Find More Services

Assignment of lease – Licence to Assign

If you are a tenant and wish to assign the lease then this is likely to be a detailed legal job just like any other property transaction. You will almost certainly require the landlord’s written permission to the assignment. This is called a licence to assign. The landlord will require his legal costs (and perhaps additionally his surveyor’s costs for advising on the acceptability of the assignee or other details of the transaction) to be paid by his tenant. The total costs involved on an assignment can be significant. In order to mitigate the risk of a tenant having to pay a large legal bill only to find that the assignment does not proceed, an assignor may wish to stipulate that the assignee pays or contributes towards the landlord’s costs, so it is quite common for an assignee’s solicitor to be required to undertake to pay all or part of those costs. Again we would recommend your seeking our advice at an early stage so that we can discuss in detail all the factors that need to be taken into consideration.

Underletting (whole or part)

Underlettings can involve more legal work than applies to assignments, potentially resulting in higher fees. The headlease will usually contain restrictions or even a complete prohibition on underletting the whole (or a part) of the premises. If underletting (of the whole or part) is permissible with the landlord’s consent, cost considerations will apply. Clearly if you wish to underlet part then this may be the only viable way forward if as landlord you wish to mitigate your rent bill under the headlease. If you wish to get out of your lease by underletting you may wish to consider exercising any break clause or finding an assignee rather than an underlessee.

There are numerous legal and commercial factors to take into account so you would be well advised to contact us at an early stage if an underletting is proposed.

Licence to change user

The lease almost certainly contains restrictions as to what the premises may be used for. If a tenant wishes to change the use then a licence to change user or perhaps a deed of variation will be required. The tenant is usually responsible for the landlord’s costs unless there is some other commercial quid pro quo. Anything can be agreed by negotiation but generally the landlord has the upper hand.

Licence to alter

A tenant may wish to make alterations to the premises. The lease will more likely than not contain a clause setting out the conditions for this to happen. The landlord may wish to control what works are carried out in order to preserve the structural integrity of the building. On the other hand if a tenant with a longish lease is willing to spend money on improving the premises this may be welcome news to the landlord. A tenant can become entitled to compensation for improvements in certain circumstances. Generally, where a landlord is asked to consent to alterations to the premises he will require a detailed drawing and specification, might well appoint a surveyor to check everything and expect all his costs to be paid by the tenant.

Deed of variation

Sometimes the parties will agree to vary the terms of the lease. This is a matter of negotiation. Neither party will have the right to vary the lease unilaterally.