As a landlord, you’ll encounter various situations that require an understanding of property law.
One such area is the subletting and assignment of residential leases. Both can significantly impact your legal responsibilities and income.
The following will provide insights into the legal implications.
What is subletting?
Subletting happens when your long leaseholder or tenant rents out part or all of the property to another person, known as the subtenant.
Under such an arrangement the original long leaseholder or tenant remains legally responsible under the Lease of the property.
Legal considerations
- Lease: Your lease should clearly outline the conditions under which subletting is allowed. Failure to specify could leave you vulnerable to unwanted subletting arrangements. Furthermore if required the Lease should also include clauses to cover short-term arrangements if these are not to be permitted.
- Tenant vetting: Even if you consent to subletting, you can still require that the subtenant meets your requirements including references, and covenants to protect your position. Most leases prohibit subletting or assignment of part of the property.
- Right to refuse: This will depend on the wording of the lease and this would commonly allow subletting subject to consent not being unreasonably refused. The Lease should be carefully drafted to set out your particular requirements.
What is assignment?
Assignment occurs when the original tenant transfers all their rights and obligations under the lease to another individual or corporate body.
Legal considerations
- Lease clauses: Similar to subletting, your lease should clarify conditions regarding assignments such as the prohibition of assignment of part only, requirements in relation to consent such as references, security deposits and guarantors. The purpose of a covenant against assignment without consent is to protect you from having your premises used or occupied in an undesirable way or by an undesirable assignee.
- Vetting process: Again as set out above
- Written consent: Always ensure that your consent for assignment is given in writing to avoid any future disputes.
Steps to ensure a smooth process
Formal requests
Encourage your tenants to submit a formal, written request for subletting or assignment, detailing the reasons and any relevant information.
Written consent
Always provide written consent or refusal within a reasonable time. You may request reasonable information in order to make that decision.
The current legislation makes clear that where a landlord’s consent is required for an assignment or underletting, the landlord must give that consent unless it is reasonable to withhold it. If you refuse, make sure to give legally justifiable reasons to avoid potential legal repercussions. The burden of proof is on you to show that you are acting reasonably in withholding consent.
Review lease agreements
Regularly review and update your lease agreements to ensure they comply with the latest legal regulations concerning subletting and assignment. This proactive approach will help you manage your property more effectively and safeguard your legal interests.
Understanding the ins and outs of subletting and assignment can help you maintain greater control over your property while adhering to the law.
If you would like advice on how to navigate subletting and assignment in your lease contracts, please contact Tony Kent or Mandy Ng by calling + 44 (0) 20 7240 0521 or emailing tony.kent@mackrell.com/ mandy.ng@mackrell.com
