Renters' Rights Act 2025, Phase 1 commencement
Transition readiness pack
England

Leasehold Property

Underlease UK

Underleases (sub-leases): obtaining consent to underlet (LTA 1988), the fundamental rule that the underlease cannot exceed the head lease, intermediate landlord obligations, LTA 1954 security of tenure for commercial undertenants (including the s.65 risk), forfeiture of the head lease, and the intermediate landlord's trapped position.

14 min readUpdated 7 June 2026Last reviewed: 17 May 2026underleasesublettingLTA-1988LTA-1954

Obtaining Consent to Underlet — LTA 1988

Where the head lease contains a qualified alienation covenant, the LTA 1988 requires the landlord to give written consent or written refusal (with reasons) within a reasonable time; the burden of proving reasonableness of refusal lies on the landlord; the landlord cannot charge beyond their own legal/surveying costs; damages are available for unreasonable refusal (Bocardo SA v S&M Hotels Ltd [1980]).

Structure — Term, Covenants, and the Fundamental Rule

The underlease cannot exceed the head lease in term or scope. The minus-one-day convention ensures the underlease expires before the head lease. The underlessee should be bound by covenants mirroring the head lease covenants. The head lessee remains primarily liable to the head landlord for all head lease covenants regardless of the underlessee's conduct.

LTA 1954 — Security of Tenure for Commercial Undertenants

A commercial underlessee has LTA 1954 security of tenure against the intermediate landlord. Under s.65 LTA 1954, if the head lease is not renewed or is forfeited, the underlessee can apply directly against the head landlord for a new tenancy — a significant trap for head landlords unaware of the sub-tenancy. Commercial underleases should be contracted out of LTA 1954 (s.38A procedure) to avoid this risk.

Intermediate Landlord Obligations and Forfeiture

The head lessee must remedy breaches vis-à-vis the head landlord even if caused by the underlessee. Forfeiture of the head lease ends the underlease — but the underlessee can apply for relief under LPA 1925 s.146(4). The head lessee must notify the underlessee of any s.146 notice received from the head landlord. The head lessee can forfeit the underlease for the underlessee's breach — the underlessee can apply for relief from forfeiture.

Frequently asked questions

Do I need the landlord's consent to grant an underlease?+

In most cases, yes. Where the head lease contains a qualified covenant against subletting, you must apply to the head landlord for written consent. Under LTA 1988, the landlord must respond within a reasonable time and cannot unreasonably refuse. Where the covenant is absolute, no subletting is permitted at all.

Can an underlease exceed the head lease term?+

No. An underlease cannot exceed the head lease from which it is derived. By convention, the underlease term is at least 1 day shorter than the unexpired head lease term, preventing the underlessee from becoming a direct tenant of the head landlord at head lease expiry.

What happens to the underlessee if the head lease is forfeited?+

Forfeiture of the head lease automatically brings the underlease to an end. However, the underlessee has an independent right under LPA 1925 s.146(4) to apply to the court for relief from forfeiture — the court can vest the head lease directly in the underlessee, making them a direct tenant of the head landlord.

Found a gap or disagree with something?

Reply to any LetSafe email or write to Richard@letsafeuk.co.uk. We rewrite guides when we get something wrong, the sooner we hear, the sooner we fix it.

Related landlord guides

Hand-picked by topic overlap with this guide.

Leasehold Law
Headlease UK — Intermediate Landlords, Headlessee Obligations, and Subleasing Structure
Covers the three-tier headlease structure (freeholder → headlessee → subtenant); headlessee obligations upward (headlease covenants, rent, repair, insurance, alienation) and downward (HA 1985 s.11, deposit protection, HMO licensing); forfeiture risk and subtenant relief (LPA 1925 s.146(4)); alienation covenants and direct covenants with freeholders; and term extension under LTA 1993.
Commercial Property
Concurrent Lease UK
What a concurrent (reversionary) lease is, how it differs from subletting, commercial uses in sale and leaseback and mezzanine finance, the concurrent lessee's LTA 1954 obligations as competent landlord, forfeiture risks, and practical protections.
Varying a Long Lease: Ground Rent Reduction, Subletting Restrictions and Informal Lease Extension
Landlord Deed of Variation Guide 2026
Deed of variation long lease guide 2026: legal instrument amending existing lease terms by agreement between freeholder and leaseholder. Common uses: subletting restriction removal (absolute prohibition or qualified consent clause); ground rent reduction to peppercorn (lenders require this for onerous escalating ground rents; Leasehold Reform (Ground Rent) Act 2022 prohibits ground rents on new leases); informal lease extension by deed (adds years; continuation of original lease not new lease; faster and cheaper than statutory route; SDLT differs); alterations consent broadening; forfeiture clause removal. Formal requirements: executed as deed (signed; witnessed; delivered) under LP(MP)A 1989 s.1; registered at Land Registry (Form AP1) — binding on successors in title; both parties must consent. SDLT: no new consideration = typically no SDLT; premium or added rent = SDLT may apply. Scotland: title conditions; minute of variation (commercial lease); no residential leasehold equivalent.
Commercial Lease Forfeiture 2026
Forfeiture of Commercial Lease — Re-Entry, Section 146 Notice and Relief from Forfeiture
Forfeiture is the right of a commercial landlord to bring a lease to an early end for breach of covenant — non-payment of rent allows immediate peaceable re-entry without a s.146 notice; all other breaches require a valid s.146 notice (LPA 1925) first. Waiver — accepting rent after knowing of a breach — destroys the right to forfeit. Relief from forfeiture available to tenants within 6 months of peaceable re-entry. Scotland: irritancy under Law Reform (Miscellaneous Provisions) (Scotland) Act 1985.
Leasehold Law
Forfeiture of Residential Leasehold UK
CLRA 2002 s.168 requires FTT or court determination of any breach before a landlord can serve a s.146 notice on a residential long leaseholder. Ground rent arrears threshold (s.167), s.146 notice procedure, waiver of breach, relief from forfeiture, and why residential leasehold forfeiture rarely succeeds in practice.
Landlord Possession Law
Mesne Profits — Damages for Unauthorized Occupation UK
Mesne profits (pronounced 'meen profits'): damages for unauthorized occupation of land after tenancy has ended. Not rent (which requires a subsisting tenancy) — claim in damages for trespass to land. Assessed at open market rental value for period of unauthorized occupation (may differ from expired contractual rent). Arises on: residential holdover after fixed-term expiry/s.21 order; commercial holdover without LTA 1954 application; post-forfeiture occupation during relief application; squatter occupation. Commercial tenants with LTA 1954 protection not in mesne profits territory during statutory continuation — landlord applies for interim rent under LTA 1954 s.24A instead. Limitation Act 1980 s.5: 6 years from each daily accrual. Scotland: 'violent profits' — traditionally double market rent; modern practice: open market value.