Glossary definition
Break Clause
A provision in a lease that allows either the landlord or tenant to terminate the tenancy before the contractual expiry date, subject to specified conditions and notice periods. Break clauses are a key consideration in investment valuations, as they introduce uncertainty about future rental income.
Definition
A provision in a lease that allows either the landlord or tenant to terminate the tenancy before the contractual expiry date, subject to specified conditions and notice periods. Break clauses are a key consideration in investment valuations, as they introduce uncertainty about future rental income. Lenders assessing a commercial mortgage will stress-test their calculations assuming tenants exercise break options, which can reduce the property's investment value.
See also
Closely related terms.
Rack Rent
The full open market rental value of a property if let on normal commercial terms without any premium, rent-free period, or discount.
Void Period
The period during which a property stands empty and produces no rental income, whether between lettings or prior to first occupation.
Valuation
A professional assessment of a property's market value, carried out by a qualified surveyor for lending, investment, or transactional purposes.
Anchor Tenant
A major tenant whose presence in a commercial development attracts other tenants, customers, or footfall, typically occupying a significant proportion of the available floorspace.
Further reading
Guides that touch this term.
Guide
Commercial Mortgages in the UK: A Complete Guide
Everything you need to know about commercial mortgages in the UK - from eligibility criteria and rental coverage ratios to how lenders value multi-let properties and what lease length matters.
4 min read readReadGuide
RICS Red Book Valuations for Development: What Lenders Require
A comprehensive guide to RICS Red Book valuations in development finance, covering what lenders require, how valuations are structured, and how to ensure your scheme is accurately assessed.
11 min read readRead
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