Lease assignment and transfer in England: main rules and legal advice

Assigning a property lease in England

A lease assignment is a situation when an original tenant (assignor) transfers his or her lease to a new tenant (assignee). The landlord expects the new tenant to meet the same expectations as previously set for the assignor.  

Consent of Landlord 

Most leases require the landlord’s written consent before a tenant can assign their lease to another party. The landlord may have the right to approve or reject the proposed assignee if the new tenant does not meet the terms set out in the initial lease agreement, in particular: 

• Financial status and proof of solvency. 

• References, such as statements from previous landlords. 

• Proposed use of the premises. 

• Likelihood of requesting alterations to the building or works.  

If the contract allows lease assignment but the landlord refuses without reasonable grounds, he or she may be liable to pay compensation to the existing tenant. Refusal based on matters outside the lease is generally unjustified, for example: 

• The landlord argues that the tenant will affect the letting of other properties in the vicinity. 

• The landlord argues that the tenant will affect the letting of other parts of the building of which the said letting forms a part only 

• The landlord wants repossession 

• The landlord wishes to withhold consent on discriminatory grounds, such as race, sex, or disability. 

The landlord may also request a new deposit from the assignee before consenting to the assignment of the lease. 

Lease Assignment Liabilities 

Please note that the assignment of a lease to a new tenant does not automatically exempt the previous tenant from all his or her obligations. The assignor is usually required to sign an Authorised Guarantee Agreement which requires him or her to cover any rent and damages of the new tenant, but not any future tenant after him.  

Landlords, in their turn, can only claim payments of rent within six months of the money being due provided that a complete notice has been served to the previous tenant. 

Lease Assignment Cost 

The lease assignment may be gratuitous or for a certain price that is applied to offset any cost difference: 

• The assignee usually pays a price to the assignor if the rent is below market rate. 

• The assignor should pay the assignee if the rent is above market rate. 

Neglecting the rules according to lease assignment may result in legal consequences. The original tenant or the new one may have legal grounds to take action against the landlord. We want to share with you some legal tips that will help to avoid such an unfortunate situation:  

• If the tenant presents you with an assignee, examine their financial and personal situation carefully to make sure that you have reasonable grounds to refuse, if you wish. Request necessary proof from the existing tenant. 

• Make sure not to base your refusal on grounds outside the actual property leased, or on discriminatory grounds against the new tenant. 

• Request a new deposit from the assignee or make sure that the assignor concludes with a transfer of deposit to the assignee. 

If you are a private or commercial tenant, we encourage you to: 

• Check to whom the security deposit will be returned and remember to ask the new tenant for the corresponding payment when transferring the deposit to him or her. 

• Make a thorough assessment of the new tenant’s file and creditworthiness, because promises made by the new tenant are not binding on the landlord. Everything must be proven by objective documents and facts. 

• Remember to draw up an inventory of fixtures and fittings when you leave so that you can clearly define which damages and repairs are your responsibility and which are the responsibility of the new tenant. 

• Don’t confuse the lease assignment with subletting.