Consider this if…
- You have space you no longer need and want to sublet it
- You are taking a sublease and want to know what you are actually getting
- You are leaving early and cannot assign the lease
- Your landlord's consent to a sublease is being delayed or refused
- You want to know what happens to a sublease if the head lease ends
- You are a landlord asked to consent to a subletting
How it works
Send us the head lease
Whichever side you are on, the head lease governs. It says whether subletting is permitted, on what conditions, and what consent is required.
Today
We check what is permitted
Whether the lease allows subletting at all, whether consent can be withheld, and what the landlord can require as a condition of giving it.
First thing we do
We draft or review the sublease agreement
Rent, outgoings, term, permitted use, access, services, repairs, insurance, make-good, security, termination and what happens if the head lease ends early.
Quoted before we start
We handle the consent
Preparing the request, the information the landlord is entitled to, and the consent deed if one is required.
Quoted before we start
Fee
Quoted in writing before we start
GST inclusive
We quote a fixed fee in writing before any work begins.
What a commercial sublease agreement does
A commercial sublease agreement is a lease granted by a tenant out of its own lease. The head tenant becomes a landlord to the subtenant, and remains a tenant to the head landlord at the same time. Nothing about the head lease changes; the head tenant stays fully liable under it.
That is the point people most often miss. Subletting is not an exit. If the subtenant stops paying, the head tenant still owes the rent.
Landlord Consent to a Sublease
Most leases prohibit subletting without the landlord's consent, and set out what the landlord may require for approval: information about the proposed subtenant, its financial position, the terms of the sublease agreement, and the landlord's costs. The conditions of consent may be recorded in a consent deed. Some consent provisions are qualified so that consent cannot be unreasonably withheld, and the retail regime addresses the topic as well. Whether that qualification applies must be checked against the head lease and applicable law rather than assumed.
A subletting done without the consent it requires is generally a breach, and it hands the landlord a reason to serve a default notice.
What the sublease agreement needs to cover
The commercial sublease agreement should identify the premises and permitted use, the rent and outgoings, the term, and the services and access the subtenant will receive. It should also allocate repairs, maintenance, insurance and utilities, and deal with fit-out, alterations, make-good and security.
The ending provisions matter just as much. The sublease needs to address default, termination and the expiry or early ending of the head lease. A careful sublease agreement review compares those terms with the head lease rather than reading the sublease on its own.
If you are the head tenant
Two things protect you. First, a sublease that mirrors your obligations, so whatever your landlord can require of you, you can require of the subtenant — rent timing, insurance, use, repairs, make-good. Any gap between the two documents is a liability you absorb.
Second, security. A bank guarantee or bond from the subtenant, and a personal guarantee where the subtenant is a small company, are worth asking for. You are taking the credit risk either way.
And keep the term short of your own. A sublease cannot outlast the head lease.
If you are the subtenant
Read the head lease before anything else. It tells you what the head tenant can actually give you, what use is permitted, what the make-good obligation is, and when the head lease ends.
Then ask the awkward questions. Is the head tenant up to date with rent? Has the head landlord consented in writing? What happens if the head lease is terminated — is there anything in place with the head landlord to protect your occupation?
A subtenant's position is only ever as strong as the lease above it, and the strongest protection is a direct agreement with the head landlord, negotiated before you sign rather than after something has gone wrong.
Sublease vs Assignment
A sublease creates a new lease beneath the head lease. The head tenant remains liable to the landlord and becomes responsible for managing the subtenant. An assignment transfers the existing commercial lease to another party, subject to the lease and landlord consent process.
Subletting can suit a business retaining part of the premises or returning later. If the business is leaving the whole premises permanently, an assignment of the commercial lease may be the more appropriate structure. We compare assignment or sublease options before the documents are negotiated, including the effect on the outgoing tenant's ongoing liability.
For landlords asked to consent
Consenting is routine, but it is worth doing properly: a consent deed that confirms the head lease is unaffected, that the head tenant remains liable, that no direct relationship with the subtenant is created, and that costs are met.
Frequently asked questions
Do I need landlord consent to sublease commercial premises?
Almost always. Most leases prohibit subletting without consent, and many set out conditions attached to giving it. Subletting without the consent the lease requires is generally a breach, so the head lease is the first thing to check.
Can the landlord simply refuse?
That depends on the lease and, where it applies, on the legislation — some consent provisions are qualified so that consent cannot be withheld unreasonably, and the retail regime deals with the subject as well. What applies to your lease needs to be checked rather than assumed.
If I sublet, am I still liable to my landlord?
Yes. That is the key difference between subletting and assigning. Under a sublease you remain the tenant under the head lease and remain responsible for the rent and every other obligation, even if the subtenant stops paying you.
What happens to my sublease if the head lease ends?
A sublease generally depends on the head lease, so if the head lease comes to an end the subtenant's position is at risk. It is the main thing a subtenant should investigate, and there are protections worth asking for — such as direct arrangements with the head landlord — before signing.
What is the difference between a sublease and an assignment?
A sublease creates a new landlord and tenant relationship beneath the head lease, while an assignment transfers the existing lease to another party. If you are leaving permanently and someone will take over the whole premises, an assignment may be cleaner. Whether liability actually ends depends on the documents and the landlord's consent.
I am taking a sublease. What should I ask for?
A copy of the head lease, evidence that the head landlord has consented, confirmation the head tenant is not in arrears, and clarity on services, access and make-good. A sublease negotiated without seeing the head lease is negotiated blind.
Should a lawyer review a sublease agreement before signing?
Yes. A commercial sublease agreement should be reviewed with the head lease and the landlord's proposed consent. The review should identify what the head tenant can grant, what the subtenant must pay and do, and what happens if the head lease defaults or ends.
Related services
Tell us which side of the sublease you are on.
Send us the head lease