Planning for lease events  

Leases are fixed term contracts too. And, to get the most out of lease negotiations ideally you need to plan ahead.   

It might surprise you to learn that the ideal point to start planning around a break clause is two years before you need to serve notice.  

And, for lease renewals, you should think about planning up to five years in advance of a lease ending. 

Let’s dig deeper into the advantages of planning this far ahead…  

Use break clauses to negotiate  

Why two years? That seems like a long time, however, if there isn’t another suitable property to move into, it’ll take time to find alternatives. You’ll need a plan to make sure that different premises are secured and adequately fitted out before services can be moved. 

Break clauses offer a tenant the opportunity to end a lease early. This is useful to cut costs where a property is underutilised or expensive compared to other options. Notice needs to be served in advance, perhaps six months. Certain conditions also need to be met to make sure a notice is valid, usually including that the rent is paid up to date. 

It’s also important to keep in mind that dates of break clauses are usually fixed. So you may have a limited window of opportunity. This is why it’s so important to plan ahead. 

Break clauses present a risk to landlords. On, say, six months’ notice they could find themselves with a vacant property, no rental income and the costs of holding the property whilst they find another tenant. 

Many landlords are prepared to offer incentives to remove a break clause. This can include rent free periods, money for improvements or reducing the costs you will need to pay when eventually you leave the property. There could even be the opportunity to reduce the size of your space if you are not utilising it efficiently. 

So, even if you wish to remain in a property, every occupier should explore the opportunity a break clause brings.  

For lease renewals, plan even further ahead 

And exactly the same is true for lease renewals, but we can start the conversation even earlier. Again, five years seems a long way off. But, by starting negotiations early enough, landlords will recognise that we are seriously thinking about moving. They want to maintain their long-term rental income to protect their investments.  

If we start discussions early, they may offer us better terms to stay. 

So if you think your property is too large, expensive,  difficult to manage or not fit for purpose in some way, starting an early conversation gives landlords an opportunity to offer a better deal.  You may even be able to resolve issues earlier than you expected, bringing forward cost savings. 

Play the NHS card 

Signing a lease with the NHS can also mean added investment value to the landlord. Their rental income is government backed - the best protection there is. 

What incentives will they offer us? Rent free periods are a popular offer from landlords, but many are also open to discuss capital improvements to properties including fit-out costs, reconfiguration of space, or works to achieve net carbon zero for NHS occupiers.