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Break Notice

“My tenant served a break notice to terminate its lease but has now asked whether it can stay. I am happy to agree to that, but what should I do next?”

A break notice cannot be unilaterally withdrawn or waived by your tenant alone, but it can be withdrawn with your consent. Therefore you could simply agree with your tenant that it withdraws its break notice.

However, the courts have decided that even if it is withdrawn by consent, the lease still ends on the date specified in the break notice. The agreement to withdraw the break notice evidences an agreement for a distinct new tenancy, which takes effect when the old one ends.

There are several reasons why you might not want this to happen. First, if your tenant is a business tenant then the new tenancy may benefit from a statutory right of renewal under the Landlord and Tenant Act 1954. If your existing lease excludes this statutory right to renew, it is unlikely that you will want to agree to a new tenancy that includes it.

Second, any guarantor of the tenant under the old tenancy may not be bound under the new tenancy without express agreement by the guarantor. By helping out the tenant by simply agreeing that it may withdraw its notice to terminate, you may lose a vital guarantor.

Third, although it is likely that the terms of the old tenancy will apply to the new tenancy, the terms of the new tenancy will not be written down in any document, which may lead to some uncertainty.

To ensure that the position is clear, at the same time that you agree with your tenant that its notice to terminate is withdrawn, we would advise you to enter into a new lease with your tenant to commence when the old one ends, excluding the statutory renewal rights and including the guarantor if necessary.

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