Commercial Lease Assignments and Subletting Solicitors in Manchester & Stockport

The starting point is always the lease. It will usually say whether you can assign at all, whether landlord consent is required, and what conditions can be imposed (for example, requiring references, a guarantor, or an Authorised Guarantee Agreement).

Most landlords will want financial information, references and details of the proposed use. If there are arrears, disrepair, or historic breaches (such as unauthorised alterations), these often need addressing early because they commonly become consent conditions.

Where the lease says consent cannot be unreasonably withheld, the landlord has a statutory duty to give consent within a reasonable time (unless it is reasonable to refuse), and to give written notice of any conditions or refusal reasons.

Assignment is typically completed by a deed of assignment, alongside a licence to assign documenting the landlord’s consent and any conditions. If an AGA is required, it will be documented separately and should be checked carefully so you understand exactly what you are still guaranteeing.

On completion, there are usually formal notices to serve and costs to settle (often including the landlord’s reasonable legal costs if the lease allows). Timing and “conditions precedent” matter here: many licences make consent conditional on specific steps being taken before completion.

Many leases allow underletting only with consent and only on specified terms (for example, rent level, term length, and form of sublease).

Whole-premises underletting is usually simpler. Part-only subletting often needs more work because you must deal with practicalities such as access, services, repairs, signage, and how service charge and insurance are split.

It is common for headleases to require subleases to be contracted out of the renewal rights under the Landlord and Tenant Act 1954. If contracting out is required, the prescribed warning notice and declaration procedure under the 2003 Order must be followed for it to be effective.

As with assignment, landlords typically want to assess the subtenant’s covenant strength and suitability of use. Where the lease requires consent not to be unreasonably withheld, the same statutory framework applies to how the landlord deals with the application.

A well-drafted sublease aims to be as “back-to-back” as possible with the headlease, so you are not left responsible to the head landlord for obligations you cannot pass down or enforce against the subtenant. In both routes, the practical risk is usually not the headline deal but the details: consent conditions, timing, existing breaches, and documents that leave you carrying liability you did not expect.

Assignment is usually better if you want the closest thing to a clean exit, because the new tenant takes over the lease (though you may still have limited ongoing liability under an AGA). Subletting is usually better if you want to keep the lease but reduce costs or only let part of the space, but you remain fully responsible to the landlord if the subtenant defaults.

To assign a commercial lease, you first check the lease’s alienation clause to confirm assignment is allowed and what conditions apply, then apply for the landlord’s written consent (usually via a licence to assign) with the assignee’s references and financial information. Once consent is agreed, the parties sign a deed of assignment (and often an AGA if required) and serve any notices and pay the landlord’s reasonable costs where the lease provides for them.

Usually, yes. Most commercial leases say you must obtain the landlord’s written consent before you can assign the lease, and that consent is normally documented in a Licence to Assign.

A licence to assign may not be needed only where the lease expressly permits assignment without consent (uncommon) or in very limited situations where the lease wording means consent is not required. The safest approach is always to check the lease’s alienation clause before agreeing terms with an incoming tenant.

To “register” a commercial lease assignment in England & Wales, you normally apply to HM Land Registry to update the registered leasehold title, because a transfer of a registered leasehold estate generally does not operate at law until it is completed by registration. In practice this is done by submitting the Land Registry application (commonly form AP1) with the executed deed/transfer, the correct fee, and (where an SDLT return is required) the SDLT5 certificate from HM Revenue & Customs. If the lease is unregistered but has more than 7 years left to run, the transaction will usually trigger compulsory first registration, so the application is made as a first registration rather than an AP1 update.

Commercial subletting can be beneficial because it lets you reduce your net occupancy cost by bringing in rent from a subtenant, retain flexibility (you stay in control of the headlease rather than giving it up), and monetise surplus space without relocating. It can also be a practical option where you cannot assign (or can’t find a suitable assignee) or where you only want to dispose of part of the premises, though you remain liable to the landlord if the subtenant defaults.

The main risks of commercial subletting are that you stay fully liable to your landlord under the headlease (rent, service charge, repairs and compliance) even if your subtenant doesn’t pay or breaches the sublease. You also take on “middle landlord” responsibilities, meaning you must manage and enforce the sublease, which can involve cost, delay and potential disputes if the subtenant defaults. Finally, if the sublease isn’t drafted properly you can end up with non back-to-back terms (for example, repair, alterations, reinstatement or access), leaving you exposed to obligations you can’t pass down or recover.

Usually no. Most commercial leases require the landlord’s written consent to assign or sublet, and doing it without consent is typically a breach of lease that can lead to enforcement action (including forfeiture proceedings, damages and an injunction).

You can only assign or sublet without consent if your lease expressly allows it (rare) or sets out a route where consent is not required, so the alienation clause must be checked carefully before you agree anything with an incoming tenant.

A landlord can refuse consent only if it is reasonable to do so, and the refusal must be based on matters connected to the property, the lease and the landlord’s legitimate interests (not unrelated leverage). In practice, refusals are most commonly upheld where the proposed assignee/subtenant has weak financial standing, the proposed use would breach the lease or harm estate management, or where there are existing tenant breaches (for example arrears, unauthorised alterations or disrepair) that the landlord reasonably insists are dealt with before consent is granted.

There’s no fixed deadline. Where the Landlord and Tenant Act 1988 applies, a landlord must give the tenant written notice of their decision within a “reasonable time” after receiving a written, properly supported request for consent.

What counts as “reasonable” depends on the facts, but it’s generally measured in weeks rather than days for straightforward applications (often around 2–4 weeks, and longer if the matter is complex or information is missing).

For most matters, the paperwork is fairly standard, but the exact documents depend on your lease terms and any conditions the landlord sets for consent. For a commercial lease assignment, you usually need a Licence to Assign and a Deed of Assignment. Depending on the deal, you may also need an Authorised Guarantee Agreement (AGA), a guarantor and/or rent deposit documentation, plus any required notices and (where applicable) SDLT and Land Registry paperwork.

For a sublease, the core documents are the Licence to Underlet and the Sublease. If required, you’ll also need the 1954 Act contracting-out notice and declaration, and sometimes additional documents such as a rent deposit/guarantee, side letters, or plans and schedules (particularly for part-underlettings and reinstatement/repair arrangements).

The main tax points are Stamp Duty Land Tax (SDLT), VAT and income/corporation tax. The incoming tenant/subtenant may need to file an SDLT return and pay SDLT on any premium and, for non-residential leases, on the net present value of the rent where thresholds are met.

VAT often depends on whether the property is opted to tax, as rent and premiums can become VATable, affecting cashflow and whether VAT can be reclaimed. For direct taxes, subletting rent is usually taxable income for the head tenant, while a payment for assigning an existing lease is often treated differently (commonly as a capital receipt), so your accountant should confirm the correct treatment for your figures and structure.

In a sublease, the head tenant remains responsible to the landlord for paying the rent under the headlease, and the subtenant pays rent to the head tenant under the sublease, so if the subtenant doesn’t pay, the head tenant still must.

In an assignment, the assignee (new tenant) becomes responsible for paying the rent to the landlord from completion of the assignment, although the outgoing tenant may still have limited ongoing exposure if they have given an Authorised Guarantee Agreement (AGA).