ on the tenant specifying one of the grounds under the LTA which allows the landlord to terminate the lease.

  1. Forfeiture

If the tenant is in breach of an obligation under the business lease, the landlord may have the ability to forfeit the lease. Forfeiture allows the landlord to terminate a business lease during the contractual term. Please click here for further information.

  1. Exercise of a break clause

A business lease may provide certain circumstances in which a landlord and/or tenant can expressly serve notice on the other party to terminate a business lease during the contractual term in accordance with a break clause.

Termination options for Tenant:

  1. Termination procedures under the Landlord and Tenant Act 1954 (“LTA”)

A tenant may terminate a business lease at the end of the contractual term by serving a notice known as a ‘section 27 notice’ on the landlord which provides the landlord with at least 3 months’ notice to terminate the business lease.

  1. Vacating the premises

A fixed term business lease will automatically terminate at the end of the contractual term if the tenant vacates and ceases business occupation at the property.

  1. Exercise of break clause

As noted above, a business lease may provide the tenant with the ability to terminate the lease in accordance with a break clause.

  1. Surrender

If the landlord agrees, the tenant may be able to ‘surrender’ a business lease during the contractual term which will bring an end to the business lease.

  1. Alienation

Although not strictly a means of terminating a business lease, a tenant may look to benefit from other options in order to relieve itself from the burden of tenant obligations under the lease such as the obligation to pay rents.

A business lease may provide the tenant the ability to either assign the business lease to a third party or sub-let the premises to a third party. Assigning the lease to a third party will ensure that the tenant obligations under the business lease are passed to the third party. Sub-letting the lease means that the tenant will still be responsible for the tenant obligations under the lease, but can obtain a rental income from the sub-tenant. A business lease may attach conditions to a tenant’s right to assign or sub-let and a tenant will need to evaluate whether such conditions can be adhered to.

Our specialist Dispute Resolution team have considerable expertise in representing both landlords and tenants in dealing with business lease termination. For more information about our expertise and how we can help you, please contact us.