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Getting out of a Lease
6. Sub-letting Your Premises
If you sub-let, you become the landlord of the incoming tenant.
6.1 You remain liable to your landlord under the original lease (the head-lease).
6.2 You negotiate a new lease with the new tenant (the sub-lease).
- Check the terms of the existing lease to establish what you can and cannot do.
- The terms of the sub-lease are usually similar to the terms of the head-lease, to cover all your liabilities.
- You cannot give any rights to the new tenant which extend beyond your own rights as a tenant. For example, you cannot give a longer lease.
- Even if you cannot cover your rent, sub-letting may at least cover other overheads such as rates and service charges.
- You may be able to make a profit on the rent and other charges.
- To protect your reclaims of any VAT paid to the landlord you should carefully consider your own VAT arrangements.
6.3 Landlords usually want to approve the terms of a sub-lease before consenting.
Labels: Premises, Reduce Costs
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