23rd July 2025 ❘ Legal News and Commentary
A short guide to commercial lease assignments
A short guide to commercial lease assignments…
As many commercial leases are let for long periods, it may be that during the term a tenant may wish to transfer their obligations to a third party, whether for financial reasons, operational or other changes in business need.
A review of your commercial lease will identify whether an assignment is either expressly prohibited or limited. It is usual for most modern commercial leases to set out that the assignment may take place with the landlord’s consent, with such consent not to be unreasonably delayed or withheld.
If there is no provision in relation to assignments in the lease the tenant may assign it without the landlord’s consent.
Landlord’s Consent to Assign
Where there is an express provision in the lease and the current tenant has found a new tenant (the Assignee), who wants to take over the lease and be responsible for complying with the lease terms and obligations, the process usually starts with a written request to the landlord for consent to the assignment and provision of the Assignee’s details, including accounts information and references from a lender and others.
The next step will be for the landlord to decide whether to give consent or not. Here, the landlord should assess whether the Assignee is financially stable or otherwise suitable for the use of the property, consider details about business plans and request references or guarantors.
In the event that a landlord is not satisfied with the Assignee’s covenant strength, they may have grounds to refuse consent.
There can also be conditions on granting an assignment within the provisions of the lease.
It is important to note, however, that a landlord must respond to the tenant’s request to assign within a reasonable timeframe and consent must not be unreasonably withheld, otherwise it leaves the landlord open to challenge by the tenant.
What if you’re a tenant and the landlord delays or unreasonably refuses to give consent?
A reasonable time would generally be calculated in terms of weeks rather than months from the landlord’s receipt of information from the existing tenant.
Unreasonably withholding consent will be fact specific but examples may include where the landlord’s reasons are unrelated to the landlord tenant relationship, or to gain an unearned benefit, to try and raise the rent or to exploit a market opportunity.
As a tenant, if you consider that the landlord has unreasonably refused consent to your request to assign the lease or the landlord is taking too long to respond to your request you may wish to make a challenge and take action such as an application to the court for a declaration to proceed with the assignment and seek damages from the landlord for financial losses suffered as a result of the landlord’s breach of duty to not unreasonably withhold consent.
What happens when a tenant assigns their lease without obtaining landlord consent?
In some cases, a tenant will not follow the procedure as required within the provisions of the lease and this will result in it being in breach of these terms.
In these circumstances, a landlord may consider the following options:
- Forfeiture of Lease – forcing the tenant and assignee to vacate the property
- Possession proceedings – to regain possession of the property
- Claim for damages – for breach of the lease (lost rent, costs of finding a new tenant)
- Injunctions – to prevent the attempt to assign
- Grant retrospective consent
How can we help?
We act for both landlords and tenant in assisting with the assignment process.
If you have a dispute in relation to a landlord’s refusal to consent or a tenant’s assignment without consent, our Dispute Resolution Partner Susan Roberts can help.
Or if you want to agree terms and complete an assignment to transfer the lease we can prepare the required legal documentation for you (Licence to Assign, AGA, Rent Deposit Deed) – please just get in touch with our Commercial Property team.