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The purpose of this paper is to look at the problem caused by the operation of break clauses contained in commercial leases – a predominantly UK phenomenon, a consequence of longer lease terms.

The pitfalls that can befall a corporate occupier are numerous and the authors of this paper share some of their recent experiences to highlight issues that can arise and how a Corporate Real Estate Manager or advisor can avoid or minimise those risks.

For corporate occupiers, the operation of a break clause can be fraught with difficulty and its successful implementation requires a strategy to be put in place well in advance of the break date.

The paper shows how turmoil in the wider financial market could make the flexibility that breaks offer very important to certain businesses.

This paper examines the changes in the length of commercial property leases over the last decade and presents an analysis of the consequent investment and occupational pricing implications for commercial property investments. It is argued that the pricing implications of a short lease to an investor are contingent upon the expected costs of the letting termination to the investor, the probability that the letting will be terminated and the volatility of rental values. The paper examines the key factors influencing these variables and presents a framework for incorporating their effects into pricing models. Approaches to their valuation derived from option pricing are critically assessed. Simulation methododology is applied to the rental and capital valuations of short leases and properties with break clauses. It is concluded that in addition to the rigour of its internal logic, the success of any methodology is predicated upon the accuracy of the inputs.

The purpose of this paper is to analyse the changing nature of commercial leases with specific reference to the landlord and tenant relationship, lease lengths and incentivisation in the post-recessionary UK property market.

The research applies data analysis utilising the Estates Gazette Interactive database coupled with survey analysis conducted across three UK cities to investigate and compare the changing nature of the commercial property leasing market and the landlord and tenant relationship.

The empirical analysis highlights that recessionary conditions prevalent in the market from the 2007 global crisis has caused a reassessment of lease structures, leading to shorter lease terms and increased use of incentives, as tenants have been empowered to negotiate more flexible leases due to their stronger market position.

This paper builds upon previous research conducted back in 2005, investigating commercial leases in the market up-cycle. The recent volatility in the commercial property sector requires fresh insights and in-depth analysis of lease patterns, length and covenant strength, which is fundamental for investor decision-making. In addition, past research has tended to consider solely landlord or occupier perspectives, whereas this research offers new insight into the landlord–tenant lease negotiation process.

This legal update examines the implications for commercial landlords of regulations required to be made under Energy Act 2011, and to come into force by 1 April 2018. Under those regulations, a landlord “may not let” commercial premises falling below a specified energy performance rating (likely to be E). The sanction of market deprivation arguably represents a significant shift in the balance between incentive and compulsion as the key policy tool adopted by the UK Government in seeking to improve the energy performance of commercial buildings. The paper aims to discuss these issues.

The paper sets out and reflects a practitioner's concerns relating to the proposed new sanction of market deprivation. It identifies and highlights practical difficulties likely to be encountered when considering the interaction of the proposed regulations with existing statute (e.g. Landlord and Tenant Act 1954) and contractual provisions such as tenant break clauses.

The prospect of being unable to let commercial premises that fall below a specified energy efficiency rating must focus landlord attention on rights to enter to carry out improvement works. The paper identifies a potentially significant trap for landlords in the model green lease clauses issued by the Better Buildings Partnership where tenant consent is required.

The paper does not reflect extensive or exhaustive academic research. Consistently with its purpose a legal update, it identifies key issues likely to be encountered by practitioners.

The principal practical implication is the need for landlords and their professional advisors to consider as part of any current lease negotiations the need to secure rights of entry for landlords to carry out improvement works where premises are at risk of falling below the energy performance rating likely to be specified in regulations to be made under Energy Act 2011, s 49.

The paper reflects a practitioner's views, developed through client matters and also through designing and delivering professional training sessions, on the likely implications of the requirement for regulations under Energy Act 2011.

Index by subjects, compiled by K.G.B. Bakewell covering the following journals: Facilities Volumes 8‐17; Journal of Property Investment & Finance Volumes 8‐17; Property Management Volumes 8‐17; Structural Survey Volumes 8‐17.

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes 8‐18; Property Management Volumes 8‐18; Structural Survey Volumes 8‐18.

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐17; Journal of Property Investment & Finance Volumes 8‐17; Property Management Volumes 8‐17; Structural Survey Volumes 8‐17.

Index by subjects, compiled by K.G.B. Bakewell covering the following journals: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes 8‐18; Property Management Volumes 8‐18; Structural Survey Volumes 8‐18.

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes 8‐18; Property Management Volumes 8‐18; Structural Survey Volumes 8‐18.

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐17; Journal of Property Investment & Finance Volumes 8‐17; Property Management Volumes 8‐17; Structural Survey Volumes 8‐17.