assignment of a commercial lease uk

How Do I Assign a Commercial Lease in the UK?

By Clare Farmer

Updated on 27 June 2023 Reading time: 5 minutes

This article meets our strict editorial principles. Our lawyers, experienced writers and legally trained editorial team put every effort into ensuring the information published on our website is accurate. We encourage you to seek independent legal advice. Learn more .

Deed of Assignment

What happens after the lease is assigned, other ways to end your lease agreement, key takeaways, frequently asked questions.

As a commercial tenant, you may not be able to honour your commercial lease for the entire lease term. The lease term refers to the time period in which you occupy the property. This property may be your business’ HQ, warehouse or distribution centre. There are various reasons as to why you may want to terminate your lease early and assign the lease. This article will explain the three critical instructions for assigning a UK commercial lease.

Assignment is a property transfer by the ‘assignor’ (the holder of the property) to the ‘assignee’ (the person receiving the property). As the commercial tenant, you are also the ‘assignor’ and, as such, may effectively assign your lease to another business owner. At this point, they become the new commercial tenant. This means that the new tenant is liable for the lease obligations in the commercial lease, such as rent payments and repair obligations.

The effect of an assignment is that you are now no longer a party to the lease. However, you will still be liable for the lease obligations if your landlord requires you to guarantee the new tenant’s lease obligations. This will be where an Authorised Guarantee Agreement (AGA) is put in place.

Whilst some commercial leases may not allow lease assignment, those which do will generally have conditions attached for the assignment to be valid. The assignment provision may detail whether there are conditions you must satisfy.

If you want to assign your commercial lease, you must know how to do so. Below, we detail three essential instructions to assign a UK commercial lease.

1. Find an Assignee

If you wish to assign your commercial lease, the first step will be to find a suitable business owner. They will be the assignee. A potential assignee will want first to inspect the lease terms in your commercial lease agreement before they agree to take on the lease. One term they will specifically look for is the permitted use of the commercial premises. This is because they will need to ensure that their business activities can occur on the commercial premises.

They may also want to carry out checks on, for example:

the local authority;
utility companies; and
environmental issues.

It is not just your prospective assignee who will carry out checks when you assign the lease. You also will want to carry out checks on your prospective assignee, as will your commercial landlord. It is best to pre-empt the checks your landlord will carry out to ensure you select an assignee who can meet them satisfactorily. For example, you will need to check your assignee’s:

financial status; and
previous lease references.

2. Landlord Consent

Once you are satisfied you have found a suitable assignee for your lease assignment, you will likely need to get your commercial landlord’s consent before you assign your commercial lease. You should do this as soon as possible. UK law states that your landlord must respond to your request without unreasonable delay and should not unreasonably refuse to give consent for the lease assignment. It is advisable to get a solicitor to assist you with this.

Other Consent Considerations

Before you assign the lease to a specific business owner, you will also have to get your landlord’s consent that you may indeed assign the lease to this person. A landlord may include conditions in the commercial lease agreement as to who the assignee can be to ensure that the prospective tenant:

can pay the rent;
will look after the landlord’s commercial property; and
will behave well on the commercial premises to avoid disturbing other businesses and tainting the landlord’s name.

Your landlord has the right to ask you to provide documents and information about the assignee. Your landlord may require information about your assignee’s position, such as their financial status, which you should have previously checked.

Once your landlord agrees to assign the lease, they will give you a document which is a licence to assign. They may also require you to sign an Authorised Guarantee Agreement. Your solicitor will typically review both documents before the documents are finalised and thereafter become binding.

If your commercial lease details no conditions surrounding the assignment of a lease, such as the need to get your landlord’s consent, you will not need a licence to assign the lease.

3. Assign the Lease

Once you have found a business owner to be the assignee for your commercial lease and your landlord consents to them being the new commercial tenant, you can start the lease transfer process and assign the lease.

As the tenant, you are responsible for assigning the lease. The process might vary depending on the lease term. If the lease is for seven years or more, you should use a Land Registry form which is a TR1. This method involves a simple transfer of the lease and is suitable where your lease is a registered lease. Where your commercial lease is less than seven years, you can assign it with a deed of assignment. This method is suitable where the commercial lease is unregistered.

Once the landlord consents to the proposed new tenant, the landlord and the new tenant will enter into a deed of assignment. This is the formal document that transfers your lease to the new tenant. It ends your duties concerning the lease, which the new tenant then takes over and agrees to be bound by. Since this is a legal document that all parties will need legal advice on, you and the new tenant must decide who will pay for the landlord’s legal fees.

Provided you did not enter into an authorised guarantee agreement with your now ex-landlord, you are released from any responsibility concerning the commercial premises you leased. The new tenant takes those responsibilities on. If you had to enter into an authorised guarantee agreement to secure the landlord’s agreement to the new tenant, that new tenant is still responsible for abiding by the terms of the original commercial lease. However, you are still potentially liable for the new tenant’s breach of that lease.

Before you ask your landlord if you can assign your lease to someone else, note that there are other ways to end your lease agreement early. These include:

taking advantage of a ‘break clause’ (also known as an early termination clause ) in your lease agreement;
asking your landlord to agree to let you terminate your lease early; and
asking your landlord if you can find a subtenant for the property you rent.

This cheat sheet outlines what you should be aware of in your lease agreement.

Assigning a lease allows a tenant to terminate a commercial lease before it comes to an end. It allows you to end your lease obligations and pass these on to another business owner. If you wish to assign your lease, there are three key instructions on how to assign your commercial lease. The first is to find a suitable assignee (a new tenant) for your commercial premises. The new tenant will need, for example, to carry on a business similar to yours. The second is to gain consent to assign your lease from your commercial landlord, which may require you to obtain a licence to assign. Your landlord must also agree to the new commercial tenant you propose as the assignee. It is likely your landlord will carry out financial checks to confirm the proposed commercial tenant’s financial health. Finally, you can assign the lease with a land registry form or deed of assignment.

If you need help understanding the key instructions to assign a commercial lease in the UK, contact our experienced leasing lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page .

Lease assignment is when a commercial tenant transfers their lease to a third party. The third party will then take on the lease obligations and be the new tenant in a commercial lease.

The first key instruction when you want to assign a commercial lease is to find a suitable assignee; this is a third party that becomes the new tenant and is bound by the commercial lease.

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Commercial lease assignments: A guide for businesses

Business owners often consider commercial lease assignments to enhance flexibility, mitigate financial burdens, or adapt to evolving operational requirements.

The work landscape, particularly in cities like London, is also evolving with the widespread adoption of remote and hybrid models, with many tenants seeking to streamline their footprints and reduce overhead costs.

Whether your business is looking for a more suitable space or navigating market fluctuations, this article will give you an overview of the lease assignment process and the essential legal aspects to consider.

What is the assignment of a lease?

The assignment of a lease refers to the legal process through which a tenant transfers their lease obligations and rights to another party, known as the assignee. This strategic move allows businesses to exit their premises before the lease term ends, with the assignee assuming responsibility for complying with the lease terms and obligations.

Businesses may consider lease assignment for various reasons, such as relocation, financial constraints, or changes in business needs. For instance, a company experiencing rapid growth may seek more extensive premises, making lease assignment an attractive option to exit the current arrangement.

What role does a solicitor play?

Understanding the legal complexities is vital when considering the assignment of a commercial lease. In this process, solicitors offer expert advice and can negotiate with the landlord to secure favourable terms within the assignment agreement, safeguarding the client's interests.

Their pivotal role extends to drafting and finalising essential legal documents associated with lease assignments, such as:

Licence to assign: A solicitor can assist in drafting this document, ensuring that it covers all necessary conditions and terms for the assignment, meets legal requirements, and protects the interests of both parties.
Rent deposit deed: Solicitors can draft the rent deposit deed, specifying the details of the deposit arrangement, its purpose, and the conditions under which the landlord can use the deposit, providing legal clarity for both parties.
Authorised guarantee agreement (AGA): Solicitors are instrumental in creating an AGA, outlining the legal commitment by the outgoing tenant to guarantee the new tenant's performance. They ensure that the agreement is comprehensive and legally sound, protecting the interests of the landlord and the outgoing tenant.

Avoiding the legal pitfalls of lease assignments

While every commercial lease assignment is unique, several legal aspects require careful consideration.

1. Leasehold covenants: Ensuring compliance

Understanding leasehold covenants is essential in the lease assignment process as it involves recognising and complying with the agreed-upon obligations and restrictions outlined in the lease agreement. These covenants dictate how the property can be used, any alterations or improvements allowed, and other conditions the current and potential tenants must adhere to.

For example, if a leasehold covenant stipulates that the premises can only be used for office purposes, you cannot assign the lease to a manufacturing company.

Failure to understand and meet these covenants could lead to complications, including the landlord's refusal to consent to the assignment or potential legal issues. Comprehending these covenants is essential for a smooth and legally compliant lease assignment.

2. Securing the landlord's consent: A prerequisite

Before proceeding with a lease assignment, obtaining the landlord's consent is paramount. This process involves submitting a formal request providing details about the proposed assignee and their financial stability.

While landlords cannot unreasonably withhold consent, specific lease terms may give them grounds to do so. Understanding the particular conditions for refusal is crucial, so it is important to seek legal advice as soon as possible.

3. Liabilities when assigning a commercial lease

Understanding liabilities when assigning a lease is crucial for business owners as it directly impacts their ongoing responsibilities and potential financial obligations. Transferring a lease doesn't automatically absolve the original tenant of all liabilities; they may still be held accountable if the new tenant defaults on payments or breaches lease terms.

An authorised guarantee agreement (AGA) is a legal commitment often used in the context of commercial lease assignments. When a tenant assigns its lease to a new tenant, the outgoing tenant (assignor) may be required to provide an AGA. This agreement serves as a guarantee by the original tenant to the landlord, ensuring that the obligations of the new tenant (assignee) under the lease will be fulfilled.

The AGA means that if the new tenant defaults on the lease obligations, the outgoing tenant remains liable, guaranteeing the landlord a level of financial security. The original tenant can be pursued for any unpaid rent or other breaches of the lease terms by the new tenant. The AGA provides a legal mechanism for the landlord to seek redress from the outgoing tenant if issues arise with the assigned lease.

Clear comprehension of these liabilities ensures informed decision-making and risk mitigation during the lease assignment process.

4. Navigating regulatory changes

The evolving regulatory landscape, particularly factors like Energy Performance Certificates (EPCs), can add additional challenges to lease assignments. For example, if you took on a lease before Minimum Energy Efficiency Standards (MEES) came into effect on April 1, 2018, the regulations did not apply at the time of the lease's inception. However, if you are now considering assigning the lease, MEES regulations would be applicable.

A landlord may be less willing to agree to the lease assignment if it becomes essential to ensure that the property meets the required EPC standards to comply with the current regulations.

5. Formalising with Land Registry: A vital step

Registering an assignment with the Land Registry is an important step in the lease assignment process. If a lease is granted with a term of over seven years, it must be registered to record the change of tenant officially.

Failure to complete this registration can have significant consequences, including potential challenges to the validity and enforceability of the assignment.

What are the alternatives to assigning a commercial lease?

When considering an exit from a commercial lease, it's crucial to recognise that assignment is just one of several options. Exploring these options is vital, and seeking guidance from a solicitor ensures a comprehensive understanding of the available choices.

Assignment vs. subletting: Assignment involves permanently transferring your lease obligations to a new tenant. On the other hand, subletting a commercial property allows you to lease a part of your space to another party, retaining your responsibility for the entire lease.
Taking advantage of a 'break clause': A break clause is a provision in the lease allowing either party to terminate the agreement early, typically at predefined intervals. It provides a strategic exit, but conditions and notice periods must align with the lease terms.
Early termination with landlord's consent: Seeking your landlord's agreement to terminate the lease prematurely can be challenging. It requires negotiations and may involve financial considerations. Legal advice is essential to navigate this complex process and safeguard your interests.

Business owners can make informed decisions that align with their strategic objectives by understanding the intricacies, exploring alternatives, and leveraging legal expertise.

Commercial lease expertise

Our team of experienced commercial property solicitors is dedicated to guiding you through the lease assignment process. Every business has unique needs, so we offer tailored advice that aligns with your objectives.

In addition to lease assignments, we can provide guidance on alternative options for ending a commercial lease, such as subletting, break clauses, and lease termination.

With solicitors in London, Brighton, East Sussex, and Cumbria, we assist commercial landlords and tenants nationwide.

Looking to assign a commercial lease?

You might also like to read:

Subletting strategies: maximising flexibility in commercial leases, how to surrender a commercial lease: a guide for landlords and tenants.

How to end a commercial lease early: A quick guide

Repair clauses in commercial leases: what tenants need to know.

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An assignment of a commercial lease is a process by which the current tenant of a leased commercial property transfers its leasehold rights to a new tenant.

The new tenant takes over the obligations and responsibilities of the lease, including paying rent and maintaining the property during the remaining lease term. The assignment process involves various legal and administrative steps, including obtaining the landlord’s consent and preparing and executing a lease assignment agreement.

Do you need help with the assignment of a commercial lease? Call our fixed-fee commercial property solicitors on 020 3417 3700 or fill in the enquiry form .

Our commercial lease solicitor in Wembley, London will help you to understand the rights & obligations of all parties involved in the lease assignment process. We can provide guidance and ensure that the process is conducted correctly.

No matter where your commercial property is, our commercial lease solicitors provide legal services regarding the assignment of commercial leases throughout England and Wales.

Table of Contents

What is an assignment of a lease?

5 things you should know about lease assignments, what is the process of assigning a lease in the uk, what is the difference between assignment and transfer of lease, do you need a solicitor to assign a lease, how much do solicitors charge for the assignment of the lease.

Why choose Wembley Solicitors?

Frequently Asked Questions

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An assignment of a lease is a legal process that allows the original tenant (assignor) to transfer their rights and obligations under the lease agreement to a new tenant (assignee).

When a lease is assigned, the assignee effectively takes over the remaining term of the lease and assumes all the responsibilities and liabilities outlined in the original lease agreement. The assignor is usually released from their obligations, but this depends on the terms negotiated with the landlord.

Here are a few key points to understand about lease assignments in the UK:

Legal Documentation
Leasehold Covenants
Landlord's Rights

Lease assignments typically require the consent of the landlord or the freeholder, as most lease agreements have clauses that restrict or regulate assignments. The landlord may have specific criteria or conditions for approving an assignment.

2. Legal Documentation

To complete an assignment of a lease, the assignor and assignee must typically enter into a legal agreement known as a Deed of Assignment. This document outlines the terms of the transfer and ensures that all parties involved are aware of their rights and obligations.

3. Leasehold Covenants

The assignee is bound by the original lease's covenants, which are the terms and conditions that govern the lease. These may include payment of rent, maintenance responsibilities, restrictions on use, and other obligations.

4. Liability

While the assignor is usually released from future obligations, it is important to note that they may still be liable for any breaches of the lease agreement that occurred before the assignment.

5. Landlord's Rights

The landlord typically retains the right to review and approve the proposed assignee, ensuring they are financially capable and suitable to take over the lease. The landlord may also have the power to request reasonable fees or costs associated with reviewing and processing the assignment.

The process of assigning a lease in the UK typically involves the following steps:

Review the Lease Agreement
Obtain Landlord's Consent
Negotiate Terms
Deed of Assignment
Land Registry Notification
Completion and Handover

1. Review the Lease Agreement

The assignor (current tenant) should review the existing lease agreement to understand the terms and conditions associated with the lease assignment. It is important to check for any clauses or restrictions on assignments and seek legal advice.

2. Obtain Landlord's Consent

The assignor must seek the landlord's consent to assign the lease. This usually involves making a formal request in writing by providing details of the proposed assignee and their financial standing. The landlord may request additional information or documents as part of their assessment process.

3. Negotiate Terms

The assignor and assignee negotiate the terms of the assignment, including any financial arrangements and responsibilities. This may include agreeing on rent apportionment, security deposits, and any other relevant terms. Legal professionals can assist in ensuring that the negotiation process is fair and comprehensive.

4. Deed of Assignment

Once the terms are agreed upon, a Deed of Assignment is drafted. This document outlines the specifics of the lease assignment, including the names & details of the parties involved, the property address, the assignment effective date, and any additional terms or conditions. The Deed of Assignment must be signed by both the assignor and assignee in the presence of witnesses.

5. Land Registry Notification

After the Deed of Assignment is signed, it is typically submitted to the Land Registry. This ensures that the assignment is officially recorded and that the assignee's interest in the property is registered.

6. Completion and Handover

Upon completion of the assignment, the assignee assumes all rights and obligations under the lease. This includes paying rent, fulfilling maintenance responsibilities, and adhering to any other lease terms. The assignor is typically released from future liabilities, subject to the terms negotiated with the landlord.

Throughout the process, it is advisable for both parties to seek legal advice to ensure that their interests are protected and that all necessary legal requirements are met. Additionally, consulting with the landlord or a property professional can help navigate any specific requirements or conditions set by the landlord regarding lease assignments.

The assignment involves transferring the rights and obligations of the lease from one party (the assignor) to another party (the assignee). The assignor is typically the current tenant, while the assignee becomes the new tenant.

On the other hand, a lease transfer refers to transferring the leasehold interest from the current tenant (transferor) to a new tenant (transferee). In a lease transfer, the existing tenant is completely replaced by the new tenant.

It is crucial to consult with legal professionals, such as solicitors or commercial property specialists when dealing with lease assignments in the UK. They can provide guidance and ensure that the process is conducted correctly, protecting the interests of all parties involved.

At Wembley Solicitors, we offer affordable legal services regarding the assignment of a commercial lease on a fixed fee basis with no hidden costs or nasty financial surprises.

Our commercial property solicitors in London charge a fixed fee between £1000-£1500 (Plus VAT) for complete services regarding the assignment of a lease.

Why choose Wembley Solicitors for the assignment of a commercial lease?

We have extensive knowledge and experience in drafting commercial leases and assignments of leases.
Our commercial lease solicitors provide legal services on a fixed fee basis without blowing your budget and with no hidden costs.
We provide professional legal advice and assistance at every step and keep you updated as your matter progresses.
We provide legal services remotely throughout England and Wales. You do not need to physically attend our office.
We have a team of qualified and accredited solicitors.
We are authorised and regulated by the Solicitors Regulation Authority (SRA), so you know you are in safe hands.

We provide legal advice and services to both landlords and tenants. Call our property solicitor today at 020 3417 3700 for more information about the services.

Who pays lease assignment fees?

The responsibility for paying lease assignment fees can vary depending on various factors, including the terms negotiated between the parties involved and any legal or contractual provisions.

Usually, the current tenant (the assignor) and the new tenant (the assignee) bear their own legal costs.

How long does it take to assign a commercial lease?

In general, the assignment of the lease process takes around 3-4 weeks. However, it could take anywhere from a few weeks to several months, depending on how complex the lease is and how long it takes to obtain the landlord's consent.

The amount of time it takes to assign a commercial lease in the UK can vary depending on several factors, including the agreement between the parties, the complexity of the lease and the involvement of third parties, such as solicitors and landlords.

Need legal advice & assistance?

Do you need legal advice or assistance with a commercial property lease? Our expert property solicitors are ready to help you. We're authorised and regulated by the Solicitors Regulation Authority (SRA), so you know you're in safe hands.

Contact our solicitor today to get legal advice and assistance with your legal matters. You can call us on 02034173700 or leave your details here for a callback request regarding your legal matter.

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