When it comes to conveyancing, we come across situations regularly where a Licence to Assign is required when it comes to a leasehold property. In this article we explain what is a Licence to Assign and answer the question as to how important is a Licence to Assign?
Speaking broadly, we can divide properties in two main types; houses and flats. In the main, houses are usually Freehold Properties, where the owner owns the whole property and any land it is built upon. A flat, apartment, or maisonette, are most often leasehold (or share of freehold) where the owner owns a proportion of a larger property/land and a Landlord or Freeholder owns the remaining part and has overall ownership and responsibility. In the situation of a leasehold, then the property owner is known in Conveyancing as a tenant. You, as the tenant, is effectively renting the property from the Landlord or freeholder on a long term (often somewhere between 99-999 years from the start of the lease). Such leasehold properties come with a Lease which defines the proportion of the property owned, any rights granted and reserved and any covenants determining what can and can’t be done in the property.
One of the most commonly seen covenants in leasehold properties is the requirement for a Licence to Assign.
What is a Licence to Assign?
A licence to assign is defined as a specific request for permission from the Landlord or Freeholder to assign the lease to another party. An assignment of a lease is effectively a sale or transfer of that existing lease term.
What forms can a Licence to Assign take?
For each individual property and lease, a Licence to Assign can take many forms and have a variety of specific terms or stipulations to it. Examples of this are:
- The type of assignment – some may specify the licence is only required on a sale, whereas some may be required for mortgage charges or letting out the property on a short-term basis to a tenant, with more than one being required in some cases where there is a mortgage lender and also an assignment at the same time.
- The specifics of what and how the Licence should be obtained and delivered
- Timeframes
- Varying fees and costs
- Any specific terms, restrictions or covenants imposed on any party within the assignment
What information is included in the Licence to Assign?
Although detailed specifics can vary between Licences, speaking generally, a Licence to Assign should contain the following key information:
- The parties involved in the assignment, including clear identification of the following:
- The Landlord
- The Assignor or original tenant who is assigning the lease
- The Assignee or new tenant who will be assigned the lease
- Property details, the start and end dates of the original lease, date the assignment takes place
- Lease terms and covenants
- Assignment terms and fees
- Guarantees if required by the specific lease, including Authorised Guarantee Agreements, Rent deposits etc in the cases of Commercial Leases
Management Company and Licence to Assign
In a number of cases, especially in larger leasehold properties, or where a property forms part of a larger estate of properties all owned by the same Landlord, a Landlord will employ a Management Company or Managing Agent to help with the day to day running of the property, including matters such as Licences to Assign
Mortgage Lenders and Licence to Assign
If you are reliant on mortgage finance for your leasehold purchase, your mortgage lender will require your solicitor to take any necessary steps to ensure their charge over the property is secured including applying for a Licence for their charge.
The Process
The process of obtaining a Licence to Assign varies between properties, especially where Management Companies or Managing Agents are involved as a intermediary between the Landlord and the tenant, however the process usually follows the same key steps:
- Consent is requested using a specific format if required to seek the Landlord’s permission to assign the Lease
- Consideration time for the Landlord, where they will gather relevant details from the proposed assignee such as references and financial information
- Once the Landlord agrees to the assignment, the Licence is then drafted including all relevant details discussed earlier in this article and anything specific to the particular property, lease or tenant.
- The Licence is then executed and all parties involved sign the Licence.
How can we help?
If you are considering purchase a leasehold property, or taking over a commercial lease, we have experienced and knowledgeable teams here at Express Conveyancing ready to help with your lease and licence to assign if required. We also have a wealth of experience of working with some of the well-known and lesser-known Management Companies
