Licences to Assign
Whether you are a business looking to transfer your lease to a third party or a landlord keen to ensure that the incoming tenant is financially and operationally suitable, it is essential to navigate the licence to assign process with expert guidance. Our experienced commercial property solicitors can help you protect your interests, avoid delays, and ensure compliance with your lease obligations.
What is a Licence to Assign?
A licence to assign is a formal legal document in which a landlord gives consent to a tenant to transfer (assign) the tenant’s lease to a new tenant (assignee). Most commercial leases contain restrictions on assignment and require the landlord’s prior written consent. Without this consent, the assignment will usually be invalid and could result in serious legal consequences.
A licence to assign typically:
- Sets out the conditions on which the landlord consents to the assignment. These conditions often include financial checks on the incoming tenant and, in some cases, the requirement for a guarantor or rent deposit.
- Preserves the landlord’s rights and ensures the outgoing tenant remains liable if the new tenant defaults, particularly under an authorised guarantee agreement (AGA).
- Forms part of the legal documentation needed for the successful transfer of the lease.
Why is a Licence to Assign Important?
For landlords, the licence to assign process ensures that any new tenant is financially sound and capable of complying with the lease covenants. For tenants, it is a crucial step in completing a lease transfer, whether due to a business sale, relocation, or restructuring. Failing to obtain the landlord’s consent properly can:
- Breach the terms of the lease, giving the landlord grounds to terminate it.
- Result in the new tenant having no legal right to occupy the premises.
- Create significant disputes and potential claims for damages.
How We Help Tenants
If you are a tenant seeking to assign your commercial lease, we can guide you through the entire process. This includes:
- Reviewing your lease to confirm the conditions and restrictions around assignment. Many leases include specific procedural requirements, such as providing financial information about the assignee, which must be followed precisely.
- Negotiating with your landlord to obtain consent on fair terms and avoiding overly onerous conditions.
- Drafting or reviewing the licence to assign to ensure your ongoing liability is limited as far as possible. This may involve negotiating the terms of any required Authorised Guarantee Agreement (AGA).
- Coordinating with the assignee’s solicitor and your landlord’s solicitor to ensure a smooth and timely completion.
How We Help Landlords
For landlords, protecting your investment and ensuring the ongoing financial security of your property portfolio is key. We assist landlords by:
- Reviewing the assignee’s financial standing and references to assess their suitability.
- Advising on whether a rent deposit, guarantor, or other security is advisable and lawful.
- Drafting robust licence to assign documents that preserve your rights if the assignee defaults.
- Ensuring that the outgoing tenant remains liable where appropriate, giving you additional protection.
- Handling the matter efficiently to reduce void periods and maintain rental income.
Common Challenges with Licences to Assign
Licences to assign can become complex when issues arise such as:
- The incoming tenant’s financial standing is marginal and the landlord seeks additional security.
- The outgoing tenant wishes to be fully released from ongoing liability, but the landlord is reluctant.
- There are disputes about whether certain conditions imposed by the landlord are reasonable.
Our experienced solicitors can help resolve these issues, often through negotiation, ensuring the deal progresses without unnecessary delays or costs.
Why Choose Jonathan Lea Network?
We are a full-service law firm with particular expertise in commercial property law. Clients choose us because:
- We offer clear, practical advice that balances protecting your interests with achieving a commercially sensible outcome.
- Our team is known for being approachable and responsive, ensuring that you understand every step of the process.
- We work efficiently to meet deadlines and reduce the stress often associated with property transactions.
- Our transparent pricing gives you confidence in how we will manage costs.
If you are facing time pressures, complex lease conditions, or concerns about liability, we will take a proactive approach to secure the best possible outcome for you.
Speak to Our Commercial Property Team
If you are considering assigning your lease or are a landlord approached for consent, it is vital to get the legal process right. At Jonathan Lea Network, we combine technical expertise with a commercial mindset to help you achieve your goals while avoiding unnecessary risk.
Call us today on 01444 708 640 or email us at wewillhelp@jonathanlea.net to book a free 20-minute initial consultation. We can quickly assess your situation and provide clear advice on the next steps.
FAQs: Licences to Assign
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What happens if I assign my lease without a licence to assign?
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Assigning a lease without the landlord’s consent (where it is required) is a serious breach of lease terms. The landlord could forfeit the lease, meaning they take back possession of the property. Even if the landlord does not act immediately, you could be liable for damages or face legal action later. The assignee may also have no legal right to occupy the property, which can disrupt business operations and lead to disputes.
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Can a landlord refuse to grant a licence to assign?
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A landlord cannot unreasonably withhold or delay consent if the lease is subject to the Landlord and Tenant Act 1988. However, what is “reasonable” will depend on the facts. For example, refusal may be reasonable if the incoming tenant has poor financial references or intends to use the property for a purpose that breaches planning laws or the permitted use clause.
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Will I still be liable for the rent after I assign my lease?
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Often, yes. Many landlords will require the outgoing tenant to enter into an Authorised Guarantee Agreement (AGA). This means that if the new tenant defaults, you must step in and pay the rent and comply with lease obligations. We can help you negotiate the terms of any AGA to limit your liability as much as possible.
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Can the landlord insist on a rent deposit or guarantor from the new tenant?
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Yes, in many cases. Where the incoming tenant has a limited trading history or weaker financials, landlords are entitled to ask for security such as a rent deposit or a third-party guarantor. Whether such conditions are reasonable will depend on the specific circumstances and the terms of the lease.
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What if the assignee wants to change the use of the property?
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This is a more complex issue. Even if the landlord consents to the assignment, the assignee must comply with the “permitted use” provisions in the lease. If the proposed use differs, separate consent for a change of use may be required, often involving planning permission. We can advise you on the necessary steps to avoid any breach.
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Can the landlord impose new covenants on the incoming tenant as part of the licence to assign?
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Not usually. The landlord’s consent should relate to the existing lease terms. However, in some situations, landlords may seek additional undertakings or security as a condition of consent. If these are unreasonable or outside the scope of the lease, we can challenge them on your behalf.
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What if the lease does not mention assignment at all?
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This is rare but possible, especially with older leases. If the lease is silent on assignment, the tenant may be entitled to assign without consent. However, it is critical to review the full lease carefully, as other clauses could still restrict assignment. We can help clarify your position and avoid disputes.
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Our Areas of Experience
Whether you are a landlord, existing tenant or potential new tenant; our experienced team can help you review, structure and document a lease assignment.
Some areas we have particular experience in are as follows:
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Acquisitions and disposals of freehold and leasehold properties, including agricultural land and buildings
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Construction contracts
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Development projects including planning agreements, options, conditional contracts and joint venture arrangements
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Leasebacks and re-financings
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Leasehold arrangements and landlord and tenant negotiations
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Leasehold enfranchisement;Planning contracts including s.106 agreements
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Residential site assembly and plot sale disposal
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Short term licence to occupy agreements
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Vacant property management, including property guardian contractual documentation
We also identify and advise on other relevant areas of law, such as; mergers & acquisitions, corporate law, finance law, competition law, intellectual property law and tax law.
Our Commercial Real Estate Team
What Our Clients Say
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