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A Licence to Sublet is a formal agreement between a commercial landlord, tenant, and subtenant, in which the landlord grants permission for the tenant to sublet all or part of a commercial property to the subtenant. Licences to Sublet ensure that subletting arrangements are carried out in a way that protects all of the parties involved.
Use this Licence to Sublet:
when a tenant has approached a landlord requesting consent to sublet the whole or a part of the property the tenant is renting
for commercial properties only (ie properties used for business purposes)
when the tenant requires consent to sublet (eg because their Commercial lease includes a clause preventing the tenant from granting a sublease without the landlord’s consent)
when the landlord has seen the subtenant's financial accounts and is satisfied that they are in a position to pay the rent and other sums due under the sublease
for properties in England and Wales only
This document has been customised over 15.1K times
Legally binding and enforceable
Complies with relevant laws
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This licence to sublet is made on___________________________________(date)
| Lease | the lease dated of premises at , under which you are the tenant |
|---|---|
| Property | the property to be let to the Subtenant as described in the Sublease |
| Sublease | a sublease in the form attached to this licence granted by you to the Subtenant. |
This licence has today been duly signed and delivered as a deed on the date first written above.
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This Licence to Sublet template covers:
providing a commercial tenant with consent to sublet
a requirement that the subtenant won’t have security of tenure
the landlord's registration fee
A commercial tenant may decide that they no longer want to use all of the property that they’re leasing for their business. For example, they may wish to stop using all or half of a property due to a reduction in workforce or in production volume. In these situations, the tenant may want to sublet the property (ie grant a new lease under their own lease, so that their lease remains intact but they now have a subtenant who rents some or all of the space from them).
The tenant’s commercial lease may require that the tenant obtains their landlord’s permission before creating such a subletting arrangement. Or, it may not allow subletting at all. In either situation, the tenant may request their landlord’s consent to sublet the property. If, as a landlord, you are satisfied with the proposed subtenant and the arrangement as a whole, you can use a Licence to Sublet to give your permission. Using a formal, written document like this one ensures that the terms of the arrangement are clear and, as the Licence contains certain covenants (ie legally binding promises) from the tenant and subtenant, ensures that the landlord is adequately protected.
If the tenant’s Commercial lease absolutely prohibits subletting, the landlord can refuse consent if asked for it without giving a reason.
If the tenant’s commercial lease prevents subletting without the landlord's consent, the landlord must have a good reason for refusing consent. Refusal is likely to be justified only if the proposed subtenant:
cannot show that it has the financial strength to pay the rent, any other sums due under the sublease, and/or the costs of repairs and other obligations, or
intends to use the property for a purpose that’s not allowed by the lease (eg as a fast food outlet instead of a retail store)
The landlord can set a time limit within which the sublease must be granted. The landlord is also entitled to insist that the sublease is completed within a reasonable period after the date that the subtenant’s references were provided. If a sublease isn’t 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 (ie a new Licence will be needed).
This Licence to Sublet will have three parties: the landlord, the tenant, and the proposed subtenant.
It’s important that the subtenant joins in as a party to the Licence so that they can also make promises to the landlord in the agreement, so that the landlord can make legal claims against the subtenant if the subtenant breaches any of its obligations under the sublease.
A landlord can charge a fee to cover any administration costs it incurs in updating records and management systems as to which tenant is using the property. Fees of £25 or £50 are common.
Making your Licence to Sublet online is simple. Just answer a few questions and Rocket Lawyer will build your document for you. When you have all of the information about the property and the parties prepared in advance, creating your document is a quick and easy process.
You’ll need the following information:
The landlord, tenant, and subtenant
What is the landlord’s name, address, and legal structure? If it’s a company, what is its company number?
If the landlord is a company or a partnership, how will it sign the Licence? You must choose one of the viable methods of signing (ie executing) a deed (eg by 2 company directors signing). You will need the names of all individuals who will sign.
What is the tenant’s name, address, and legal structure? If it’s a company, what is its company number?
If the tenant is a company or a partnership, how will it sign the Licence (ie the deed)?
What is the subtenant’s name, address, and legal structure? If it’s a company, what is its company number?
If the subtenant is a company or a partnership, how will it sign the Licence (ie the deed)?
The original lease
On which date was the original lease granted?
What is the address of the leased property?
The sublease
Do you know the date on which the tenant requested permission to sublet? If so, what was it?
What is the time limit on this Licence (ie the period from the date of the Licence within which the sublease must be made or else the Licence will lapse)?
Is the sublease required to have the same rent review provisions as the original lease (ie will the tenant be required to review the amount of rent payable on the same specified dates as in the original lease)?
What is the landlord’s registration fee?
Licences to Sublet allow a commercial landlord to formally provide consent for a tenant to sublet a property. To do this, this Licence to Sublet includes the following terms and sections:
This Licence to Sublet is made on…
The Licence document starts by highlighting the date of the licence. This is followed by clearly identifying the parties to the agreement, ie the landlord, tenant, and subtenant.
Meanings
This definition table assigns specific meanings to key terms used throughout the Licence. When these terms are used capitalised in the Licence they carry the meaning they’re given in this table. In doing this, this table also provides key information about the Licence, for example, the date of the original lease and the address of the property to which it applies.
Consent
This is where the landlord grants consent (ie a licence) for the tenant to sublet the property. A time limit is included, ie the number of weeks or months within which the sublease must be granted before the Licence expires.
Your covenants
Here the tenant makes various (once the Licence is correctly signed) legally binding promises (ie covenants) with the landlord regarding the sublease. For example, that:
the subtenant must not have security of tenure under the sublease
the sublease won’t be varied in any way that would breach the terms of the original lease or of this Licence
the tenant will pay a specified registration fee, and
if you’ve decided that the sublease should have the same rent review provisions as the original lease, that such rent reviews will take place
Subtenant’s covenants
Next, various covenants are made with the landlord by the subtenant. For example, that they will:
abide by the tenant’s covenants contained in the sublease (eg repair or use covenants)
comply with the terms of the original lease
indemnify the landlord against (ie cover) any costs incurred by the landlord due to a breach of any tenant covenants in the sublease
General
This section deals with various other points of law that govern how this Licence agreement operates. For example, stating that:
the Contracts (Rights of Third Parties) Act 1999 is excluded, ie third parties (ie not the landlord, tenant, or subtenant) that would otherwise be able to enforce obligations under this Licence under the Act cannot do so
the legal system of England and Wales must be used to resolve any disputes arising in relation to this Licence (ie the Licence’s agreement’s jurisdiction)
This Licence has today been duly signed and delivered as a deed…
This text clarifies that the document is being signed as a deed, which is one of the legal requirements for the execution of a deed. It is followed by spaces for all necessary individuals to sign on behalf of each the landlord, tenant, and subtenant. For more information on how to execute (ie sign) your Licence, read Execution of deeds and the Make it legal checklist for this document.
If you want your Licence to Sublet to include further or more detailed provisions, you can edit your document. However, if you do this, you may want a lawyer to review the document for you (or to make the changes for you) to make sure that your modified Licence complies with all relevant laws. Use Rocket Lawyer’s Ask a lawyer service for assistance.
Consider whether allowing a sublease is a good idea
Taking on any commercial tenant or subtenant will always come with an element of risk. If the tenant’s business fails or they hit financial difficulty, they may not be able to pay rent.
This Licence to Sublet contains legally binding terms that mitigate the risks the landlord takes on in allowing the proposed sublease. For example, the subtenant’s covenant (ie legally binding promise) to abide by the terms of the sublease. As this covenant is made directly with the landlord, the landlord can take legal action against the subtenant directly if the subtenant breaches their obligations under the sublease (eg by not paying rent). The landlord does not have to claim against the original tenant. Despite these protections, the landlord will still be exposed to the legal costs and time commitments of enforcing their rights in the court, if their subtenant doesn’t pay rent or otherwise doesn’t fulfil their obligations under the sublease. Therefore, consider the subtenant’s business, financial position, and reliability, and related market conditions, before you consent to a sublet.
However, make sure you only refuse a sublet as allowed by the original commercial lease. Also consider the upsides of a sublet - if your original tenant is going to be unable or unwilling to continue paying rent, subletting may be an advantageous option for all.
For more information, read Entering a commercial lease and Subletting business premises.
Understand when to seek advice from a lawyer
In some circumstances, it’s good practice to Ask a lawyer for advice to ensure that you’re complying with the law and that you are well protected from risks. You should consider asking for advice if:
an original lease does not allow subletting
a subtenant has the ability to pay the rent due under a proposed sublease but you object to them for other reasons
you’re considering granting permission for a subtenant whose use of the property will be different to the use allowed under the original lease
