assignment lease tenancy property management guideYou often hear talk of ‘assigning’ a lease that a tenant holds of a property, with a specific clause in the tenancy regarding the process.

In simple terms, this means transferring the lease to another tenant.

Often a tenant needs to move on and no longer occupy the property. Or cash in and sell the lease interest if it has value, therefore, transfer it to another for payment.

You tend to have a broader alienation clause in the lease, which covers many different ways to part with occupation and responsibility of a lease, including underletting to sub-tenants and shared occupation with a connected party.

One aspect of this you’ll need to look into is how you assign a lease.

Most Types of Property Interests

Whilst most leases with a substantial interest will allow an assignment, often the smaller ones like a regular short-term AST of a residential property simply won’t.

Others tend to allow it on a specific basis, so maybe a long leasehold interest of a residential flat which almost has the value of a freehold interest and therefore sold (and transferred) for good money.

Commercial property leases will also have them in most circumstances, with a business's ability to sell the business or move out and still assign the lease interest over to another tenant to take over.

How to Assign Your Lease

The best way to know how to complete a lease assignment is to look at what your lease says.

These will be outlined in the alienation section that will probably go into a lot of detail about when and how this happens—right from what notices are served to what conditions and information must be issued and agreed upon.

However, remember that there is often legislation in the background to help imply things, for example, the landlord having to act reasonably when granting consent to an assignment.

It’s one of those areas of property management where it’s worth getting some professional advice. Even if everyone seems happy to progress, these things can take time and cause a delay or proposed assignment to fall through.

Solicitors are an essential part of that, and knowing how to procure. However, additional property surveying and management advice is also beneficial to make sure the whole thing is going okay.

Contact us here in you want any more help and feedback.

Frequently Asked Questions

Here are some FAQs that we often see asked in these scenarios as a quick go-to guide for any specific questions you have as well:

What does the assignment of a lease mean?

This is where the lease is transferred to another tenant, so they effectively become the new tenant’s name on the lease and are responsible for everything.

Who signs a Licence of Assignment?

This can have up to three parties involved – the landlord who agrees on the assignment, the current tenant who is permitting this (the assignor), and the new tenant taking the lease on (the assigned).

There may then be different contact details, authorised agents, and solicitors acting on their behalf.

What happens when there is a reassignment?

Usually, this means that one assignment has already happened in the past, but then another is planned for the future. So the tenant who initially took the lease on may want to pass on themselves to another.

They’re separate transactions, although the new one has consequences, for example, the first tenant and guarantor being off the hook with the re-assignment.

Is the assignment registrable?

This will relate to the legal transaction being registered with Land Registry. This will depend upon the length of the original lease and obligations within the lease.

If it is required, then usually, the assignee (new tenant) has to arrange and cover any administration costs.

Can you assign part of a lease?

Generally, no, and leases will only allow assignment of the ‘whole’ of the premises rather than ‘part’.

This is because it gets too complicated to split a lease-up effectively and would be best documented through a separate sublease of just one part.

Who pays lease assignment fees?

One part that usually does not pay is the landlord, with an obligation to have these covered by others.

Therefore, this leaves the current or new tenant to cover the bill. The landlord therefore often has to agree to what they call ‘undertaking’ of fees with the current tenant, who still has the lease contract but may well decide to have these covered in the background by the assignee tenant taking the lease.

Can you assign a lease without the landlord’s permission?

Check the lease, as sometime you may not need to, or only inform the landlord by notice afterwards rather than ask permission.

Can a lease be assigned to another party?

The lease should clearly say if you can assign to another tenant and the conditions.

Behind the scenes, general legislation may also imply obligations, including how a landlord must reasonably give consent to the lease assignment.

How does a lease assignment work?

In short, the current tenant needs to drive this and propose a new tenant to take over. Then, they need to agree on terms and basis between them and even check whether it’s allowed in the first place.

It’s often a case of them then requesting consent from the landlord.

What conditions do you usually have to agree with a lease assignment?

It depends upon how safe a bet the new tenant is and what the lease says must happen.

It may include a rent deposit or the current tenant still guaranteeing the assignment. There may also be various pieces of information and documentation to be provided.

How do you write a lease assignment letter, and is there a standard letter?

There’s a difference between the final legal documentation and the initial letters that cover the agreed terms and conditions (and maybe Heads of Terms).

Solicitors will need to cover the former, and ideally, a professional surveyor or property manager the latter.

Any standard letter or template needs to be looked at carefully, and what is being missed just as much as what is being added.

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