Commercial Subleases

Most leases of commercial buildings give the tenant the right to sell the lease and some will permit subletting. Subletting means that the tenant grants a new lease out of the tenants lease. If this is done then the tenants lease (from the freeholder)┬áis generally called the ‘head lease’ and the lease granted out of that is called the ‘sub lease’ or ‘under 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 head lease terms - if 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 sublease 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 sublease 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 sublease it means that there are generally two documents required - one is the sublease itself, and the other is the licence to sublet that would be granted by the landlord.

The same conditions regarding registration requirements and Stamp Duty Land Tax apply to a sub lease as they do to a lease, see Useful links.

If further security is required against performance of the tenants obligations then the landlord may wish to consider taking a security deposit, see Useful links.

We hope that you will find our templates helpful. Beware though - leases are substantial and often complex documents. Bear in mind that sometimes the head lease will set out various requirements that have to be observed in the way in which the sublease is drafted. All leases are different and you need to consider the relevant provisions of the head lease.

Our templates available below assume that the sublease will be a lease of the whole of the property demised by the head lease. There are different versions of the lease and licence depending on whether the intention is that the sublease carry security of tenure. If you have any doubts you should consult a solicitor.

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The documents available on this site have been prepared for use in England & Wales. They may not be valid if used in other areas.