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Buying a business

Assignment of lease when you buy a business: the landlord's consent and your completion date

An assignment of lease moves rented premises to you when you buy a business. What the landlord must do, what it may ask for, and how to protect your completion date.

Reading time 5 min read
Category Business guides
Written by The bizbritain team
If you buy a business's assets and it rents its premises, the lease has to be transferred to you. That transfer is called an assignment of lease. Most commercial leases need the landlord's consent before it can happen. So the landlord's answer can decide when you complete, and when your lender releases the money.
This guide explains what the law expects from the landlord, what landlords tend to ask for, and how to keep the lease from holding up your purchase. The law described here applies in England and Wales.

Section 01

What is an assignment of lease?

An assignment of lease moves the whole lease from one tenant to another. You take over the rent, the repairs and every other promise in it, for the time left to run.
It matters most in an asset purchase. The seller's company keeps its own legal identity, so the lease has to be moved across to you.
In a share purchase, the company itself changes hands. The company stays the tenant, so the lease usually stays where it is. Some leases still treat a change of ownership as something the landlord must agree to, so check. Our guide to asset sales and share sales explains the difference in full.

Section 03

What the landlord may ask for

A landlord wants to know the new tenant can pay the rent. Expect questions about your finances and your plans for the business.
Leases granted since 1996 can also list conditions in advance. If the lease lists them, the landlord can rely on them without having to show they are reasonable. Read that part of the lease before you agree a price.
Landlords commonly ask for accounts, references or a guarantee. Ask your solicitor what is usual for a lease like yours.

  1. Read the lease early

    Check the clause on assigning, the years left to run and the next rent review date.

  2. Ask the seller to apply in writing

    The landlord's duty to reply starts with a written application from the tenant.

  3. Have your information ready

    Accounts, references and a short plan for the business answer most of what a landlord asks.

  4. Chase the answer in writing

    The landlord must reply within a reasonable time. A written record helps if it does not.

  5. Keep your lender informed

    Send the lease and the consent timetable to your lender as soon as you have them.

Section 04

How the lease affects your loan and completion date

A business that rents its premises depends on its lease. Your lender will want to know the business can stay where it trades.
Ask your lender what it needs to see about the lease before it releases the money. Ask as well how the time left on the lease affects what it will lend.
Your solicitor can make the purchase conditional on the landlord's consent. That way you are not committed before the lease is secure.
If you need finance for the purchase, speak to an acquisition finance broker early. Then the lease checks and the loan can run side by side. Our guide to what your lender will check covers the rest of the deal.

This guide is general information, not financial advice. Applications are subject to status, affordability and lender criteria.

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