What is a License to Assign?

If a commercial tenant is not able to continue with a lease for the full term, they may wish to transfer (‘assign’) the lease to a new tenant, if they are not able to terminate the lease early.  

However most commercial leases contain terms which prohibit assignment without the Landlord’s consent. Therefore, a Licence to Assign may be required. 

A Licence to Assign is the landlord’s written consent which grants permission for the current tenant (‘Assignor’) to transfer (‘assign’) the commercial lease to a new tenant (‘Assignee’). 

Once the current tenant has found a suitable new tenant, the landlord may have conditions before granting the Licence to Assign which may include: 

• Checking the financial status of the tenant
• Require that the current tenant remains liable if the new tenant does not comply with the terms of the lease through an Authorised Guarantee Agreement
• Payment of their legal fees/surveyor’s fees 
• Rent Deposit from the new tenant. 

Due to the Landlord and Tenant Act 1988, landlords cannot usually refuse consent for no valid reason if the consent is not to be unreasonably withheld. 

The landlord’s solicitors will usually prepare the Licence to Assign. 

Once the Licence to Assign is completed, you can start the process to assign the lease. 

The new tenant is responsible for assigning the lease. The process will vary depending on the lease term. If the lease is for seven years or more, a Land Registry Transfer Form should be used and the transfer will need to be registered at the Land Registry. Where the lease is less than seven years, it can be assigned using a Deed of Assignment. 

Jordans Solicitors are able to act on behalf of Landlords or Tenants in respect of Licences to Assign. We are able to review the Lease and advise on what would be required in respect of the transfers. We are also able to assist with drafting or reviewing the Licence to Assign, advise/negotiate on terms if needed and assist with the assignment of the lease once the Licence to Assign has completed.