Consent and Refusal to Assignments & Underletting
We have expanded our range of documents to help landlords and tenants handle applications to assign leases and grant underleases. Our new and amended documents are designed to comply with the Protocol for Applications for Consent to Assign or Sublet (also called the Alienation Protocol) which was introduced last year.
What is the Alienation Protocol?
The Alienation Protocol can be found at http://www.propertyprotocols.co.uk. It aims to standardise how landlords and tenants in England and Wales approach applications for consent to assignments and underlettings. It is a “best practice” guide that is endorsed by many high profile players in the property industry.
How does the consent process work?
Most business leases permit a tenant to assign (or sell) the lease subject to obtaining the landlord’s consent. Some leases also permit the tenant to grant an underlease, either of the whole of the premises or of a part or parts.
The first stage of the process is for the tenant to apply for the landlord’s consent to the proposed assignment or underlease. The tenant’s application should be in writing and should contain all the information necessary for the landlord to make a decision.
The landlord will then decide whether or not to consent to the proposed assignment or underlease. The landlord may only withhold consent if it is reasonable to do so. It might be reasonable to refuse consent to an assignment if, for example, the financial information provided for the assignee indicates that the assignee will be unable to afford the rent. The landlord may give consent subject to reasonable conditions. These can include a requirement for personal guarantees or a rent deposit to be provided.
If the landlord is willing to give consent, it will confirm this to the tenant. The consent will be formally documented in a Licence to Assign or Licence to Underlet.
We have updated our Tenant’s Request for Consent templates and our Heads of Terms templates for both assignment and underlettings. We have also added new Letters for landlords to use to acknowledge applications for consent, request further information and notify the tenant of the landlord’s decision to give or withhold consent.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.