MAKE YOUR FREE Licence to Sublet
What we'll cover
What is a Licence to Sublet?
A Licence to Sublet is a formal agreement between a commercial landlord, tenant, and subtenant, in which the landlord grants permission for the tenant to sublet all or part of a commercial property to the subtenant. Licences to Sublet ensure that subletting arrangements are carried out in a way that protects all of the parties involved.
For use in England and Wales only.
When should I use a Licence to Sublet?
Use this Licence to Sublet:
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when a tenant has approached a landlord requesting consent to sublet the whole or a part of the property the tenant is renting
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for commercial properties only (ie properties used for business purposes)
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when the tenant requires consent to sublet (eg because their Commercial lease includes a clause preventing the tenant from granting a sublease without the landlord’s consent)
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when the landlord has seen the subtenant's financial accounts and is satisfied that they are in a position to pay the rent and other sums due under the sublease
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for properties in England and Wales only
Sample Licence to Sublet
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Licence To Sublet
This licence to sublet is made on___________________________________(date)
Between:
- (We or us); and
- (You or your); and
- (the Subtenant)
Meanings
- These words and phrases have defined meanings:
Lease the lease dated of premises at , under which you are the tenant Property the property to be let to the Subtenant as described in the Sublease Sublease a sublease in the form attached to this licence granted by you to the Subtenant.
Consent
- We have considered your request and consent to the grant of the Sublease provided that the Sublease starts within after the date of this licence.
Your covenants
- You covenant with us that the Subtenant will not have security of tenure under the Landlord and Tenant Act 1954, and you must:
- not vary the Sublease which would breach any of the provisions of the Lease or this licence
- not permit the Subtenant to occupy or take possession of the Property until the Sublease is completed
- give us written notice of the date of completion of the Sublease
- provide us with a copy of the Sublease
- pay to us a registration fee of £.
Subtenant's covenants
- The Subtenant covenants with us:
- not to occupy or take possession of the Property until the Sublease is completed
- on and from completion of the Sublease to perform and observe the tenant covenants in the Sublease and not to do anything that would form a breach of any term in the Lease
- to indemnify us against any costs, claims or damages arising from a breach of the tenant covenants in the Sublease.
General
- A person who is not a party to this licence shall not have any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this licence.
- This Agreement shall be governed by and interpreted according to the law of England and Wales and all disputes arising under the Agreement (including non-contractual disputes or claims) shall be subject to the exclusive jurisdiction of the English and Welsh courts.
This licence has today been duly signed and delivered as a deed on the date first written above.
About Licences to Sublet
Learn more about making your Licence to Sublet
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How to make a Licence to Sublet
Making your Licence to Sublet online is simple. Just answer a few questions and Rocket Lawyer will build your document for you. When you have all of the information about the property and the parties prepared in advance, creating your document is a quick and easy process.
You’ll need the following information:
The landlord, tenant, and subtenant
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What is the landlord’s name, address, and legal structure? If it’s a company, what is its company number?
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If the landlord is a company or a partnership, how will it sign the Licence? You must choose one of the viable methods of signing (ie executing) a deed (eg by 2 company directors signing). You will need the names of all individuals who will sign.
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What is the tenant’s name, address, and legal structure? If it’s a company, what is its company number?
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If the tenant is a company or a partnership, how will it sign the Licence (ie the deed)?
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What is the subtenant’s name, address, and legal structure? If it’s a company, what is its company number?
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If the subtenant is a company or a partnership, how will it sign the Licence (ie the deed)?
The original lease
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On which date was the original lease granted?
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What is the address of the leased property?
The sublease
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Do you know the date on which the tenant requested permission to sublet? If so, what was it?
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What is the time limit on this Licence (ie the period from the date of the Licence within which the sublease must be made or else the Licence will lapse)?
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Is the sublease required to have the same rent review provisions as the original lease (ie will the tenant be required to review the amount of rent payable on the same specified dates as in the original lease)?
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What is the landlord’s registration fee?
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Common terms in a Licence to Sublet
Licences to Sublet allow a commercial landlord to formally provide consent for a tenant to sublet a property. To do this, this Licence to Sublet includes the following terms and sections:
This Licence to Sublet is made on…
The Licence document starts by highlighting the date of the licence. This is followed by clearly identifying the parties to the agreement, ie the landlord, tenant, and subtenant.
Meanings
This definition table assigns specific meanings to key terms used throughout the Licence. When these terms are used capitalised in the Licence they carry the meaning they’re given in this table. In doing this, this table also provides key information about the Licence, for example, the date of the original lease and the address of the property to which it applies.
Consent
This is where the landlord grants consent (ie a licence) for the tenant to sublet the property. A time limit is included, ie the number of weeks or months within which the sublease must be granted before the Licence expires.
Your covenants
Here the tenant makes various (once the Licence is correctly signed) legally binding promises (ie covenants) with the landlord regarding the sublease. For example, that:
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the subtenant must not have security of tenure under the sublease
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the sublease won’t be varied in any way that would breach the terms of the original lease or of this Licence
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the tenant will pay a specified registration fee, and
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if you’ve decided that the sublease should have the same rent review provisions as the original lease, that such rent reviews will take place
Subtenant’s covenants
Next, various covenants are made with the landlord by the subtenant. For example, that they will:
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abide by the tenant’s covenants contained in the sublease (eg repair or use covenants)
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comply with the terms of the original lease
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indemnify the landlord against (ie cover) any costs incurred by the landlord due to a breach of any tenant covenants in the sublease
General
This section deals with various other points of law that govern how this Licence agreement operates. For example, stating that:
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the Contracts (Rights of Third Parties) Act 1999 is excluded, ie third parties (ie not the landlord, tenant, or subtenant) that would otherwise be able to enforce obligations under this Licence under the Act cannot do so
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the legal system of England and Wales must be used to resolve any disputes arising in relation to this Licence (ie the Licence’s agreement’s jurisdiction)
This Licence has today been duly signed and delivered as a deed…
This text clarifies that the document is being signed as a deed, which is one of the legal requirements for the execution of a deed. It is followed by spaces for all necessary individuals to sign on behalf of each the landlord, tenant, and subtenant. For more information on how to execute (ie sign) your Licence, read Execution of deeds and the Make it legal checklist for this document.
If you want your Licence to Sublet to include further or more detailed provisions, you can edit your document. However, if you do this, you may want a lawyer to review the document for you (or to make the changes for you) to make sure that your modified Licence complies with all relevant laws. Use Rocket Lawyer’s Ask a lawyer service for assistance.
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Legal tips for landlords
Consider whether allowing a sublease is a good idea
Taking on any commercial tenant or subtenant will always come with an element of risk. If the tenant’s business fails or they hit financial difficulty, they may not be able to pay rent.
This Licence to Sublet contains legally binding terms that mitigate the risks the landlord takes on in allowing the proposed sublease. For example, the subtenant’s covenant (ie legally binding promise) to abide by the terms of the sublease. As this covenant is made directly with the landlord, the landlord can take legal action against the subtenant directly if the subtenant breaches their obligations under the sublease (eg by not paying rent). The landlord does not have to claim against the original tenant. Despite these protections, the landlord will still be exposed to the legal costs and time commitments of enforcing their rights in the court, if their subtenant doesn’t pay rent or otherwise doesn’t fulfil their obligations under the sublease. Therefore, consider the subtenant’s business, financial position, and reliability, and related market conditions, before you consent to a sublet.
However, make sure you only refuse a sublet as allowed by the original commercial lease. Also consider the upsides of a sublet - if your original tenant is going to be unable or unwilling to continue paying rent, subletting may be an advantageous option for all.
For more information, read Entering a commercial lease and Subletting business premises.
Understand when to seek advice from a lawyer
In some circumstances, it’s good practice to Ask a lawyer for advice to ensure that you’re complying with the law and that you are well protected from risks. You should consider asking for advice if:
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an original lease does not allow subletting
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a subtenant has the ability to pay the rent due under a proposed sublease but you object to them for other reasons
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you’re considering granting permission for a subtenant whose use of the property will be different to the use allowed under the original lease
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Licence to Sublet FAQs
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What is included in a Licence to Sublet?
This Licence to Sublet template covers:
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providing a commercial tenant with consent to sublet
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a requirement that the subtenant won’t have security of tenure
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the landlord's registration fee
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Why do I need a Licence to Sublet?
A commercial tenant may decide that they no longer want to use all of the property that they’re leasing for their business. For example, they may wish to stop using all or half of a property due to a reduction in workforce or in production volume. In these situations, the tenant may want to sublet the property (ie grant a new lease under their own lease, so that their lease remains intact but they now have a subtenant who rents some or all of the space from them).
The tenant’s commercial lease may require that the tenant obtains their landlord’s permission before creating such a subletting arrangement. Or, it may not allow subletting at all. In either situation, the tenant may request their landlord’s consent to sublet the property. If, as a landlord, you are satisfied with the proposed subtenant and the arrangement as a whole, you can use a Licence to Sublet to give your permission. Using a formal, written document like this one ensures that the terms of the arrangement are clear and, as the Licence contains certain covenants (ie legally binding promises) from the tenant and subtenant, ensures that the landlord is adequately protected.
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Can a landlord refuse a tenant’s request to sublet?
If the tenant’s Commercial lease absolutely prohibits subletting, the landlord can refuse consent if asked for it without giving a reason.
If the tenant’s commercial lease prevents subletting without the landlord's consent, the landlord must have a good reason for refusing consent. Refusal is likely to be justified only if the proposed subtenant:
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cannot show that it has the financial strength to pay the rent, any other sums due under the sublease, and/or the costs of repairs and other obligations, or
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intends to use the property for a purpose that’s not allowed by the lease (eg as a fast food outlet instead of a retail store)
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How long will the Licence last before it expires?
The landlord can set a time limit within which the sublease must be granted. The landlord is also entitled to insist that the sublease is completed within a reasonable period after the date that the subtenant’s references were provided. If a sublease isn’t completed within the agreed time period the tenant will no longer have permission to grant a sublease and the tenant will need to re-apply for permission (ie a new Licence will be needed).
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Who are the parties to the Licence to Sublet?
This Licence to Sublet will have three parties: the landlord, the tenant, and the proposed subtenant.
It’s important that the subtenant joins in as a party to the Licence so that they can also make promises to the landlord in the agreement, so that the landlord can make legal claims against the subtenant if the subtenant breaches any of its obligations under the sublease.
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What is the landlord's registration fee?
A landlord can charge a fee to cover any administration costs it incurs in updating records and management systems as to which tenant is using the property. Fees of £25 or £50 are common.
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