Selling a business is stressful enough without uncertainty about what your commercial lease allows. Many business owners only discover late in the process that the lease contains clauses restricting assignment, requiring landlord consent, or triggering costs that can delay or derail a sale.
This guidance explains, in plain English, what to look for in a commercial lease if you want to sell your business, and when a fixed-fee solicitor review can give you certainty before you commit to a deal.
Understanding the issue or context
When you “sell the business”, you may be doing one of two things:
- Selling the shares in a company that operates from the premises (a share sale), or
- Selling the assets and goodwill of the business, with the buyer taking over the premises (an asset sale).
A commercial lease usually affects an asset sale more directly, because the buyer typically needs the right to occupy the premises. That usually happens through:
- Assignment of the lease to the buyer, or
- Grant of a new lease to the buyer (sometimes alongside surrender of the existing lease), or
- Subletting (less common for a full business sale, but sometimes used as a workaround).
Your rights depend on the exact wording of the lease. The landlord’s consent is often required, and the lease may set conditions for approval.
The legal rules or framework
Commercial leases in England and Wales commonly include clauses dealing with disposal of the lease. The key headings to look for are usually:
Assignment, underletting and sharing occupation
Most leases contain an “alienation” clause which sets out whether you can:
- assign the lease (transfer it to a buyer),
- sublet all or part,
- share occupation,
- or charge/mortgage the lease.
It is very common for a lease to say assignment is allowed only with the landlord’s written consent, and consent may be conditional.
Landlord’s consent and conditions
Even where consent is required, the lease often sets out conditions such as:
- the buyer must be financially sound (sometimes with accounts or references),
- an authorised guarantee agreement (AGA) may be required (meaning you remain on the hook if the buyer defaults),
- you must pay the landlord’s legal and surveyor costs,
- any existing breaches must be remedied first.
“User” clause and permitted use
A buyer may want to run the business differently. A user clause may restrict:
- the type of business allowed,
- hours of operation,
- noise, smells, deliveries, signage,
- or whether there is alcohol/late-night activity.
If the buyer’s intended use does not fit the user clause, the landlord may refuse consent or require a variation.
Change of control clauses (less common, but important)
If your business is operated through a limited company and you are selling shares, some leases include provisions that treat a change of control as a disposal requiring consent. If present, this can affect share sales as well.
Break clauses, rent review, and redevelopment rights
These do not always “restrict selling” directly, but they can affect sale value and buyer appetite, for example:
- an imminent rent review,
- a landlord break option,
- redevelopment clauses,
- or onerous repair obligations.
Practical steps to take
- Identify what you are selling
Confirm whether it’s a share sale or asset sale, as the lease impact can differ. - Find the alienation clause
Look for headings like “Assignment”, “Underletting”, “Disposal”, “Parting with possession”, or “Alienation”. - Check if landlord consent is required
Note whether consent is required for assignment, subletting, or change of control. - List the conditions for consent
Common items: AGA, rent deposit, guarantor, references, and landlord’s costs. - Check for any existing breaches
If there are repair issues, unauthorised alterations, or rent arrears, these can block consent until resolved. - Confirm the permitted use
Compare the lease user clause with what the buyer intends to do. - Get a fixed-fee solicitor review before you agree heads of terms
A solicitor can quickly flag any “deal-breakers” and the likely route (assignment vs new lease), which helps you negotiate from a position of clarity.
Common pitfalls to avoid
- Assuming “selling the business” automatically includes the premises
The buyer may need an assignment, a new lease, or a landlord-approved arrangement. - Overlooking AGA obligations
An AGA can leave you financially exposed after the sale if the buyer defaults. - Agreeing completion dates before landlord consent
Landlord consent can take time, and delays are common if documents are incomplete. - Ignoring use restrictions
A buyer’s business model may not fit the permitted use, causing consent issues late in the process. - Not budgeting for landlord costs
Many leases require you to pay the landlord’s legal and professional fees for consent.
Frequently Asked Questions
Does a commercial lease usually allow me to sell my business?
Often yes, but usually only if the landlord consents to assignment or agrees a new lease for the buyer. The lease wording is critical.
What clause tells me if I can transfer the lease to a buyer?
Look for the alienation/assignment provisions. These typically set out whether assignment is permitted and on what conditions.
Can my landlord refuse consent?
The lease often allows consent to be withheld in certain circumstances, particularly if conditions are not met or the buyer is not suitable.
What is an Authorised Guarantee Agreement (AGA)?
An AGA is a guarantee you may be required to give when assigning, meaning you remain liable if the buyer breaches the lease.
If I’m selling shares in my company, do I still need landlord consent?
Sometimes. Certain leases treat a change of control as a disposal requiring consent. It depends on the lease wording.
Do I need a solicitor to review the lease?
A fixed-fee review can give clarity quickly, flag restrictions, and help you avoid committing to a sale structure that the lease does not support.
Conclusion
If you’d like to understand your rights and options in plain English, visit LegalGuidance.org — a free resource powered by Martin Taggart Legal Consulting.
For professional, fixed-fee advice from a UK solicitor, visit MartinTaggart.com.
This information is general guidance only and not legal advice. For personalised support, please contact Martin Taggart Legal Consulting.