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.