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Underleases of part

In current market conditions Landlords may wish to consider allowing Tenants to sub-let a part of their premises subject to appropriate terms and conditions: "underleases of part".

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Underleases of part

Points to consider include the following:

  • Does the layout of the building lend to itself to sub-division? If so, it is important to define that area which the tenant is permitted to sub-let by reference to an accurate plan.
  • What restrictions does the Landlord want to place on the sub- letting of part- e.g. by making it conditional on a direct covenant from the sub-tenant to observe and perform those terms of the lease which relate to the sub-let part?
  • Is sub-division restricted by a superior lease, planning conditions or fire safety regulations?
  • Will sub-division affect security or insurance of the property?
  • Will the underlease be excluded from the Landlord & Tenant Act 1954 so that the sub-tenant does not acquire security of tenure?

If the above aspects are properly addressed an underlease of part does not have to become a management burden for the Landlord and can give increased flexibility for the Tenant.

If you wish to discuss this article or require any advice or assistance in relation to commercial leases then please do not hesitate to contact Jonathan Senior on 0114 2536543.

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