In Sterling House Ltd v International Baccalaureate Organisation (UK) Ltd [2026] EWHC 2680 (BP), the High Court considered whether a tenant had successfully exercised a break clause where sums remained outstanding at the break date.

Published: 26 October 2026
Authors: Nick Wilcock

The lease required annual rent and insurance rent to be paid as conditions of the break. Although the tenant asked the landlord’s agents for the sums required before handing back the premises, the rent invoice issued by the agents only covered the period up to the break date. The tenant paid that amount, leaving approximately £45,000 outstanding in respect of the balance of the quarter which fell after the break date.

The Court held that the landlord was prevented from relying on that shortfall. It was accepted that clear wording was required to allow the parties to depart from the position under the lease. However, the Court found that the landlord’s invoice amounted to a clear representation of what the landlord wanted paid before handover. The tenant had reasonably relied on it, having specifically sought the invoice well before the break date because it wanted to ensure that all necessary sums were paid.

The landlord had also demanded approximately £2,300 of insurance rent at 3pm on the Friday before the Monday break date. The Court found that this did not give the tenant a reasonable opportunity to complete the mechanics of payment. The payment was subsequently made within a reasonable period.

The landlord’s claim was therefore dismissed. Both landlords and tenants will retain a keen interest in whether permission to appeal is granted.

Practical significance

The decision is an important warning for landlords administering conditional break options. Although tenants must comply strictly with break conditions, a landlord's communications may prevent it from relying on non-compliance. Rent demands and correspondence issued shortly before a break date should therefore accurately reflect the sums contractually due, while demands for additional sums should allow a reasonable opportunity for payment.

For tenants, this decision provides a possible shield in circumstances where a conditional break option is challenged. However, it is anticipated that tenant’s focus will remain on avoiding these circumstances arising in the first place. It seems more likely that tenants will continue to ensure any break conditions are strictly complied with, rather than rely on landlord’s conduct to (as in this case) mitigate a missed payment.