A break option can generally be described as a right conferred
upon a tenant to terminate its tenancy prior to the expiry of the
term of a lease. In the current economic environment, with the
spike in commercial properties available for rent at increasingly
competitive rents, break options are of particular importance to
both landlords and tenants and can be the subject of intense
negotiation both at the time of the grant of the lease and at the
time of its exercise.
For a tenant, a break option gives it the opportunity to exit a
potentially onerous or unsatisfactory lease arrangement and allows
it to take advantage of the lower rents available in the open
market. Even for a tenant happy in its present accommodation, the
existence of a break option may improve its bargaining position and
potentially assist in any attempts it may make to secure an
improvement on its existing lease terms.
