In this blogpost, we offer valuable advice on subletting commercial properties. It’s a challenging area to say the least, so you need to understand the pitfalls before exploring the idea further.
Unfortunately, in people’s desire to close a sublet deal, which they think is a fantastic commercial business opportunity, they can let down their guard and allow themselves to make a rash decision. This can lead to considerable problems, including losing their business and the resources they’ve invested into it.
We’ve seen this happen to hard-working business owners, sadly. So we wanted to make sure that you don’t fall into the same trap.
Learn more below…
Problem: No formal agreement has been signed between you and the sub-landlord (the tenant you’re subletting from) – just a simple handshake. You’re handing over your money in good faith.
Must-do: It is imperative that you have an agreement in place otherwise you will have no legal protection if things go wrong. Use a solicitor to draw up a lease assignment/subletting agreement.
Problem: You haven’t fully read your current lease/licence agreement to confirm whether you need the consent of the premises’ owner/ primary landlord to sublet.
Must-do: Ensure you read the sublet agreement clause meticulously, or hire a solicitor to check it for you.
Problem: You haven’t confirmed that you’re dealing with the sublandlord or the primary landlord of the property.
Must-do: Thoroughly check the names and responsibilities detailed in the agreement so you understand who you need to work with. Your agreement should only be with the tenant who you’re subletting from, not the primary landlord. Any problems should be addressed to the person you are subletting from.
Problem: Although you’re making regular payments to the sub-landlord, it’s not going to the primary landlord. This can put you in arrears, possibly resulting in the primary landlord repossessing the premises.
Must-do: Do not exchange monies until an agreement has been signed and you know exactly how money is being managed up the chain. Also, confirm that the rent you’re paying isn’t more than what the sub-landlord is paying the primary landlord. If the primary landlord finds out about your arrangement, the result could be termination of the lease agreement and you’d be evicted by default.
Problem: The sub-landlord hasn’t renewed their lease with the primary landlord, forcing you to vacate the property.
Must-do: Your agreement will normally end a minimum of one month before the main tenant’s, so their non-renewal of the lease means you’re evicted by proxy. Ensure you’re protected in your agreement should this happen.
You should be speaking to your landlord a minimum of 3- 6 months before their lease expires to understand what their plans are. If they are not looking to renew the agreement it may create an opportunity for you to approach the landlord directly to “replace” them.
Subletting shouldn’t be a headache.
Have any issues with subletting? Get in touch with us: info@propertyadviceservices.co.uk.
