Most business leases permit a tenant to assign (or sell) the lease subject to obtaining the landlord’s consent. The landlord’s consent is usually given in a formal Licence to Assign.
Before a landlord will give consent he will usually want to be satisfied that the incoming tenant will be able to pay the rent and perform the other tenant covenants in the lease. It is open to a landlord to request a guarantor or a rent deposit if the incoming tenant is of poor covenant strength.
In this folder we have Heads of Terms for Assignments, Letters for the Landlord to send to the Tenant and a Licence to Assign. The Licence is a tripartite document involving the landlord, outgoing tenant and new tenant (assignee).
Landlords should refer to the Protocol for Applications for Consent to Assign or Sublet when handling an application for consent to assign. The Protocol can be found at http://www.propertyprotocols.co.uk. Compliance with the Protocol is voluntary but the Protocol has broad support in the commercial property sector. Our documents are designed to aid compliance with the Protocol.
Other documents may be needed during the term of a lease. A wide variety of documents can be found in our Managing the Letting, Breaches of the Lease, Alterations and Underletting folders.
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Frequently Asked Questions
My tenant wants to sell the lease to someone else. Can they, and do they need my consent? +
Most business leases let the tenant assign the lease subject to the landlord's consent, given by a formal licence to assign. Before consenting you will usually want to be satisfied the incoming tenant can pay the rent and meet the covenants. This sub-folder has heads of terms, letters and a licence to assign.
Can I refuse to let my tenant assign the lease? +
Where the lease allows assignment with consent, section 19 of the Landlord and Tenant Act 1927 means you cannot unreasonably withhold it. For new leases, section 19(1A) lets you agree in advance the conditions or circumstances in which consent can be refused, and those agreed conditions are then treated as reasonable. This sub-folder's documents work within those rules.
Can I make the outgoing tenant guarantee the new tenant? +
Often yes. For a lease granted on or after 1 January 1996, the outgoing tenant is released on a lawful assignment under the Landlord and Tenant (Covenants) Act 1995, but you can require them to give an authorised guarantee agreement guaranteeing the assignee. That guarantee falls away on the next lawful assignment. This sub-folder's licence to assign can include an AGA.
The incoming tenant looks financially weak. What protection can I ask for? +
You can make consent conditional on reasonable protections, such as a rent deposit, a guarantor for the assignee or an authorised guarantee agreement from the outgoing tenant. What is reasonable depends on the covenant strength and the lease. This sub-folder's heads of terms and licence to assign let you build in these conditions before you consent.
Is there a recommended process for handling a consent to assign application? +
Yes. The voluntary Protocol for Applications for Consent to Assign or Sublet sets out the information the tenant should give and the timescales for a landlord's response. It is not law but has broad sector support, and following it lowers the risk of a claim that you delayed or unreasonably withheld consent. This sub-folder aids compliance with the Protocol.
