Consider Breaking Your Office Lease: What Are Your Options?

You might want an early exit from your office lease for a number of reasons. Maybe the office complex is no longer conducive for business growth, or your company is having some financial struggles and needs a better lease term.
Whichever reason you have, you must understand that breaking a lease is difficult, and it is largely dependent on the terms and conditions in the signed contract. Speaking with your landlord about breaking your lease might be beneficial if you have been dependable. Chances are, he will feel sympathetic to your situation and will be open for negotiations.


If you find yourself in this situation, then you need to consider the options below.

Common Lengths for Office Leases in Singapore

In Singapore, the landlords ensure that any tenant who is renting property signs a lease agreement with them. The lease contains a list of guidelines and provisions that every tenant must adhere to. This could be maintenance policies or specifications of the type of upgrades you can apply to the office space. It also includes the rental cost per month as well as the lease duration.

Commercial properties have a longer lease term; it could be five to ten years or two to three years for tenants who want a short-term lease. However, the case is different with tenants of residential properties. Landlords offer them the option of signing a yearly or biennial agreement.

If a company happens to sign a short-term lease agreement, it brings flexibility to the table, and this is important for business growth and rapid evolution. Conversely, entering into a long-term office lease contract can be beneficial if you secure a good space. This implies that you will escape the stress and costs of moving for an extended period.

What Happens If I Need To Break A Lease?

For a lot of companies, staying in a particular location for numerous years is not a major concern because almost everyone dislikes moving. However, running a business is a complex task, and Singapore mostly offers expensive properties. Your company may be experiencing rapid growth, which means that a large space is needed, or you may wish to restructure your business in a different way.

Nevertheless, if you wish to break the lease and move out of a particular property, what scenario will you face? The terms stated in the lease contract remain unchanged; therefore, the landlord reserves the right to insist that you continue with the rent payment until the lease duration elapses.

As a matter of fact, most landlords are rational and will work out a better solution with you. Here, you have just about two options; either you find another tenant willing to sublet the office space, or you can find an incoming tenant who wants a total lease takeover.

The Difference Between Sublets And Commercial Lease Takeovers

In the event of a sublet, the original tenant remains responsible for the lease; however, he finds a different tenant to occupy the space and foot the bills. Based on the terms, the incoming tenant may pay the rent directly to the landlord or to the original tenant.

The subleasing tenant may only wish to lease the space for a short period, probably a few months. This implies that when they evacuate from the office space, the original tenant will have to find another tenant to replace them. If the leaseholder has moved to a different location outside Singapore, this could be a daunting task to accomplish.

In a scenario whereby you agree on a commercial lease takeover, you will pass on the lease to a different person (the incoming tenant). The new tenant takes charge of the current lease and foots the bills till the contract elapses.

A lease takeover involves having the original tenant find a new tenant who has the capacity to take over, fill in their names, and see the lease through until it expires. Also, if the landlord deems fit, he will most likely offer a renewal option to the new tenant.

What Involvement Do Landlords Have In The Lease Takeover?

Although landlords have varying involvements in a sublease scenario, the case is different in a lease takeover. He certainly has to get involved. Whilst the original tenant bears the brunt of finding a new tenant to replace him; it is the duty of the landlord to run a background and credit check on the new tenant. He also has to update the lease contract, just like he will do with a new lease.

The involvement of the landlord is a good thing because it enhances transparency, and nobody will feel left out. This implies that the landlord is aware that he is getting a trustworthy tenant. Hence, the new tenant has all the due legal rights while the original tenant enjoys his peace of mind knowing he no longer has any legal obligations to the landlord.

Saving Costs With Lease Takeover

Office lease in Singapore is expensive. In truth, a commercial takeover mostly has the three parties concluding the deal happily. This is because the current tenant gets relieved of paying rent for an office space he isn’t using, and the new tenant may likely negotiate a good deal giving that the current tenant wants to take his hands off the lease responsibilities.

Also, the incoming tenant gets to save more because the office space will most likely be fitted-out. Since the responsibility of finding a new tenant lies with the outgoing tenant, the property owner saves the costs that would have been spent on marketing and advertising.

How To Find Tenants For Sublets And Lease Takeovers In Singapore

How do leaseholders find the ideal tenant to replace them when they wish to break a lease? The best option here is to engage the services of a commercial property agent. Most times, agents have a lot of tenants who are searching for offices to takeover. He can recommend the right tenant for you; therefore, you should use this to your advantage. You will also have to pay him a commission fee.

The guide above has shown you all the possible options that could play out in the event of breaking your office lease. So, weigh all your options and ensure you follow the right steps to avoid any repercussions.

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