Overview

The current economic climate means we are likely to see an increase in tenants looking to move out of their premises and find new tenants or "assign their leases". Once a new tenant (the proposed "assignee") is found, the outgoing tenant usually wants to move as quickly as possible, particularly if a business is unprofitable and the lease has become a liability.
It is often assumed that leases can be disposed of as quickly as selling a freehold building - unfortunately, this is rarely the case. However, with some forward planning delays can be reduced and the process can be made smoother. What follows is a quick guide highlighting some keys issues to bear in mind if you are thinking of disposing of your lease and some tips to help speed up the process.
Landlord consent and your lease terms
The process of disposing of a lease is complicated by the fact that, in most cases, the transaction is not simply between two parties. Under the terms of the lease, the landlord's consent will usually be required to assign the lease, which brings a third party to the transaction. Whilst in most instances the lease will provide that the landlord cannot unreasonably withhold or delay the giving of consent, unlike the outgoing tenant and incoming assignee the landlord has no real incentive to treat the matter with a sense of urgency.
Does the lease allow assignment?
In the first instance, you should check that your lease actually permits you to assign it. On first reading, it is not always entirely clear and you should ask your solicitor to check the lease terms.
If the lease does not allow assignment, it may still permit you to underlet the premises and this would be an alternative way of achieving an effective disposal. On an underletting, you will still remain directly liable to the landlord for rent and other covenants under the lease, but, in turn, you will have a direct relationship with the undertenant who will pay rent to you. In this way, you can offset your lease liabilities. Underlettings also most often require landlord's consent and conditions are likely to be imposed as to rent level, covenant strength of undertenant etc.
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