The shift towards hybrid and remote working models has transformed the way businesses operate.

Many companies who have a commercial lease are opting for more flexible arrangements and might find themselves in a position where subletting your leased premises becomes a compelling option.

Subletting, or subleasing, can provide financial relief and flexibility.

So, whether you’re aiming to reduce overhead costs, share space with like-minded businesses, or want to move to a smaller or larger office while retaining your current lease, it’s vital to grasp your rights and obligations concerning subletting before proceeding.

What are the key considerations for tenants

The first step in determining whether you can sublet your commercial lease is to thoroughly review your lease agreement.

Most commercial leases include specific clauses regarding subletting, so you will need to pay close attention to the following:

• If it outright prevents you from subletting.
• If you can sublet but are required to obtain the landlord’s consent first.

Landlords have the authority to impose conditions, such as ensuring the subtenant has a good financial standing or that their intended use of the premises aligns with your original lease.

Carefully look through your agreement for anything that may prevent you from subletting or making it too high risk.

What does the Landlord and Tenant Act 1954 do?

The Landlord and Tenant Act 1954 (LTA 1954) governs many aspects of commercial leases in England, including subletting.

As a tenant, under the Act, you do generally have the right to assign (transfer) your lease, which can include subletting. However, as we’ve already touched upon, this right is subject to the lease’s specific terms.

If your lease allows for subletting with consent, then the landlord can only refuse consent on reasonable grounds. These may include concerns about the subtenant’s financial capability or the suitability of their intended use of the property.

How do I get my landlord’s consent?

If your lease permits subletting with the landlord’s consent, it’s essential to approach them formally and professionally to avoid the risk of any disputes.

We would advise you to include as much detail about the prospective subtenant when you communicate your request to increase the chances of approval.

This can include a brief background of the subtenant, their rental history with references, if possible, their intended use of the property, proof of income and a signed confirmation that the subtenant is willing to abide by all the terms in the original lease.

You should also clearly explain your reasoning behind your decision to sublet to show your landlord that you are acting responsibly.

If you require assistance obtaining permission, our commercial property solicitors can assist you.

Drafting a sublease agreement

If you are granted consent, you will need to create a sublease agreement. This document should outline the terms of the sublease, including:

• How long the sublease will last.
• Clarification on rental payments, deposits, and any additional financial obligations.
• Define who will be responsible for maintenance and repairs.
• Include clauses that outline how the sublease can be terminated.

It’s wise to consult with a legal professional to ensure that the sublease agreement is comprehensive and protects your interests, especially if you are unsure about any part of the process.

Your ongoing responsibility

One crucial aspect to remember is that even after subletting, you may still be liable to your landlord for the actions of your subtenant.

This means that if your subtenant fails to pay rent or causes any damage to the property, you could still be held accountable.

Your landlord may make a claim against you in court, which can leave you out of pocket.

You can reduce the likelihood of this happening by making sure you have a clear agreement in place with your subtenant that clearly outlines that they are liable for this, not you.

If you’re considering subletting your commercial lease, seek advice from our solicitors who can support you in making informed decisions and successfully managing your subletting arrangement.