Lease advise needed
Discussion
Started a business 3 years ago, and over the past 6 months had a massive loss in trade. Our break clause isn't for another twelve months, but we'd like to surrender our lease now. The landlord has asked us to suggest a solution (ie financial) to reach an agreement, any advise? Is there a rule of thumb ie 6 months rent?
No rule of thumb as such. If you can get away with a reverse premium = to 6 months rent (to include any disrepair claim 
) then IMO you have done well. It is also dependant on how easy it would be for the landlord to relet.
I would not, as a rule, entertain anything less than 2/3's of the remaining rent, dependant on condition of the property and ease of relet. If I had a ready and willing replacement tenant then I may reduce that some, especially if he/she/it was a better financial bet.
Its a 'suck it and see' situation
) then IMO you have done well. It is also dependant on how easy it would be for the landlord to relet.I would not, as a rule, entertain anything less than 2/3's of the remaining rent, dependant on condition of the property and ease of relet. If I had a ready and willing replacement tenant then I may reduce that some, especially if he/she/it was a better financial bet.
Its a 'suck it and see' situation
Sorry lots of questions!
What sort of property is it? (retail/office/multi use building/stand alone property etc?) What sort of landlord? (small private/large commercial etc?)
When can you actually break and how much notice to you have to give?
Is your lease in the name of a limited company or a personal name? Is there a guarantor?
If you don't want to post the detail send me an email but I won't be able to pick it up until this evening so the thread is better.
What sort of property is it? (retail/office/multi use building/stand alone property etc?) What sort of landlord? (small private/large commercial etc?)
When can you actually break and how much notice to you have to give?
Is your lease in the name of a limited company or a personal name? Is there a guarantor?
If you don't want to post the detail send me an email but I won't be able to pick it up until this evening so the thread is better.
FUBAR said:
No rule of thumb as such. If you can get away with a reverse premium = to 6 months rent (to include any disrepair claim ) then IMO you have done well. It is also dependant on how easy it would be for the landlord to relet.
I would not, as a rule, entertain anything less than 2/3's of the remaining rent, dependant on condition of the property and ease of relet. If I had a ready and willing replacement tenant then I may reduce that some, especially if he/she/it was a better financial bet.
Its a 'suck it and see' situation
I agree.) then IMO you have done well. It is also dependant on how easy it would be for the landlord to relet.I would not, as a rule, entertain anything less than 2/3's of the remaining rent, dependant on condition of the property and ease of relet. If I had a ready and willing replacement tenant then I may reduce that some, especially if he/she/it was a better financial bet.
Its a 'suck it and see' situation
From the other point of view though, there is no hard and fast rules.
However, making the situation seem like a good bet to the landlord is good. The 'game theory' answer to this is that he has done the best thing by putting the ball in your court as it is you who now has to pitch an offer.
I would be tempted to come back with "I have little or nothing fiancially, but am willing to vacate quickly and cleanly as your convenience. Dependent on how quickly you want me out, please let me know what you would be happy to accept."
That way you are then talking about what it is he want and you are more likely to be able to meet it without paying out more that what you might have had to do.
JustinP1 said:
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I would be tempted to come back with "I have little or nothing fiancially, but am willing to vacate quickly and cleanly as your convenience. Dependent on how quickly you want me out, please let me know what you would be happy to accept."
Maybe add in something along the lines of "lost loads of money in the business and looking down the barrel of liquidating the company (is the landlord holding any rent deposit? Have you given any Drector's guarantees?), but you are an honorable chap and would much rather settle ammicably (sp?) for £xxx than close the company and knock him for the lot" .....or words to that effect I would be tempted to come back with "I have little or nothing fiancially, but am willing to vacate quickly and cleanly as your convenience. Dependent on how quickly you want me out, please let me know what you would be happy to accept."
Incidentially I assume there is no demand in the area for the OPs property at the rent he is paying. If there was he could consider a sublet or assignment of the lease.
The property could come back to haunt him in years to come, but it might not, and it might be a lot cheaper way out. If rents have increased since the last review it might even generate some cash!
The property could come back to haunt him in years to come, but it might not, and it might be a lot cheaper way out. If rents have increased since the last review it might even generate some cash!
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