How to make sure you don’t miss your lease expiry date

When you sign up to an office via a licence agreement (used for serviced offices) or a lease (used for non-serviced offices) there will be a set term length. Commonly for leases this will 5 years with a 5 year break. Commonly for licence agreement this will be 12 months or 24 months with a 12 month break. Of course, there are lots of variations on term lengths and breaks. 

It is no surprise that your licence agreement or lease will have a set term but what is a surprise is that if you do not give notice before a set date then you will more often than not be bound to another lease or licence agreement. 

For example, if you have a 12 month term set out in your licence agreement, it is common that you have to give notice in writing at least three months prior to the lease end date to end the agreement otherwise it will automatically renew for another 12 months. And it might be that that renewal will be at a set increase in price. This can seem shocking - as you would be forgiven for thinking the term will end when it says it ends without you having to do anything. 

If you wish to break your lease or licence agreement there will also be a date on which you have to give written notice. This is also commonly 3 or 6 months prior to the break date. If you have a break penalty - for example £10k payment to break then the terms might specify that you have to give notice and have the money transferred into their account prior to the notice date specified in the contract or lease agreement. 

At Tally Workspace, we have worked with and spoken with countless companies who have missed their notice dates and have been held into a contract which they did not want to be. This can be very frustrating when your needs have changed or when you have already eyed up a new office space that would be perfect for your team. 

When speaking with companies, we often found that issues occurred when the main contract within the company who had set up the office contract has since left and no one else in the company was aware of the dates or even where the contract is! 

At Tally Workspace, we put our heads together to think of ways in which we could help our clients (and every other company) not miss those all important dates. 

Although we had been collecting these dates in spreadsheets and Hubspot for some time, it was becoming clear that this was not an efficient way for our sales team to track them and keep our clients up to date. With the help of our tech team we were able to upload all the data we had to the Tally Workspace platform, and sync up all of our companies with our venues and spaces in the database, as well as allowing contracts to be uploaded as PDF’s.

Now that these details were in our database, we were able to run a check each day to see whether any of our companies had an important date coming up. This could be a lease expiry date or break clause date, but also the date at which they would need to serve notice for either of these.

An automated email is triggered for any companies that our platform finds, reminding them about the upcoming date and giving them the option to opt out of any future automated emails. We also have slack integration with our platform which means our sales team can be notified that the reminder has been sent out, and are able to also follow up should they need to.

Given how easy we have found it can be to miss these dates, we trigger these reminder emails three times for the most important dates - 3 months, 1 month, and 2 weeks before - giving our clients the best possible chance to either renew their current deal, or consider any new options that might be suitable for their teams.

Automatic renewal clauses are provisions within a license agreement that allow the agreement to continue without the need for renegotiation at the end of the term. These clauses can provide stability and continuity for both parties, preventing the disruption that might occur if the agreement were to lapse unexpectedly.

However, these clauses typically require the licensee to provide advance notice if they do not wish to renew the agreement. The notice period can range from three to six months, depending on the terms of the agreement. Failure to provide this notice can result in the automatic renewal of the agreement, binding the licensee to another term under the same conditions.

Both parties must be aware of the terms related to automatic renewal clauses. Misunderstandings or lack of awareness can lead to unintended renewals or disputes. Clear communication and a thorough understanding of the agreement’s provisions are key to avoiding such issues.

How far in advance do you need to look for a new office space very much depends on how large the space is. For 2-20 person offices in serviced offices, we would recommend looking for new spaces 2-3 months prior to your lease expiry. For teams larger than 20 people in serviced offices, we recommend looking 2-4 months prior to lease expiry. For leased spaces we would recommend looking 6 months prior to lease expiry for a fully fitted space. If you are planning to do fit-out works then we would recommend looking 10-12 months prior to your current lease expiry date. This is a fit out works can take 10-12 weeks to complete. 

If you have successfully given notice to end or break your license agreement or lease then there are a few things you will need to think about. You will need to make sure that; there are no end of term charges e.g. cleaning or dilapidations; you give back all your access cards prior to the last date; and you remove all personal belongings and furniture. 

Licence agreements will include specific terms outlining the licensee’s obligations upon expiration. Understanding and adhering to these terms is crucial to avoid legal complications and maintain a good relationship with the licensor.

As the expiry date of a licence agreement approaches, businesses must consider their options for renewal. If you love your current office space and are hoping to stay, the sooner you speak with your current provider the better. They will commonly present you with a renewal offer which is negotiable. So make sure that you investigate the current market prices and other similar options on the market. There is never any harm in shopping around to know what price you should be paying. 

Even if a renewal amount is agreed upon, the terms of the new contract need to be negotiated. This includes discussing the duration, credits, and any revisions to other terms. These negotiations should reflect current market conditions and the needs of both parties to ensure a fair and sustainable agreement.

Once a licence agreement or lease expires, both parties have specific legal obligations. Tenants may need to return the property in its original condition, including any necessary repairs and decorations as outlined in the tenancy agreement and the tenant act. This ensures that the property is ready for the next tenant or any other use the landlord has planned.

Landlords, on the other hand, often have the right to keep a security deposit to cover any unpaid rent or damages after the lease ends. Both parties should be aware of these rights and obligations to avoid disputes. Additionally, landlords must not accept rent post-expiration without a formal agreement, as this can complicate the tenancy status.

Effective communication between landlords and tenants about their respective obligations and the potential consequences of not fulfilling them can prevent misunderstandings. Landlords must follow legal procedures to regain possession of the property after a license agreement expires, in accordance with the landlord and tenant act. This includes serving legal notices, and when necessary, the landlord serves notice and possibly initiating possession proceedings if the property is not vacated voluntarily.

Navigating the complexities of license agreements and renewals often requires professional advice. These professionals can help navigate the intricacies of lease negotiations and ensure compliance with all relevant laws regarding commercial property. They can also help with finding a new office if required. 

Firms like Tally Workspace can offer expert guidance and negotiation skills to achieve favourable lease terms. This step can save time, reduce risks, and ensure a smooth operational transition. In conclusion, understanding what happens after the expiry of a licence agreement or lease is crucial for businesses. From immediate actions and legal obligations to renewal options and negotiating new terms, each step requires careful consideration and planning. Ignoring these aspects can lead to significant risks and complications.