In need of a break? Why it can pay to look at your lease.
This Christmas I would urge all businesses to think about taking a break.
While many of you will be thinking long and hard about what period your offices should be closed over the festive period, it is a different kind of break that I am talking about.
Where tenants have previously been able to negotiate break clauses in their leases, the trigger dates for serving notices are typically on the traditional quarter days - of which Christmas Day is one.
These notice periods can be for any period of time, but typically they are for six, nine or 12 months and normally the break dates themselves are on quarter days.
Break clauses are often quite hard fought for by tenants - often having upfront cost implications for them.
But by the time the break clause comes around it is sometimes forgotten about by the tenant and consequently wasted as an opportunity to review property strategy.
What makes it even more likely that break clauses are missed, is that many tenants tend to focus more on the date of the break itself rather than the all-important notice date.
At Christmas time in particular it can be all too easy to overlook this opportunity, only to return in the new year to discover that it is too late to act.
Break clauses in leases differ from lease expiries in that they are a one off 'time specific' event that is lost for ever if not triggered on time.
By comparison, lease expiries can usually be dealt with over a period of time.
Given the current challenging economic climate, missing a break clause could be a very expensive mistake.
Not that businesses need to be thinking about a move to justify exercising their break clause.
The point is that break clauses are usually there for the benefit of the tenant and they provide the chance to review current space requirements, but also to think about the suitability of existing space in terms of quality, efficiency and profile.
As some businesses have already seen, moving to more efficient space in a new building can be more cost effective than staying put.
Even if you don't want to move, the break clause can provide the chance to re-gear the lease and potentially re-negotiate the rent.
The point here is to make sure you know what is in your lease and don't pay the price by taking the 'do nothing option'.
You have nothing to lose in the runup to Christmas by looking at your lease and at least seeking advice from an expert - you may discover a timely gift for your business.
John Griffiths is from GBR
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|Publication:||The Birmingham Post (England)|
|Date:||Dec 11, 2008|
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