Can I Sublet My Leasehold Property

Date Added 24.03.17

How can you tell and why do you need a Solicitor to check the Lease for you?

Leases contain a clause known as an “alienation clause”. These clauses restrict what can and cannot be carried out in the property. Most Leases will contain a restriction on subletting or underletting, this is to give the Landlord some control over who is occupying the property.

Typical restriction clauses are:-

1.            ‘Not to sublet  the whole of or any part of the demised premises’

2.            ‘Not to assign sublet or part with possession of part only of the demised premises’

3.            ‘Not to sublet the demised premises without first obtaining the Landlord’s consent in writing’

If the property is being purchased as a Buy to Let it is essential that the purchaser is aware of the restrictions on underletting as the restrictions must be complied with and the purchase will not be a good investment if the property cannot then be sublet.

A Solicitor acting on the purchase of Leasehold property needs to check the alienation clauses and advise accordingly, if there is a restriction on subletting the client needs to be properly advised.  An approach can be made to the Landlord to obtain consent to subletting but this may be refused if clauses similar to 1 and 2 above are included within the Lease, in these clauses there is no obligation for consent to be given. With reference to clause 3 above, consent from the Landlord should be obtained if it is the intent to sublet the property, consent from the Landlord cannot be unreasonably withheld. Such consent from the Landlord should be obtained prior to exchange of contracts.

A purchaser should also consider future circumstances, for example, the property is purchased and the purchaser is then offered employment abroad, the job offer is a temporary contract for a period of 2 years. If similar clauses 1 or 2 above are within the Lease the purchaser may have difficulty in obtaining consent to sublet the property whilst working abroad which would then leave the property empty for a period of 2 years at the expense of the purchaser as there would still be an obligation to pay Ground Rent and Service Charges and all other expenses.

Another example would be, the purchase of a 2 bed flat, the purchaser then decides that financial gain could be obtained by subletting one of the bedrooms, again, if clauses similar to 1 or 2 above are contained within the Lease this could prove problematic.

Legal advice should always be obtained from a Solicitor who will check the Lease and advise a prospective purchaser on the alienation clauses to allow the purchaser to make a decision on whether the purchase of a Leasehold property will be a sound investment.

If you need advice about purchasing a leasehold propertybuy-to-let property or for any other legal advice about purchasing property Talk to Tollers.

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