MAKE YOUR FREE Licence to sublet

A licence to sublet is an agreement between a landlord and tenant giving the tenant the right to sublet the whole or part of the property to another party (known as the subtenant).

As a landlord of a commercial property, you may decide to grant your tenant a sublease at their request. Use this straightforward subletting contract to formally give them your consent to sublet. This sublet agreement will make sure everything is properly done and contains the usual covenants so that the tenant and landlord are adequately protected.

For use in England and Wales only.

Use this licence to sublet:

• when your tenant has approached you for consent to sublet the whole or part of a commercial property to another business
• when the original lease includes a clause preventing the tenant from granting a sublease without your consent
• when you have seen the subtenant's financial accounts and they are in a position to pay the rent and other sums due under the sublease

This licence to sublet covers:

• providing a commercial tenant with consent to sublet

• a requirement that the subtenant won’t have security of tenure

• a notification of the completion of the sublease assignment

• the landlord's registration fee

If the lease absolutely prohibits subletting then the landlord can refuse consent without giving a reason. If it prevents subletting without the landlord's consent the landlord must have a good reason for refusing. Refusal is likely to be justified only if the subtenant:

1. cannot show that it has the financial strength to pay the rent and other sums under the sublease or to meet the cost of repairs and other obligations, or

2. intends to use the property for a purpose not allowed by the lease (eg using a shop as a fast food outlet or restaurant).

If the lease absolutely prohibits subletting then the landlord can refuse consent without giving a reason. If it prevents subletting without the landlord's consent the landlord must have a good reason for refusing. Refusal is likely to be justified only if the subtenant:

1. cannot show that it has the financial strength to pay the rent and other sums under the sublease or to meet the cost of repairs and other obligations, or

2. intends to use the property for a purpose not allowed by the lease (eg using a shop as a fast food outlet or restaurant).

The landlord can set a time limit within which the sublease must be granted and is entitled to insist that the sublease is completed within a reasonable period after the date of references of the subtenant were provided. If a sublease hasn't been completed within the agreed time period the tenant will no longer have permission to grant a sublease and the tenant will need to re-apply for permission.

A landlord should insist that the subtenant joins in the licence to sublet so that the landlord can claim against the subtenant if there is any breach of its obligations under the sublease.

A landlord can charge a fee to cover its administration costs for updating records and management systems as to who is in the property. Fees of £25 or £50 are common.

Ask a lawyer for:

• original leases that do not allow the tenant to sublet
• a subtenant that you do not agree with has the ability to pay the rent under the sublease
• a subtenant whose use of the property is different to the use allowed under the original lease