What legal issues should I be aware of when I assign my lease?

Duration of a lease

Often when an individual signs a tenancy agreement to lease a particular property in return for the payment of rent there will be a minimum duration of the lease. For many properties in England and Wales the minimum term of a lease will be 6 months and in some cases it will be 12 months.

When a tenant signs up to this agreement they may not be aware of certain unforeseen factors which may require them to move out before the end of the lease. If this is the case and they can no longer afford to live in the property they have the option of assigning the lease.

Assignment of a lease

What is meant by assignment of a lease?

An assignment of a lease is the process of passing on or selling a leasehold interest.

Can a landlord object to the assignment of a lease?

If the lease which the original tenant signed provides for and allows assignment, the landlord should not unreasonably object or delay. If a landlord does unreasonably object or delay they will risk having to pay compensation to the tenant.

The Right to assign a lease

One of the main principles of a leasehold which gives an interest in land (i.e. a lease which enables the tenant to live in a property under the condition of rent payment) is the fact that the leasehold interest can be owned and sold or passed on to another leaseholder.

This means that under most agreements for an individual tenant to lease a property from a landlord it is perfectly legal for the tenant to assign the lease to another individual. The original tenant will the vacate the premises with the leasehold agreement being taken over by the individual whom it was assigned to.

Does the Landlord have to give permission for this to be the case?

The right to assign the lease is generally subject to permission of the landlord being granted. However, this permission cannot be unreasonably withheld.

Is there any criterion which must be established before a lease can be assigned?

Normally it will be provided for in the lease that if an assignment is going to take place the individual who it is assigned to must meet certain criteria and be qualified as a reliable tenant by the landlord.

What sort of criteria must be adhered to?

In most cases this would require similar checks to which the original tenant was subject to when taking on the tenancy in the first place. Usually this will have been financial checks and references.

Are there any duties placed on the landlord when an assignment is to take place?

The Landlord and Tenant Act 1988 provides for the following duties placed on the landlord when an assignment is to take place:

  • To give consent to an assignment, except where it is reasonable not to do so
  • To give consent without undue delay
  • If the landlord also requires the consent of a superior landlord, to take reasonable steps to secure consent without undue delay

When will it be deemed reasonable for a landlord to withhold consent?

If the landlord withholds consent it may be deemed reasonable even where the assignment of the lease was not excluded in the original agreement.

The following are reasons as to why the landlord may justifiably refuse to assign a lease:

  • Insufficient information supplied on or by the proposed tenant – if this is the case the landlord would be unable to make a judgment on the proposed new tenant
  • Character and financial standing of the assignee
  • Following the landlord’s judgment he has decided that the future viability of the building as a whole could be jeopardised

When will it be deemed unreasonable for a landlord to withhold his consent?

It is generally held to be unreasonable for a landlord to withhold consent on matters outside the lease and the landlord and tenant relationship of if one of the following issues has occurred:

  • 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 grounds of race, sex or disability

What happens if the landlord and tenant cannot come to an agreement over the assignment of a lease?

In some scenarios a tenant will feel that he can justify a claim for assignment of the lease and the landlord is unreasonably withholding consent. If this situation occurs the tenant has the option with simply carrying on the transaction for the assignment of the lease.

Does the tenant run any risks if they carry on in this manner?

If the tenant simply carries on with the assignment as they believe consent on the part of the landlord to be unreasonably withheld they do run the risk of forfeiture of the lease.

Is there any other option available to the tenant?

Where the tenant feels that consent is being unreasonably withheld they have the option of applying to the court for a judgement. However, this will bring a subsequent delay to proceedings.