Underlease of Part Heads of Terms
These Underlease of Part Heads of Terms are designed to ensure that the tenant and undertenant agree all significant points of principle before the tenant prepares and issues a draft underlease (or asks his solicitors to do so).
These heads of terms are suitable for an underlease of part of the tenant’s premises. If the underlease is to be of the whole of the tenant’s premises, the Underlease of Whole Heads of Terms should be used instead.
The terms prompt the parties to an underlease to record administrative information, such as the parties’ contact details, and to set out what has been agreed in relation to key points such as the underlease term, break rights, assignment and further underletting and repair. There is also a field where the energy efficiency rating of the premises can be confirmed. The agreed Heads of Terms can be sent to the Landlord with the tenant’s application for consent to underlet. They also prompt the landlord to provide an Energy Performance Certificate (EPC) and have been updated to include consideration in the lease in respect of access for carrying out an EPC assessment, energy efficiency upgrading and for the tenant to pay the costs of energy efficiency works.
It is good practice to attach a plan to the Heads of Terms so that the extent of the property is clearly defined. If the underlease is to have a term of more than 7 years the plan must be Land Registry compliant. Further information about the Land Registry’s requirements for lease plans can be found at https://www.gov.uk/government/collections/plans-practice-guides.
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This Underlease of Part Heads of Terms template can also be found under Property Management: Underletting Documents and under Commercial Occupiers: Heads of Terms and Underlease Documents.