Learn about the necessary licences for alterations, assignments, sub-letting, and charging in commercial leases.
This section covers the essential restrictions and conditions both tenants and landlords need to understand. We represent both landlords and tenants in obtaining and providing these permissions.
Licence to assign
If a tenant wants to transfer their lease – perhaps because they are selling their business – they usually need the landlord’s permission through a “licence to assign” the lease. This consent often comes with conditions – for example, the landlord might require the departing tenant to vouch for the new tenant, or they may request a guarantee from the new tenant as well.
Additionally, the landlord may set other terms, such as the payment of any overdue rent. It’s important to review these conditions carefully to ensure they are fair and suitable for the transaction.
Generally, the outgoing tenant pays the landlord’s legal fees for preparing the licence, although sometimes these costs can be shared with the incoming tenant.
We support landlords by preparing these licences and negotiating consent terms. We also help tenants apply for the landlord’s consent on time and provide advice on the conditions imposed.
Licence to sub-let
If a tenant wants to sub-let their entire premises, they usually need a licence from the landlord to do so.
Most leases only allow sub-letting of the entire property, not just a part of it, unless the lease specifically says otherwise and the landlord agrees.
The landlord will likely set conditions for their consent. They will want to approve the rental price to ensure it’s competitive with current market rates, review the terms of the proposed sub-lease, and may require the new sub-tenant to provide guarantees.
It’s important to carefully examine how much control the landlord has over the terms agreed between the tenant and the prospective sub-tenant.
Typically, the tenant pays the landlord’s legal fees for issuing the licence.
We can help landlords by creating these licences and reviewing the proposed sub-lease agreements. We also support tenants in applying for the landlord’s consent and provide advice on the conditions being set.
Licence to charge
Sometimes, a tenant may need to borrow money to expand their business and might look to secure a mortgage charge on their lease, similar to a mortgage on a freehold property. However, most leases don’t allow this without the landlord’s prior consent because landlords are cautious about involving lenders, especially if they need to take steps like forfeiture.
We can help landlords by drafting licences and reviewing mortgage or charge deeds. For tenants, we assist with promptly applying for the landlord’s consent and provide advice on the imposed conditions, working with their brokers and banking teams.
Licences can also be arranged for other matters like landlord’s works or changes in property use.
Licence for alterations
These licenses are often needed when tenants want to customise their leased space for their business, either at the lease’s beginning or later for renovations. Landlords typically need to approve changes, especially for internal or storefront alterations in industries like retail and hospitality.
For significant structural alterations, the licence should address building warranties, defect handling, restoration requirements at lease end, work timelines, work quality standards, and insurance.
Tenants need to apply for the landlord’s consent promptly to avoid delays in their projects.
The tenant usually pays the landlord’s legal fees. We can assist landlords by drafting licences and reviewing plans and specifications. We can also help tenants in negotiating licences and ensuring timely applications for landlord’s consent, providing advice on the conditions set.
