What Is a Licence to Sublet?
A licence to sublet, also referred to as a licence to underlet, is a formal agreement between the landlord, the tenant, and the subtenant. It confirms the landlord’s approval for the tenant to rent out part or all of the leased premises to another occupier while keeping the original lease in place.
This document is distinct from an assignment of lease, where the tenant transfers the entire interest and steps out of the contract. With subletting, the tenant remains responsible for meeting the obligations of the head lease while granting certain rights to a subtenant. In the UK, such licences are critical because many leases expressly forbid subletting without written consent, and failure to secure one can result in breach of contract.
For more on lease obligations and landlord consent requirements, see the UK Government guidance on private renting.
When Should You Use a Licence to Sublet?
1. Commercial Tenancies
In commercial leases, unused space often becomes a financial burden when companies downsize, restructure, or relocate operations. A licence to sublet allows tenants to monetise underutilised offices, warehouses, or retail units while still respecting the terms of their head lease. For example, a company that only needs half of its original floor space can sublet the other half to a complementary business, reducing costs without breaking the lease.
Landlords benefit from knowing who the new occupier is and ensuring that their property continues to attract stable, reliable businesses. The licence can also place restrictions on the type of subtenant, for instance, preventing a competitor from occupying the premises or ensuring that the use remains consistent with planning permissions and zoning laws. Without such clarity, disputes can arise over rent payments, property use, or conflicting commercial interests.
Expert Tip:
“Always check if your head lease restricts the type of subtenant you can introduce. Many landlords prohibit competitors or businesses that might devalue the property, such as noisy or high-footfall operations. Clarify these conditions before negotiating with a potential subtenant.”
2. Residential Properties
For residential tenants, the need to sublet often arises when life circumstances shift, such as temporary relocation for work, taking a study placement abroad, or simply seeking to share rent obligations. A licence to sublet protects both the tenant and the landlord by formally recording the landlord’s consent and setting clear terms for occupancy.
These licences can address important details such as whether the subtenant is responsible for utilities, whether they may keep pets, or whether they can alter the property in any way. They also establish accountability for damages: even if a subtenant causes harm, the original tenant remains liable to the landlord. This makes it vital to have indemnity provisions that ensure costs are recoverable. By requiring written permission through a licence, tenants avoid inadvertently breaching tenancy terms, which could otherwise result in eviction or loss of deposit.
3. Partial or Shared Subletting
Subletting does not always involve transferring control of the entire property. In practice, tenants often want to sublet only part of their leased space, such as a spare bedroom in a flat, a mezzanine in a warehouse, or a section of an office floor. A licence to sublet clarifies exactly which areas are included and defines rules for using shared spaces such as entrances, kitchens, or bathrooms.
This level of detail is crucial in preventing conflict. For instance, if a tenant sublets a retail corner in a shop, the licence can state when the subtenant may use shared storage areas or signage. Similarly, in residential scenarios, it can specify whether the subtenant has access to amenities like parking or garden space. By formally recording these arrangements, the licence ensures that the rights of all parties (landlord, tenant, and subtenant) are clearly defined, reducing the likelihood of disagreements or overreach.
How to Write a Licence to Sublet
Writing a licence to sublet requires attention to detail, since the document balances multiple interests. Using a tailored document generator such as Legally.io to create a sublease agreement template (UK) ensures compliance with legal standards while reducing the risk of costly mistakes.
Step 1: Identify the Parties Clearly
Every licence to sublet must begin by identifying all parties with precision. This means including the landlord’s legal name, the tenant’s full name as shown on the head lease, and the subtenant’s details. If the property is owned or leased by a company, use the registered corporate name, company number, and address to avoid ambiguity.
For subtenants who are businesses, the registered office address should be provided, along with any trading names.
Clarity is critical here because disputes often arise over who holds the obligations. For example, if a subtenant company later dissolves, the document should make it clear whether directors or guarantors are responsible for continuing obligations.
By carefully defining the parties upfront, you create a contract that can be enforced without uncertainty in the event of breach or litigation.
Step 2: Define the Premises
The description of the premises being sublet must be exact. A vague reference to “part of the property” could cause major disputes, particularly in shared commercial or multi-tenancy environments. Instead, the licence should reference the full postal address, unit numbers, or even attach a plan or map with the sublet areas shaded or outlined.
For instance, if a tenant sublets half of a warehouse, the licence should state whether this includes storage racks, access corridors, or loading bays. In residential contexts, the agreement may need to clarify whether shared kitchens, parking spaces, or garden use is permitted.
This level of detail prevents confusion over rights of entry, use of communal spaces, and repair responsibilities, and it protects the landlord’s ability to enforce rules across different occupiers.
Expert Tip:
“Attach a floor plan or schedule with the licence. Visual references reduce ambiguity, especially in multi-occupancy buildings, and make it easier to enforce boundaries if disputes arise.”
Step 3: Specify the Term of the Sublease
Time limits are one of the most important aspects of any licence to sublet. The document should set a start and end date for the sublease and confirm that it cannot extend beyond the head lease. For example, if the head lease ends in December 2028, the sublease must conclude by that date, even if the tenant and subtenant wish to continue.
Clearly defining the term protects the landlord from being locked into relationships with subtenants they have not directly chosen. It also prevents situations where a subtenant mistakenly assumes they have a longer right to occupy than the head lease allows.
Where rolling or periodic terms are permitted, the licence should set clear notice periods so all parties know how the arrangement can be ended lawfully.
Step 4: State Rent and Obligations
The financial section of a licence to sublet should go beyond just stating the rent figure. It should explain how the subtenant’s payments interact with the tenant’s responsibility under the head lease. Typically, the tenant remains liable to the landlord for the entire rent, while collecting from the subtenant separately. If the subtenant fails to pay, the landlord will still expect payment from the tenant.
To avoid disputes, the licence should specify whether the subtenant contributes toward service charges, repairs, insurance, or utility bills, and how those amounts are calculated. For example, in shared office space, the subtenant might pay 30% of the service charge proportional to the area they occupy.
Stating these terms clearly prevents arguments over unexpected costs and ensures that all parties understand who is responsible for which financial obligations.
Expert Tip:
“Break down service charges and utilities proportionally to avoid disputes. For example, base charges on floor area or agreed usage, and record the formula in the licence. This transparency helps prevent arguments over ‘hidden costs’.”
What Should a Licence to Sublet Contain?
A legally-compliant licence to sublet should contain the following details:
- Parties and Property Details: The first section should record the names and addresses of all parties and accurately describe the property. This might include the postal address, title number, or floor plan reference for clarity.
- Duration and Renewal Terms: The agreement must clearly state the start and end dates of the subletting period, ensuring it cannot extend beyond the head lease expiry. Renewal or extension rights should also be addressed to avoid uncertainty at the end of the term.
- Rent and Service Charges: Detail the rent payable under the sublease, when it falls due, and how payments are to be made. Include provisions for additional costs such as maintenance fees, insurance contributions, or utilities to avoid later disputes.
- Restrictions and Conditions: Landlords often impose restrictions to protect their property. Common examples include prohibiting certain types of business activities, banning alterations without consent, or limiting the number of occupants in residential lettings. A well-drafted licence includes these restrictions clearly.
- Landlord’s Right to Inspect: A good licence reserves the landlord’s right to access the property for inspections. This allows them to verify that the subtenant complies with the lease, keeps the premises in good repair, and avoids unlawful use.
Expert Tip:
“Include notice periods for inspections. While landlords need access to protect their investment, subtenants have rights to quiet enjoyment. Balancing both helps avoid claims of unreasonable intrusion.”
Legal Tips for Writing a Licence to Sublet
- Ensure Head Lease Compliance: Always review the tenant’s original lease before drafting the licence. Many head leases include strict clauses about subletting, and granting permission without checking these terms could cause legal problems for both tenant and landlord.
- Protect the Tenant’s Liability: Even with a sublease in place, the original tenant remains directly liable to the landlord. To safeguard against breaches caused by the subtenant, include indemnity clauses making the subtenant responsible for any violations they cause.
- Avoid Unlawful Discrimination: When selecting subtenants, both landlords and tenants must comply with anti-discrimination laws under the Equality Act 2010 in the UK. Rejecting subtenants on discriminatory grounds could result in legal claims.
- Document Everything in Writing: Verbal permission is rarely enforceable. Putting all terms in writing ensures that everyone understands their obligations. Using a formal template generated by Legally.io helps ensure that nothing important is left out.
Key Takeaways
A licence to sublet protects both landlord and tenant when a tenant wishes to introduce a subtenant. It prevents breaches of lease agreements, clarifies responsibilities, and ensures all parties are protected by law.
Comprehensive licences address payment terms, restrictions, and compliance with the head lease. They also ensure landlords retain control over who occupies their property.
By using structured templates and legal guidance, tenants and landlords can avoid disputes and ensure the subletting arrangement is enforceable.
Platforms like Legally.io allow parties to draft customised, compliant agreements with ease, ensuring legal security for all involved.
