Legal advice: Successful sub-letting

Suppose you would like to sub-let part of your premises - do you know what that would entail?

By Keith Miller of thePublican.com's team of legal experts from London solicitors Joelson Wilson.​

You have a lease of your premises. How do you go about sub-letting part of those premises? I am not suggesting you might want to become a Rigsby or a Rachman, but you may have surplus commercial space for which you are looking for a tenant. What, as a lessee yourself, should you be bearing in mind?

As usual, the first step will be: look at your lease. This may prohibit outright any sub-lettings or just sub-lettings of part of your premises. Your landlord may nevertheless agree, but could charge you for giving his consent, if he was so inclined.

Next, your lease might allow sub-letting of part in certain conditions; for example, the area to be sub-let may have to be a whole floor of a building or a specified outbuilding. If you want to let a single room on your top floor as an office, you will get nowhere.

Modern leases, such as 'investment leases' relating to pubs in pubcos, especially those included in securitisations, can be particularly tight. Examples of restrictive wording are:

• That the rent charged to the sub-tenant must be the higher of the current market rent and the rent you pay under your head-lease - or a due proportion of it.
• That the terms of the sub-lease must reflect exactly those in the head-lease, which is very unreasonable if you are a 20-year lessee and you want to sublet for a short term; your sub-tenant will not want to take on all your liabilities, especially for full repairs.
• That the sub-tenant must not be given security of tenure, i.e. the ability to renew his tenancy.
• That the landlord must approve the sub-lease. This will add delay and expense to the letting and may cause extra problems.

There will usually be restrictions in your lease on what you may use the premises for. For example, it will probably say you must only use them as a public house or other licensed premises. This would permit you to sub-let a barn or outbuilding as a restaurant, but not as a day nursery, a studio or a shop. The landlord's permission to a partial change of use (and any related alterations) will be needed and, whereas in some leases he may not be able to withhold or delay consent unreasonably, that is not always the case.

What's more, he may find a good reason for saying "no" and you might find it difficult and costly to challenge him.

Remember that although you make your sub-tenant enter into covenants with you in the sub-lease, you don't pass on your liabilities and will stay responsible to your landlord, even for the wrongs of the sub-tenant. In addition to the landlord's consent, the change of use - and any associated works - will probably require planning permission to be obtained. You or the tenant may apply and you will need to serve notice on your landlord (and even get his consent) and of course advertise the application, allowing neighbours and other busybodies to raise objections.

Your lease will invariably say that you have to foot the bill for getting all the consents which you need. These will be for the landlord's legal and surveyors' costs and sometimes for the landlord's own administration fee.

Finally, there is a licensing aspect - in some cases you may need to consider a variation to your premises licence.

If the area to be let is included in your licence, you will want to ensure that the deposited layout plan is varied to omit it.

All in all, your proposal to sub-let must be worthwhile, because along the way you may be involved in difficulties and certainly in expense. A 10-year lease for Jamie Oliver's new restaurant may come up to the mark; a short let to your mother-in-law's sewing circle will not be worth your time and trouble.