Subleasing Commercial Property

If you are leasing a commercial property, and you find that you cannot get out of the lease then it may be possible for you to sub-lease the property.

Most leases of commercial buildings give the tenant the right to sublet.
Subletting means that the tenant grants a new lease (the Sub Lease or Underlease) out of the existing lease (the Head Lease).

A Sub Lease cannot be granted for a term that exceeds the term of the Head Lease. Subject to this point, whether or not a sub lease can be granted depends on the terms in the Head Lease, and where the Head Lease is silent on the point then there is no restriction on the grant of a Sub Lease. More often though the Head Lease will permit a Sub Lease to be granted subject to it complying with certain conditions laid out – and subject to the landlords consent.

Usually the easiest way of granting a Sub Lease will be to grant a lease by reference to the Head Lease – i.e. a lease in which you set out the rent and term but otherwise import into it all the same terms as are in the Head Lease. This should pass on to the sub tenant all the responsibilities of the tenant – though of course it does not relieve the tenant of those liabilities to the landlord – a direct contract remains between the Head Landlord and the Head Tenant.

In the grant of a Sub Lease it means that there are generally two documents required:

1. the Sub Lease itself; and
2. the Licence to Sublet – this is granted by the landlord

The same conditions regarding registration requirements and SDLT apply to a Sub Lease as they do to a Lease.


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