assignment of lease uk

Assignment of Lease Explained

• December 1, 2023

Understanding the complexities surrounding the assignment of a lease is crucial for both tenants and landlords. Within the UK, various situations might compel a tenant to transfer their lease to another party. In this guide we will delve into the essentials, helping you understand every facet of a lease assignment.

What is an Assignment of Lease?

In the world of property management and real estate, the concept of an “assignment of lease” is fundamental. It involves a tenant, known as the assignor, transferring their entire legal interest in a property to another individual or entity, called the assignee. This process is common in both residential and commercial contexts and plays a significant role in maintaining the fluidity of property interests, especially in a dynamic market.

When a tenant signs a lease, they agree to specific commitments, including paying rent and maintaining the property, which are enforceable for a set period. However, various circumstances may prompt a tenant to vacate the property before the lease term expires. Herein lies the importance of the assignment of lease.

Through lease assignment, the original tenant can exit the property and pass on the responsibility to a third party, who then assumes the role of the tenant with all its incumbent responsibilities. It’s important to note that while the new tenant steps into the shoes of the original tenant, the lease terms remain unchanged.

For instance, if an individual rents a flat and later decides to move out before the lease’s expiration due to reasons such as relocating for a job or changing living situations, they may opt for an assignment of the lease. This strategy allows another person to take over the living space and adhere to the responsibilities under the original lease, ensuring that the flat does not remain unoccupied and the landlord continues to receive rent payments. This seamless transition can be especially beneficial in residential areas with high demand for housing, as it minimises financial instability for the landlord and provides immediate accommodation for those in need of a home.

Key Components of Lease Assignment

• Assignor and Assignee: The existing tenant (assignor) and the new tenant (assignee) are the primary parties in this agreement. Their willingness to transfer and assume the lease’s obligations, respectively, drives the assignment process.
• Landlord’s Role: While not a direct party to the assignment, the landlord plays a pivotal role. Most lease agreements stipulate that landlords must provide consent before any assignment takes place. This clause protects the landlord’s interests, ensuring the new tenant is reliable and meets the required standards.
• Legal Documentation: The process requires several legal documents, including the initial lease agreement and a deed of assignment. The latter must clearly articulate that all rights and responsibilities have been transferred to the new tenant. This precision prevents future disputes regarding the terms of the lease.
• Liabilities: The assignment of lease doesn’t inherently absolve the original tenant of responsibilities. Depending on the agreement’s terms, the assignor might remain liable if the assignee fails to fulfil the lease obligations. This potential continued liability underscores the importance of thorough assignee vetting.

The Legal Ground

The legality surrounding the assignment of a lease is rooted in UK property law. It necessitates compliance with various statutory requirements and often involves complex legal procedures. Consequently, parties usually engage solicitors to ensure that the assignment aligns with legal protocols, protecting the interests of all involved parties.

The assignment of a lease is a nuanced process, influenced by factors unique to each situation. Whether prompted by personal, business, or financial changes, lease assignments facilitate flexibility in property occupancy and use. Understanding this concept is crucial for tenants seeking an early exit from a lease, individuals looking for established lease properties, and landlords wishing to maintain continuous tenancy and income streams.

Understanding the Deed of Assignment of Tenancy

A “deed of assignment tenancy” is a legal document that evidences the transfer of lease obligations from the current tenant to another. It is an essential part of the lease assignment process, binding the new tenant to the terms stated in the original lease.

Landlord’s Checks Before Permitting Assignment of a Lease

The assignment of a lease, while beneficial in maintaining continuous occupancy and consistent rent payments, necessitates thorough due diligence on the part of the landlord. Before consenting to an assignment, it’s imperative for landlords to conduct comprehensive checks, mirroring the depth of evaluation done during the initial tenant screening process. These checks are crucial in mitigating potential risks and safeguarding the landlord’s investment.

Detailed Assessment of the Prospective Assignee

Landlords should ascertain the financial stability and reliability of the assignee. This assessment often involves:

• Credit Checks: This allows landlords to have a clearer understanding of the prospective assignee’s credit history, highlighting their ability to keep up with regular rent payments and financial commitments.
• Employment Verification: Landlords typically require proof of ongoing, stable employment. This verification helps ensure that the new tenant has a consistent income stream capable of covering the rent and other associated costs.
• References: Previous landlords or property managers can provide insights into the assignee’s behaviour, paying habits, and overall reliability. Personal references might also be necessary to form a more comprehensive view of the prospective tenant.

Review of the Assignee’s Intent

Understanding the prospective tenant’s reasons for seeking the property and their long-term intentions can provide reassurance. For instance, landlords should feel more comfortable knowing that the assignee plans to reside in the property for an extended period and doesn’t intend to sublet without permission or engage in unlawful activities.

Examination of Financial Documentation

Landlords may request documentation such as bank statements or savings accounts to further verify the assignee’s ability to afford the property. This scrutiny is particularly pertinent in higher-rent areas or for properties with higher maintenance costs.

Ensuring Contractual Compliance

It’s important for the landlord to confirm that the assignee understands and agrees to the terms set out in the original lease. The assignee must comply with all existing conditions, and any deviation needs to be negotiated with and approved by the landlord.

Legal Considerations

Given the legal complexities surrounding lease assignments, landlords often seek legal advice during this process. Lawyers can help ensure that the assignment adheres to local property laws, the original lease’s terms, and that the landlord’s interests are thoroughly protected throughout the transition.

By conducting these comprehensive checks, a landlord exercises due diligence, significantly reducing the likelihood of issues arising from the assignment of the lease. This meticulous approach helps maintain the property’s revenue stream, upholds community standards, and ensures the continued preservation and value of the property investment. It’s a proactive measure, providing the landlord with peace of mind that they are handing over their property to a reliable and responsible assignee.

Costs Involved in Lease Assignment

The process of lease assignment, while a practical solution for tenants looking to transfer their lease obligations, does entail various costs that both the assignor (original tenant) and assignee (new tenant) need to consider. These expenses contribute to a seamless transfer process, ensuring all legalities are properly managed, and all parties are adequately protected. Understanding these costs is essential as it prevents unexpected surprises and allows for a more transparent transaction.

Costs for the Assignor

• Advertising Costs: If the landlord does not immediately have a new tenant, the original tenant may need to advertise the property. This could involve online listings, printed materials, or hiring an estate agent to expedite the process, all of which incur costs.
• Tenant Screening Costs: The assignor might opt to conduct preliminary screenings of potential assignees, which include credit checks, reference checks, and other background investigations to ensure they’re presenting a reliable tenant to the landlord.
• Legal Fees: The legal intricacies of transferring a lease require the involvement of legal professionals. The assignor typically bears the cost for legal consultations, drafting the deed of assignment, and any related legal documentation.
• Landlord’s Administrative Fees: Some landlords charge an administrative fee for processing a lease assignment, covering the time and resources they expend to conduct their checks and modify their records.
• Potential Liability Costs: If the assignee fails to meet the lease obligations, and depending on the terms of the assignment, the original tenant may remain partially liable. This contingent liability could lead to future costs.

Costs for the Assignee

• Security Deposit: It’s standard practice for the new tenant to provide a security deposit before moving in. In some cases, the assignee reimburses the original tenant for the initial deposit, depending on its condition and any agreement between the parties.
• Advance Rent: The assignee may need to pay the first month’s rent in advance, similar to standard leasing arrangements.
• Legal Fees: Assignees also incur legal fees. They need legal counsel to review the terms of the lease, ensure the assignment is conducted correctly, and understand their new responsibilities and liabilities.
• Stamp Duty: Depending on the property’s value and the lease’s remaining duration, the assignee might need to pay Stamp Duty Land Tax (SDLT) on the premium or the rent of the lease.

Shared Costs

In some instances, both parties negotiate and equally share specific costs, such as those for legal consultations, to ensure fairness and mutual satisfaction in proceeding with the transaction.

Both assignors and assignees must factor in these expenses to accurately assess whether a lease assignment is a financially viable option. It is advisable to consult with real estate professionals and legal advisors to understand all potential charges fully. Having a clear, upfront understanding of these costs allows both parties to make informed decisions, ensuring a smooth, transparent, and fair transition process.

Does Assignment Create a New Tenancy?

No, an assignment does not create a new tenancy. It merely transfers the existing tenant’s rights and obligations to the new tenant, who then steps into the shoes of the original tenant under the same lease terms.

The Necessity of Legal Assistance

It is highly advisable to engage a solicitor during the assignment of a lease. A solicitor can provide necessary legal advice, prepare the deed of assignment of lease, and ensure compliance with various property and contract laws.

Deed of Assignment vs Tenancy Agreement

While they might sound similar, a deed of assignment is not the same as a tenancy agreement. The former refers to the document transferring existing lease rights to a new tenant, while the latter is a contract outlining the terms between a landlord and tenant for new occupancy.

Parties Involved in Signing the Deed of Assignment

The deed of assignment of lease is typically signed by the outgoing tenant, the incoming tenant, and sometimes, the landlord, especially when their consent is a prerequisite for the lease transfer.

Landlord’s Consent to Lease Assignment

A landlord can refuse to consent to assign a lease, but this refusal must be reasonable. Scenarios for justifiable refusal might include the prospective tenant’s inability to meet financial commitments or proposed use of the property that violates lease terms.

Lease Assignment vs Subletting

• Lease assignment involves the complete transfer of the tenant’s rights to another party.
• Subletting occurs when the tenant temporarily hands over the property rights to another party but retains some rights or eventually plans to return.

Financial Responsibilities in Lease Assignment

Typically, the outgoing tenant or the incoming tenant covers the costs related to the assignment of lease, such as legal fees, administrative charges, and any leasehold improvements. The specific arrangements may vary based on mutual agreements.

Assigning a Lease Without a Deed: Is It Possible?

No, a lease assignment must be evidenced by a deed to be legally binding. The deed of assignment tenancy is crucial as it protects the interests of all parties involved and provides legal clarity.

The Meaning of ‘Assignment’ in Rent Context

In the context of renting, ‘assignment’ refers to transferring the existing tenant’s lease obligations and rights to another party. The assignee assumes responsibility for rent payments and adherence to the lease terms.

Advantages of Assigning a Lease

There are several benefits associated with the assignment of a lease, including:

• Flexibility for the tenant needing to vacate the property before lease termination.
• Minimal interruption in rent payments for the landlord.
• Opportunity for another tenant to occupy the premises without having to negotiate a new lease.

Stamp Duty and Lease Assignment

Stamp duty on assignment of lease may apply depending on the premium paid and the lease’s yearly rent. It’s important to consult a solicitor to understand any potential tax implications.

Post-Assignment Liabilities for Tenants

After the assignment of a lease, the original tenant is generally released from future liabilities. However, they may remain liable if the new tenant defaults, depending on specific lease terms or if guarantees were provided.

Essential Documents for Lease Assignment

In the process of a lease assignment, several critical documents must be prepared, reviewed, and signed to ensure a legally binding transfer of rights and responsibilities from the original tenant (assignor) to the new tenant (assignee). These documents are crucial in defining the terms of the assignment, protecting the interests of all parties involved, and complying with legal standards. Here are the essential documents required for a successful lease assignment:

1. The Original Lease Agreement

• Before any transfer, all parties must review the original lease. It’s vital to understand any clauses or terms that could impact the assignment, such as conditions requiring the landlord’s consent for any lease transfer.
• The original lease agreement serves as the foundation for the assignment, outlining the terms and obligations that the assignee will need to adhere to.

2. Deed of Assignment of Lease

• This legal document formally transfers the lease obligations from the assignor to the assignee. It must clearly state the terms under which the lease is assigned, including any continuing liabilities of the assignor, if applicable.
• It should be comprehensive, detailing the rights and responsibilities of all parties and any guarantees provided by the assignor.
• The deed is usually drafted by a solicitor to ensure that it complies with legal standards and adequately protects everyone’s interests.

3. Landlord’s Consent to Assignment

• Most leases require the landlord’s formal approval for any assignment to occur. This document is the landlord’s written agreement, permitting the transfer from the current tenant to the new one.
• It may come with conditions the assignee must satisfy, which should be clearly outlined in the consent form.

4. Assignee’s Letter of Acceptance

• This document is proof that the assignee understands and agrees to the terms set out in the original lease and the deed of assignment.
• The letter may restate key lease terms for clarity and will affirm the assignee’s commitment to abide by all the lease conditions and responsibilities.

5. Legal Advisories

• Though not a formal part of the lease assignment, documentation of legal advice received by both the assignor and assignee (and possibly the landlord) is crucial.
• These advisories ensure each party has been informed of their legal rights and obligations, potentially offering protection in the event of future disputes.

6. Inventory List

• If relevant, an inventory list detailing the condition of the property, especially for furnished rentals, would be necessary. This document helps manage expectations and responsibilities concerning the property’s state and contents at the time of the assignment.

7. Proof of Assignee’s Financial Stability

• While not always formally part of the assignment documentation, evidence of the assignee’s ability to meet financial commitments (like bank statements or employment confirmation) often needs to be submitted to the landlord during the assignment process.

The process of assigning a lease is a complex legal transaction that requires strict adherence to procedural standards. These essential documents ensure that the assignment progresses smoothly, with clear understanding and agreement from all parties involved. Both assignor and assignee should seek legal counsel to ensure their interests are protected, and all documents are in order, further underscoring the importance of each document’s role in this pivotal real estate process.

Energy Performance Certificate (EPC) Requirements

Yes, an EPC is generally required for a lease assignment, especially if the building is to be sold or rented out. This certificate ensures that the property meets the necessary energy efficiency standards.

Registering an Assignment of Lease

Registration of an assignment of lease is crucial. It validates the change of tenant under the lease, making it legally binding and enforceable. This process usually involves submitting the deed of assignment to the appropriate land registry.

Timeframe for Assigning a Lease

Assigning a lease can take anywhere from a few weeks to several months, depending on factors like obtaining the landlord’s consent, the new tenant’s credibility, and the speed of legal processes.

Embracing the Benefits of Lease Assignment

Whether you’re a tenant seeking flexibility or a landlord desiring continued occupancy, lease assignment offers solutions that can cater to your individual needs, promoting ease and continuity in the leasing process.

If you’re considering a lease assignment, it’s paramount to seek professional advice to navigate the complexities involved. The information contained in this article should be used for information purposes only and should not be relied upon in place of specific legal advice.

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Assignment Of Lease: A Brief Look

What is an Assignment? Simply put, it is a transfer of an existing lease by the current tenant to a new tenant with the consent of the landlord.

Let’s see how this works in practice.

To begin with, there should be an existing lease between a landlord and tenant. And the Assignee. The Assignee is the crucial factor that makes Assignment work. He or it is the newcomer to whom the existing lease will be assigned or passed or transferred to. Why does an assignment take place?

It happens for several reasons. Existing tenant want to leave for reasons, usually due to business not doing well, Age, retirement are just a few. Or, someone new comes into the area and wants to take over the lease for their prospective venture. This often is the case.

In legal jargon, the old tenant who wants to get out of the lease is called the Assignor and the new person who wants to get the remainder of the lease is called an Assignee. The landlord remains the same.

What happens next?

1. In practice, the Assignor will instruct his solicitors that he wants to assign the lease. 2. The Assignee will instruct his own solicitors that he wants to buy that lease. 3. The Assignor’s solicitors will contact the landlord’s solicitors about the proposed assignment, asking the landlord’s consent for the transaction to take place. As can be seen there will be three different solicitors involved.

Who pays the legal fees?

The parties will foot their own legal bill except for the Landlord. It’s common practice that the Assignee pays the landlord’s legal fees in addition to his own.

What does the Landlord’s solicitor do?

The solicitor will take instructions from his client as to whether the landlord is willing to give consent for the proposed assignment. And, before such consent can be given, the solicitor will ask the Assignor to provide satisfactory references for the Assignee. These are usually bank and trade references confirming that the proposed assignee is solvent and capable of paying the rent on the lease.

Upon satisfactory receipt of references, the landlord’s solicitors will draft the following documents:

1. Licence to assign 2. Rent deposit deed 3. Authorised guarantee agreement

These will be sent to the Assignor who in turn will send them to the Assignee’s solictors. These are legally binding contractual documents and need to be thoroughly perused before the parties put their signatures on them.

Briefly let’s look at what the above three documents are:

Licence to Assign is the document that enables the current tenant (Assignor) to transfer the lease to the Assignee (incoming tenant) with the landlord’s permission (consent). All three parties will sign this document.

A landlord usually requires a rent deposit as a precondition to providing its consent to the assignment of a lease. A rent deposit is a sum of money provided by the Assignee (who will become the new tenant) to the landlord as security for payment of the rent and performance of the tenant’s covenants in the lease. A rent deposit is attractive to landlords because it is an immediately accessible source of money that can be withdrawn as soon as the tenant is in breach of a relevant covenant in the lease.

An Authorised Guarantee Agreement is a legal document where the outgoing tenant (Assignor) must guarantee the performance, by the assignee, of the covenants from which the tenant has been released. In the event that the Assignee is in breach of any of the Covenants, the outgoing tenant agrees to bear the burden. This is a very important piece of legal document that merits its own article.

All leases are different. And it is always best to look at the requirements of the lease and understand what is needed before you can assign your lease.

If you would like to talk more about this topic, contact Krish Thirugnanamoorthy on 0118 947 8638 for a free quotation or email  [email protected]

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Assignment of a tenancy

Requirements and formalities for assigning a tenancy, and liability for rent arrears of old and new tenants.

What is assignment

Rights to assign, prohibition and consent, how to assign a tenancy, arrears and assignment.

Assignment is a way that a tenant can transfer their tenancy to another person.

On assignment, the assignor's legal interest in a property is passed to the assignee who takes over that interest and becomes the tenant. All the terms of the original tenancy agreement apply to both the new tenant and the landlord, including the amount of rent payable.

Where a tenant grants someone a tenancy and remains a tenant of the original landlord this won’t be an assignment. Instead a subtenancy is created, and the original tenant becomes the landlord of the new tenant.

Whether assignment is possible will depend on:

the type of tenancy

what the tenancy agreement says

whether the landlord agrees

Under section 1(1) of the Law of Property Act 1925 all tenants, including those with a long lease, have a legal estate (an interest) in land. With this comes a general right to assign that estate to another person.

For many types of tenancy this general right is modified by statutory provisions that limit when and to whom the tenancy can be assigned. This will override the general right to assign.

Joint tenancies can be assigned but are still subject to the statutory rules for that type of tenancy. [ 1 ]

A tenancy agreement can also limit when and how a tenancy can be assigned. For example, by requiring the landlords consent.

Find out more about rights to assign for:

secure, flexible and introductory tenancies

assured and assured shorthold tenancies

regulated tenancies

Licences are not a legal interest in land and cannot be assigned.

If the tenancy agreement says nothing about assignment then, subject to any statutory limitations, the tenant is free to assign.

In most cases, the tenancy agreement will only allow assignment if the landlord gives their consent (a qualified prohibition).

If the tenancy agreement states that assignment is not allowed (an absolute prohibition), the tenant can still assign but they will be in breach of the tenancy. 

Qualified prohibition

If the tenancy agreement contains a qualified prohibition stating that the tenant may not assign without the landlord's consent, then the landlord cannot ‘unreasonably withhold’ consent. [ 2 ] This is an implied term of the agreement.

Whether consent has been unreasonably withheld will depend on the facts of the case. [ 3 ]

The courts have previously held that:

the purpose of a term in a tenancy agreement prohibiting assignment without the landlord's consent is to protect landlords from having their premises occupied in an undesirable way or by an undesirable assignee. The landlord cannot refuse consent on grounds that have nothing to do with the relationship of landlord and tenant, but can refuse if the potential assignee is not, for example, financially sound [ 4 ]

it may be reasonable for a landlord to refuse consent because of the purpose for which the assignee intends to use the premises, even if that purpose is not forbidden by the original tenancy agreement [ 5 ]

although landlords need only usually consider their own interests, there may be cases where there is such a disproportion between the detriment to the landlord and the detriment to the assigning tenant that it would be unreasonable for the landlord to refuse consent. [ 6 ] An example of this might be where the property is very difficult to assign and the tenants would have great difficulty in finding another potential assignee, whereas the landlord's loss in accepting the proposed tenant is minimal

The court has held that consent was not considered to be unreasonably withheld where the tenant had arrears. [ 7 ]

For tenancies granted after 1 January 1996, a landlord has the right, in certain circumstances, to require that the tenant wishing to assign should act as the guarantor of the new assignee where it is reasonable to do so. [ 8 ]

Discrimination

The Equality Act 2010 makes it unlawful for a landlord to refuse consent on the grounds of a protected characteristic (disability, gender reassignment, pregnancy or maternity, race, sex, sexual orientation, and religion or belief). [ 9 ]

A person who has the right to dispose of premises must not unlawfully discriminate against any person on the basis of any of the above protected characteristics by: [ 10 ]

the terms on which they offer to dispose of the premises

declining to dispose of the premises, or

the way in which they treat a person seeking to move in to the premises

The right to dispose of premises includes the right to assign. [ 11 ]

Getting the landlords consent

If a tenancy is assigned without consent where the agreement requires it, this provide a ground for possession against the new tenant.

It is not possible to argue that the landlord could not have reasonably refused consent after the assignment has taken place. [ 12 ]

The Landlord and Tenant Act 1988 introduced a procedure that can be followed to obtain consent. It applies where the tenancy agreement contains a qualified prohibition against assignment. The Act only applies to applications for consent made after 29 September 1988. It does not apply to secure tenancies.

The tenant must serve a written application for consent to assign on the landlord, and the landlord must reply in writing within a reasonable time (the Act does not define what is a reasonable time), giving consent unless it is reasonable not to do so.

If consent is refused, the landlord must give the tenant reasons for the refusal. [ 13 ] If the landlord does not reply or withholds consent unreasonably, the tenant will be able to take a civil action for damages against the landlord for breach of this duty. [ 14 ] The onus of proof that any refusal of consent was reasonable is on the landlord. [ 15 ]

Tenants could also seek a declaration that the landlord is acting unreasonably where they do not want to take the risk of assigning without consent. Alternatively, the tenant could combine a claim for damages for breach of statutory duty with one for an injunction requiring the landlord to comply with their duty.

Assignment without consent or where prohibited

Where the tenancy agreement has an absolute or qualified prohibition against assignment and the tenant assigns the tenancy without the landlord's consent, the assignment will still be effective as long as it is by deed. [ 16 ]

However, the landlord may be able to bring possession proceedings against the new tenant.

In order for an assignment to be legal, it must be made by deed. A deed is a written document that has been signed and labelled as a deed and witnessed. This is necessary in order for the assignment to bind the landlord and any other party affected by the assignment but not part of the agreement to assign.

A deed is required even where the original tenancy was agreed orally. [ 17 ]

In one case, even though the tenant had undertaken in divorce proceedings to transfer the tenancy into his wife's name, the fact that there was no deed meant that an assignment was found not to have occurred. Nothing was done to transfer the tenancy into the wife's name, although she continued to live in the flat on her own and pay the rent. When she asked the managing agents to put the rent book in her name, they recovered possession of the property. [ 18 ]

The deed must give the name(s) and address of the original tenant(s) and the new tenant(s) (the address might be the same, depending on the situation). It must also give the details of the landlord. An independent person must witness the signatures of the original tenant(s) and the new tenant(s), but the same person can witness all the signatures.

The new tenants should keep the deed of assignment in to prove the assignment took place. It’s also a good idea for the outgoing tenant to have a copy in case of any disputes.

Equitable assignment

An attempt to assign a tenancy without satisfying all the formalities of a deed may still be effective as equitable assignment if the agreement to assign is evidenced in writing. [ 19 ] The equitable assignment will bind the parties who signed the written agreement and make them liable to damages for breach of contract as well as to orders for specific performance.

The new tenant is not liable for rent arrears that accrued before they took over the tenancy. [ 20 ]

An assignee is not legally liable to meet the contractual terms of the original tenant's agreement with the landlord where the liability arose before the assignment.

The original tenant is the only person who can legally be sued for any arrears existing at the time of assignment.

In practice, some local authorities require the assignee to clear any existing arrears. An Ombudsman's decision held that an agreement to clear arrears could be deemed to constitute an illegal premium, and enforceability of the agreement would be by no means certain. [ 21 ]

Arrears after assignment

For tenancies arising on or after 1 January 1996, [ 22 ] normally only the assignee can be held liable for rent due after the assignment.

The exception is where either:

there is a prohibition against assignment and the landlord's consent should have been obtained and was not

the original tenant agreed to act as a guarantor of the new assignee

Where the tenancy was created prior to 1 January 1996 (or in one of the other cases mentioned above), the landlord can take action for arrears against either the assignee or the assignor.

However, if the landlord wishes to take action against the assignor, they must notify the assignor of the arrears on a prescribed form within six months of the arrears falling due. [ 23 ] The assignor will be able to sue the assignee if they have to pay the rent arrears, as there is an implied term in all deeds of assignment that indemnifies the assignor. [ 24 ]

Last updated: 12 March 2021

Burton v Camden LBC [2000] UKHL 8.

s.19(1)(a) Landlord and Tenant Act 1927.

Braun v Westminster Anglo-Continental Investment Co Ltd [1975] 240 EG 927.

Gibbs and Houlder Bros and Co. Ltd Lease, Houlder Bros and Co. v Gibbs [1925] Ch 575, CA.

Rossi v Hestdrive Ltd [1985] 1 EGLR 50.

International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] Ch 513.

Greenwood Reversions Ltd v World Environment Foundation Ltd and Mehra [2008] EWCA Civ 47.

s.16 Landlord and Tenant (Covenants) Act 1995.

ss.2-8 and s.32(1) Equality Act 2010.

s.33(1) Equality Act 2010.

s.38 Equality Act 2010.

Hendry v Chartsearch Ltd, The Times, 16 September 1998 CA.

s.1(3) Landlord and Tenant Act 1988.

s.4 Landlord and Tenant Act 1988.

s.1(6)(c) Landlord and Tenant Act 1988.

See for example the assured tenancy case of Sanctuary Housing Association v Baker (1997) 30 HLR 809.

ss.52-53 Law of Property Act 1925.

Crago v Julian (1991) 24 HLR 306 CA.

s.2 Law of Property (Miscellaneous Provisions) Act 1989.

s.17 Landlord and Tenant (Covenants) Act 1995.

Ombudsman Investigation 90/B/1668, 5 December 1995, Wellingborough BC.

s.5 of the Landlord and Tenant (Covenants) Act 1995

s.77 and Parts 7, 8, and 9 of Sch.2 Law of Property Act 1925.

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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.

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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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UK: The importance of registering a lease assignment in the UK

A cornerstone provision in commercial lease agreements is the lease term. The lease term refers to the time period in which the commercial tenant agrees to occupy commercial premises. Commercial tenants, for a host of reasons, may need to exit their commercial lease sooner than they anticipated. Lease assignment is one of the most common ways for commercial tenants to exit their lease early . Commercial tenants, via this method, obtain their landlord's consent to transfer the existing lease to another business owner. This article will explain the importance of registering a lease assignment in the UK.

Commercial lease assignment is when a tenant transfers their existing lease to a new tenant. The existing tenant is the outgoing tenant or assignor, and the incoming tenant is the assignee. Lease assignment means that the commercial lease does not end but the tenant is merely substituted. The assignee takes on all the outgoing tenant's lease obligations and enjoys the tenant's rights in the lease agreement. Ultimately, the incoming tenant will enjoy sole possession of the commercial property as their commercial premises. The incoming tenant will also start making rent payments for the commercial property.

The assignor starts the process of lease assignment. Leases between the outgoing tenant and the landlord which have less than several years before the conclusion of the lease term will need to go through a formal process of assignment. The assignor will need to execute a deed of assignment to transfer the lease to the incoming tenant.

Registering a Lease Assignment

The assignor or the assignee may need to register a lease assignment. The assignor or assignee may be required to register the lease assignment instead of using a deed of assignment. A lease assignment will generally need to be registered in two instances. The assignor will need to register the lease assignment if the commercial lease has seven years or more left on the lease term.

Also, the assignor is required to register the lease assignment if the lease has already been registered with the HM Land Registry Office . They must complete and submit a TR1 form to the HM Land Registry Office for a lease assignment to be valid. Once the Land Registry receives this, they will process the lease assignment and place the incoming tenant's name as the titleholder to the lease in the Land Register.

Importance of Registering a Lease Assignment

When you enter or exit a commercial lease through assignment, the process of registering the lease assignment is a crucial part of assigning a lease. This is because until this is complete, the assignee is not legally the new tenant for the commercial lease. Therefore, the lease assignment process is not fully complete. The assignor's failure to register the lease assignment with the Land Registry Office adversely impacts the assignee. Due to the lease assignment process not being legally complete, the assignee has none of the rights usually granted to them in a commercial lease. The assignee will not have the right to sole occupation of the commercial premises. The assignor will also continue to be responsible for all the lease obligations in the commercial lease agreement. Had the lease assignment been validly registered, the assignee would be responsible for the lease obligations thereafter.

It is essential to have a solicitor to see you through the lease assignment process. The outgoing tenant's solicitor will usually draft the transfer for the Land Registry Office. However, you as the assignee will want your solicitor to confirm the lease assignment is correct and complete.

Land registration is time-consuming. The assignor should register the lease assignment as soon as possible. Legal rules concerning the timeframe for registration of a lease assignment also impact the expediency of registering land. As the assignor, you can only register the lease assignment for up to two months from the lease completion date. The law will deem the lease to be void if not registered within this timeframe. You are then reliant on a discretionary agreement with the Land Registrar. The Land Registrar may extend the timeframe for you to register the lease with the use of an order.

Break Clause Within a Commercial Lease

It is important for the assignor to register the lease assignment with the Land Registry Office. The assignor's act of registering the lease assignment ensures the law considers the lease assignment process to be complete. Further, the assignor registering the lease assignment protects the incoming tenant's ability to rely on a break notice provision in the commercial lease agreement. A break clause simply allows the incoming commercial tenant to terminate the lease agreement before the lease term ends. The assignor typically needs to register the commercial lease assignment for the incoming tenant to rely on the break clause.

If the assignor has not registered the lease assignment with the Land Registry Office, the incoming tenant will be left in a precarious position. The assignee may need to end the lease early but cannot rely on the break clause.

Key Takeaways

Lease assignment is where commercial lease transfers from the existing commercial tenant to a new tenant. The assignor must register the lease assignment with the Land Registry Office in two situations. Where the commercial lease being assigned has seven years or more left on the lease term, the lease assignment will need to be registered. Likewise, registration of a lease assignment is required if the commercial lease is registered. Registration of a lease assignment is essential for assigning a commercial lease. Without it, the assignment is not legal, and it is crucial that registering the lease assignment is done within the correct time frame. Registering a lease assignment may also allow the assignee to exercise the break clause in the lease agreement if necessary.

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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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What is an Assignment of a lease?

14 feb -->what is an assignment of a lease.

When you buy or are granted a lease, you take ownership and possession of the property for a fixed period of time, which is known as the term of the lease.  You might take a ten-year lease, knowing that you might only want the property for a few years, and then want to move on as your business grows, but the landlord won’t grant a lease for a shorter period.  This might not put you off taking the lease, as you can sell the remainder of the lease on, under certain criteria. This is known as assigning a lease , and we’ve set out below more detail of how this works.

So, in legal terms, the assignment of a lease is a process whereby all rights that have previously been possessed over a property are transferred from one party to another.   It’s not unlike selling a house, but there’s a bit more paperwork involved!  In particular, the outgoing lessee, the new lessee, and the landlord will all need to enter into a document known as a licence to assign .

There are various requirements that need to be satisfied before the current lessee can be released from the lease and the obligations under the lease are transferred to the new lessee under the Licence. The lease will usually set out what the Landlord’s criteria is before an assignment is possible, but we’ve set out below the most common requirements.

What criteria must be met?

Most of the time this would require similar checks to the ones carried out on the original tenant when the lease was first granted.  These might include

• Financial checks. The landlord will want to know that the new tenant is going to be able to pay the rent.  If not, they may ask for personal guarantees, or make the outgoing tenant continue to have some liability.
• Although a landlord’s main requirement is that their tenants can pay the rent, they may also want to know that they are complaint people , not likely to break the terms of the lease, cause a disturbance or upset other tenants.  The landlord may, for example, ask for references from a previous landlord as to the tenant’s good character.
• Restrictions on activity. The landlord may restrict what business a new tenant can engage in.  For example, if the landlord is a shopping centre, and the outgoing tenant sells men’s’ clothes, they’ll probably have no objection in the new tenant selling men’s clothes, but they might object to the premises being taken over by a business selling women’s clothes, if they feel they already have enough tenants in that line of business.  Or they might only want tenants who sell high-end products.

Duties placed on the Landlord

Most modern leases will include a requirement that any consents required by the landlord must not be unreasonably withheld or delayed.  If the tenant requests a licence to assign a lease, which the landlord either refuses without good reason, or takes a very long time to consent to, the tenant can take action, such as going to court for a declaration that the landlord is in breach of the lease.  However this is a very major step to take, and we’d always encourage clients to do everything they can to reach an agreement without court action being necessary.

Not all leases will include an express provision requiring the landlord to give consent fairly and promptly.  If that’s the case, it can be much harder and possibly more expensive but never impossible to do an assignment.

Can a landlord object to the assignment of a lease?

As we’ve set out above, if the lease includes a provision that consent to an assignment should not be unreasonable refused or delayed, any landlord who fails to comply is in breach of lease.  This could result not just in court action but costs and possibly damages to the tenant.

However, it should be remembered that the right to assign the lease is generally subject to permission of the landlord being granted.  So, a tenant should not assign the lease to a new party until a licence to assign has been properly executed.  If he does, the landlord could apply for an injunction to prevent the letting, which could end with the tenant having to pay costs and damages to the landlord.  Alternatively, the landlord could seek forfeiture of the lease , which could have far more significant consequences for the tenant.

When will it be sufficiently reasonable for a landlord to withhold consent?

Although this will always depend on the circumstances of the lease, here are some guidelines as to the types of situation when a landlord may be justified in refusing to agree to an assignment of a lease:

• Insufficient information supplied in respect of the new tenant. This would mean that the Landlord is unable to make a judgment on the proposed tenant.  It will usually be for the tenants (old and new) to satisfy the landlord that the new tenant is a good fit.
• Character and financial standing of the assignee
• The landlord has decided that the future viability of the building as a whole could be at risk, such as if he feels the new tenant would damage the reputation of the area or be detrimental to other tenants

When will it be sufficiently unreasonable for a landlord to withhold consent?

Again, this will depend on the facts of the case, but generally, it is likely to be held to be unreasonable for a landlord to withhold consent on the following grounds

• Issues that are not covered by the lease. So, for example, if the lease doesn’t require a new tenant to prove that they are of good standing, it might be unreasonable for the landlord to try to imply this into the assignment process.
• The landlord makes an argument that the tenant will have a lasting effect on the lettings of the other properties in the vicinity , except other properties owned by the landlord.
• The landlord wants repossession of the property.
• The landlord wants to withhold consent on the grounds of race, sex or disability . So if the outgoing tenant’s target audience was heterosexual men, but the incoming tenant’s target audience is homosexual men, this alone is unlikely to be a good enough reason.

Assigning a Sub-lease

A sub-lease is where a tenant has sublet the property or part of it to a third party.  Sometimes that third party may want to assign the sub-lease to a new tenant.  If so, not only will the landlord’ consent be required, but also that of the tenant who granted the sub-lease.

Knowing the difference between assigned lease and a sublease

Knowing the difference between an assigned lease and a sublease could help you make the right decision when choosing which route to take. Although both achieve the same result, an assignment of a lease is distinctively different to a sub-lease.

An assignment of a lease is a complete transfer of the right to be the tenant under the lease. The third-party (or new tenant) becomes the “tenant” under the lease, taking over all of the leased premises, substituting for the old tenant. The new tenant, therefore, pays the rent due under the lease directly to the landlord and is responsible for all aspects of complying with the lease.

As we have explained above, a sub-lease is an entirely new lease between the tenant and a third party as sublessee for the premises or sometimes for a part of the premises. The original lease between the tenant and the landlord remains in place and is unaffected by the sub-lease. This results in the original tenant remaining liable for all the obligations of the original lease, whilst collecting rent from the subtenant.

If you own a lease and you are considering selling it, or you’re thinking about buying an existing lease, then hopefully this will give you enough information to consider your options, but we’d be very happy to talk to you about this further before you make any final decisions.

Disclaimer – our articles are designed to give you guidance and information.  There is no substitute for proper direct advice, particularly as everyone’s circumstances are different.  If anything in this article may affect you, please contact us for advice that is specific to your circumstances.

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Temporary conveyance of property for a fixed period of time.

Features of leases

• 12th-20th centuries
• various sizes
• written on parchment or paper
• may be written in Latin until 1733
• indenture (wavy top edge)

Important words and phrases

Leases were granted by a 'lessor'. The person taking the lease was the 'lessee'.

How to identify a lease:

• The easiest way to spot a lease is to look for the phrase 'hath demised granted set and to farm let'. In Latin, the phrase is ' ad firmam dimisi '
• Leases are always granted for a certain period of time, after which time the land would revert to the lessor
• There will be a rent payable to the lessor at specified times during the year, and sometimes services carried out for the lessor. The words usually used here are 'yielding and paying...'

Other features of leases which might or might not appear are:

• A consideration, or 'entry fine' - sometimes a lease was granted in return for a cash payment
• Reservation of certain rights to the lessor, e.g. shooting rights, or the right to extract minerals
• Covenants and conditions relating to the upkeep of the property, or the husbandry expected on an estate
• Clauses detailing what steps could be taken if the lessee failed to pay rent or abide by the terms of the lease

Most leases were granted for one of the following terms:

• A term of months or years, as specified in the lease. 7 years, 14 years or 21 years were especially popular
• A term of lives. These leases were usually for the lives of three specified people, for example, 'during the natural lives of the said A aged about 65 years, his son B aged about 20 years and his daughter C aged about 18 years, and for the natural life of the survivor or longest liver of them'. In this case, the theory was that the property would remain in the family for a substantial amount of time, since every time one of the 'lives' died, the lease would be surrendered and demised again to another three lives. This form of lease - known as a 'lease for lives' - was popular in the seventeenth and eighteenth centuries.

Long building leases , and tenancy agreements  'from year to year' are discussed further in other pages in this Skills Unit.

User beware!

If the lease is for 6 months or a year, and there is a very small consideration (5 or 10 shillings), or a nominal rent such as a peppercorn or a red rose, then it is possible that the document is not a 'real' lease, but was drawn up for another purpose. It might well be part of a lease and release .

Likewise, very long leases for 500 or 1,000 years are probably documents relating to family settlements or mortgages .

Assignment of Lease

An Assignment of Lease was created when a lessee wished to leave leasehold property before the end of the term. With the consent of the lessor, he assigned the residue of the lease (the remaining period of time) to another person. The new lessee took on the lease according to all the original conditions. The assignment therefore looks back to the original lease, and begins with a recital of the original lease and its 'provisos' (conditions). The new part of the deed begins with the words 'Now This Indenture Witnesseth'. Another clue that it is an assignment comes with the words, 'have granted, bargained, sold, assigned and set over...', and with the statement that the property is assigned 'for and during the rest and residue of the term recited...'

Ne D 3792 - Counterpart lease from John Holles, 1st Earl of Clare and his wife to Henry Bell of a mansion house and all outbuildings in Nottingham; 7 Jan. 1629

View this deed

This is a good example of a deed of lease. It is written on a medium sized piece of paper, 49 cm wide by 27 cm high. It is in English.

We know it is a lease because of the following characteristics:

• It is an indenture, that is, the top of the deed is cut in a wavy line. This indicates that the deed was made between two or more parties. Some pairs of indentures were cut from the same sheet of parchment, and could be verified by checking that the top parts of each fitted together correctly
• It begins with the words 'This Indenture...'
• It includes the phrase 'grant and to farm lett'
• The property is transferred to Henry Bell for a term of 21 years
• There is an annual rent of twenty shillings, payable on the quarter days of Michaelmas (29 September) and Lady Day (25 March)
• It has been signed and sealed by Henry Bell, the lessee. This makes it a counterpart - the other part of the indenture was retained by the lessor

This transcription of the important parts of the lease has been broken down into the standard sections common to most deeds from the early modern period onwards.

[line 1] This Indenture made the seuententh day of January in the Year of the Raigne of our Souereigne Lord Charles by the grace

[line 2] of God, Kinge of England Scotland Fraunce and Ireland defender of the faythe &c. the fourth [i.e. 17 January 1628/9]

[line 2] Betweene the Right Hon[oura]ble John Earle

[line 3] Clare, And Lady Anne his Wiefe of the one p[ar]te, And Henry Bell of the Towne of Nottingh[a]m, Cordweyner of the other p[ar]te

Operative Parts or 'Testatum'

[line 3] Witnesseth

[line 4] that the said Earle, and Lady Anne his Wiefe, for divers good causes them hereunto mooueinge [moving], as also for the Rent hereafter in theis present[s]

[line 5] expressed & reserued, Have demised graunted and to farme Letten, And by theis p[rese]nt[s] doe demise graunt & to farme Lett, unto the said Henry

[line 6] Bell, his Executo[rs] Adm[inistrators] and Assignes

[line 6] One Mansion or dwellinge house, in Nottingh[a]m aforesaid, wherein hee the said Henry Bell now dwelleth

[line 7] Together with all other the out houses Cellars and Yard, to the said dwelling house belongeinge or usually letten

[line 7] To haue and to

[line 8] hould the said dwelling house, together with all the aforedemised p[re]misses, unto him, the said Henry Bell, his Executo[rs] Adm[inistrators] and Assignes

[line 9]from the Feast day of Thanunciac[i]on of our Blessed Lady Marye the Virgine, next and ym[m]ediatly ensueinge after the date of these p[rese]nts, for, and

[line 10] duringe the whole terme and tyme of One and Twenty Years, from, and next after the said Feast ensueinge fully to be compleate & ended

[line 11] Yealdinge, and payeinge, theirefore Yearely, unto the said Earle and Lady Anne his Wiefe, or the survivor of them, their Heyres Executo[res]

[line 12] or Adm[inistrators] the iust some of twenty shillings of Lawfull money of England, duringe the naturall Liefe of Patronell Allvy,wife of Henry

[line 13] Allvy, of Nottingh[a]m aforesaid Cordweyner, Att the twoo usuall terms & feasts in the yeare, That is to say, att the feast day of St Mychaell Tharchangell, and Thannunciac[i]on of our blessed Lady Mary the Virgine by even and equall porc[i]ons

Covenants, Conditions and Provisos

Covenants include:

• If Petronella Allvy dies before the term of 21 years ends, Henry Bell must pay four marks [13 shillings and 4 pence] annually to the Earl and his wife
• The Earl and his wife are entitled to enter the premises to distrain [seize goods] if the rent is unpaid for more than 14 days. They are entitled to re-possess the premises if the rent is unpaid for more than 28 days and no distraint is possible
• Henry Bell covenants to put the property into good repair at his own costs before 20 March 1630/31; and to maintain the good repair throughout the tenancy
• Henry Bell covenants to leave and deliver up the property at the end of the term

[line 35] In witnes hereof the p[ar]ties abouesaid to

[line 36] theis p[rese]nte Indentures interchaungeably haue sette to their hands and seales the day and yeare first aboue written

[Signature of Henry Bell]

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What is the Difference Between a Lease Surrender and a Lease Assignment?

By Clare Farmer

Updated on 6 September 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 .

What is a Lease Surrender?

What is a lease assignment, what are the differences between the two, key takeaways, frequently asked questions.

As a commercial tenant, you may no longer wish to have the existing lease for its fixed term. In this case, you can surrender your lease to the landlord or assign the original lease to another party. However, it is crucial to understand the differences between the surrender of a lease agreement and a lease assignment. This article will highlight some key differences between a lease surrender and a lease assignment in the UK.

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

A lease surrender is when a tenant surrenders their lease to their landlord. Typically, both parties agree to this. The landlord has the tenant’s estate, and the lease term ends. Furthermore, the tenant no longer has any obligations under the lease.

When tenants surrender their lease to their landlord, they can do so expressly or through an operation of law. Where a tenant surrenders their lease expressly, it must be effected by deed. Otherwise, it is not a valid lease surrender.

A lease surrender through the operation of law is not expressed but is something the two parties infer from one another. Therefore, the actions they take either:

• show that they both agree the tenancy has come to an end; or
• are actions that do not comply with the tenancy. 

A lease assignment is where the assignor (the tenant), transfers their right to the lease to another party (the assignee). In this case, the lease still exists. 

When a tenant assigns the lease, they are usually required to have the landlord’s consent. Where an assignor transfers their rights to the lease to another person, they can do so either by:

• legal assignment; 
• assignment by operation of law; or
• equitable assignment. 

A lease assignment by legal assignment is where the assignment is by specific legal procedures in property law, which your solicitor will know.

Assignment of a lease by operation of law is where the lease is assigned due to a law already in place. For example, where a lease assigns because of a death or bankruptcy.

When a lease assigns through equitable assignment , it does not follow the procedures of a legal assignment. Still, it meets the criteria of an equitable assignment which is beyond the scope of this article. 

Once an assignee has the right to the lease, they have all the rights the assigner had in the lease but will not have any new ones. 

It is possible for a commercial tenant to either surrender their lease to their landlord or assign it to another party. When tenants surrender their lease, they give their interest in the land back to the landlord. However, when tenants assign their lease, they pass it to another party with the landlord’s permission. Although both acts mean that the person is no longer a party to the lease, the two have key differences. 

If you need help understanding the difference between a lease surrender and a lease assignment in the UK, LegalVision’s experienced leasing lawyers can assist 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. So call us today on 0808 196 8584 or visit our membership page

A lease surrender is when a tenant returns their lease to the landlord, so they no longer have an interest in the land. This means the lease term comes to an end.

A lease assignment is where a tenant gives their lease to another party, but the lease does not end.

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Assignment Of A Commercial Lease

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Assignment of a Commercial Lease

What is an assignment of a lease? This is the transfer of an existing lease by the current tenant of the lease to a new and incoming tenant with the Landlord’s consent. The main parties involved in the assignment of a lease are:

• The Assignor is the person who will be coming out of the lease
• The Assignee is the new person who will be entering into the already existing lease
• The Landlord will remain the same person

Each party in the transaction will have their own solicitors, they will each pay their own legal costs however, it is usual in the assignment of a lease for the Assignee to also pay the Landlord’s legal costs.

The Process

1. The Assignee instruct their solicitors informing them that they are looking to take on the assignment of a lease

2. The Assignor’s solicitors will contact the landlord’s solicitors, informing them of the proposed assignment and will ask for the Landlord’s consent to the assignment of the lease.

3. The Landlord’s solicitors will usually request further information regarding the incoming Assignee e.g. trade or bank references as security that the Assignee is of sufficient financial standing to be able to take on the lease

4. Once the Landlord’s solicitor is satisfied with the references provided by the Assignee they will draft the following documents, that will become legally binding on completion of the assignment.

1. Licence to assign 2. Rent deposit deed 3. Authorised guarantee agreement*T

What is a license to assign?

Licence to Assign is the legally binding document that transfers an existing lease by the current tenant to a new tenant with the consent of the landlord.

What is a rent deposit deed?

A Rent Deposit is a type of security taken by landlords to insure against the risk of a tenant not paying rent or breaching certain covenants in the lease. This is usually required by the Landlord from the incoming Assignee as a condition to the assignment of the lease. The terms that govern how the rent deposit is dealt with are set out in a Rent Deposit Deed.

What is an Authorised Guarantee Agreement?

An Authorised Guarantee Agreement is a legally binding document that is used where, the outgoing tenant guarantees the performance by the new tenant of the covenants in the lease.

Get in touch with our expert Assignment Of A Commercial Lease Solicitors today.

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Notice of assignment or transfer

Practical law uk standard document 4-101-6041  (approx. 5 pages).

• Assignments, Variations, Surrenders and Termination - Land and Buildings

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• Housing, local and community
• Housing and communities
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• Leasehold schemes for the elderly management fee limit
• Regulator of Social Housing

Advice note: LSE management fee limit for 2024 to 25

Updated 1 May 2024

Applies to England

© Crown copyright 2024

This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected] .

Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.

This publication is available at https://www.gov.uk/government/publications/leasehold-schemes-for-the-elderly-management-fee-limit/advice-note-lse-management-fee-limit-for-2024-to-25

Updated 31 March 2024

This note advises private registered providers who own or manage retirement leasehold accommodation of management fee limits for the financial year 2024/25.

1. From 1 April 2024:

These limits have been agreed with the Department for Levelling Up, Housing and Communities which has policy responsibility in this area.

2. Calculations

2.1 basic limit.

The limit on the management element of relevant service charges is recalculated annually, with reference to the Consumer Price Index. This means that the basic limit rises each year by an amount set by Government. For 2024/25 this has been set at CPI + 1%. The annual rate of increase in CPI at September 2023 was 6.7%. Applying the combined amount of 7.7% to the LSE management fee limit increases the basic limit to £600 for 2024/25 (the limit for 2023/24 was £557).

2.2 Enhanced limit (where VAT is charged)

A higher limit applies where the landlord contracts out the management element to a property manager who is required to charge VAT on management services. This higher limit is £688 for 2024/25 (the enhanced limit for 2023/24 was £638).

2.3 Value added tax

No VAT is chargeable on the actual supply by the landlord of residential accommodation to the leaseholder. This limit is concerned with the management element of the charge for services provided by the landlord to leaseholders. When a landlord contracts out management to an agent who is obliged to charge the landlord VAT, a provider should ensure that the amount collected from the leaseholder in respect of management fee and VAT thereon does not exceed the limit of £688.

The higher limit where VAT is payable is derived as follows. In setting the maximum amount that a landlord taking part in this scheme can charge a leaseholder for the management element of the services which the landlord is obliged to contractually provide the leaseholder under the relevant lease or legislation, consideration is taken of the irrecoverable VAT cost incurred by the landlord on goods and services bought from third parties and which relate directly to the provision of residential accommodation. This “VAT enhancement factor” that is used in calculating the upper limit of the management element of the service charge that can be charged by the landlord is 14.6%. Enhancing the basic limit by 14.6% produces an enhanced limit of £688 for 2024/25 (this was £638 for 2023/24).

The limits referred to in this announcement are maximum amounts that may be charged under leases. They are separate from the legislation on VAT and no inference should be drawn, about charging for or accounting for VAT, from the fact that the limit is higher when a landlord employs a managing agent who is required to charge VAT for the management service. It is Her Majesty’s Revenue and Customs who are responsible for setting rates of VAT, the circumstances in which VAT is to be charged and the way in which persons should present VAT returns.

2.4 Applicability

The limit applies to the management element of relevant service charges in leasehold schemes for the elderly, shared ownership for the elderly, and other types of grant-funded retirement leasehold accommodation, only where a clause appears in leases to specify that the limit should apply. The limit does not apply automatically where no such clause appears.

2.5 Good practice

Good practice on application of the limit and on management of retirement leasehold generally can be found in the Association of Retirement Housing Managers’ Private Retirement Housing Code of Practice .

2.6 Information

Information about the limit can be obtained from the Referrals and Regulatory Enquiries team at the Regulator of Social Housing by emailing [email protected] .

3. Advice about leasehold housing

General advice and information about leasehold housing can be obtained from LEASE, the  Leasehold Advisory Service .

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