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Free UK Authorised Guarantee Agreement (AGA) Template
An Authorised Guarantee Agreement (AGA) is the statutory guarantee given by an Outgoing Tenant when assigning a "new" commercial lease — one granted on or after 1 January 1996 in England & Wales or Northern Ireland — where the Landlord conditions its consent to assignment on the Outgoing Tenant guaranteeing the Incoming Tenant's performance. Use our free UK AGA template to give the precise statutory guarantee permitted by section 16 of the Landlord and Tenant (Covenants) Act 1995 — covering the s.16(4) limits that prevent over-reaching (no binding after the Incoming Tenant is itself released; no sub-guarantee following Good Harvest Partnership v Centaur Services [2010] EWHC 330 (Ch)) and the s.16(5) permitted content (primary obligation, joint and several liability, covenant to take a new lease if the lease is forfeited or disclaimed). The AGA is executed as a deed and triggers the s.17 six-month landlord notification window for any recovery from the Outgoing Tenant.
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AUTHORISED GUARANTEE AGREEMENT
LTCA 1995 S.16 · Executed As A Deed · England And Wales · 4 June 2026
OUTGOING TENANT
Hartwell Trading Limited
12 Cavendish Place, London, W1G 9DR
Companies House No. 07623941
Companies House No. 07623941
By: Olivia G. Marston, Director
INCOMING TENANT
Northwood Hospitality Group Limited
8 Mortimer Street, Fitzrovia, London, W1T 3JJ
Companies House No. 12894571
Companies House No. 12894571
LANDLORD
Crowne Estate (Mayfair) Limited
Crowne House, 27 Berkeley Square, London, W1J 6HB
Premises: Ground Floor and Basement, 28 Cavendish Square, London, W1G 0PQ
Rent: £185,000 p.a. · Assignment: 30 June 2026
This Authorised Guarantee Agreement (the "AGA") is made on 4 June 2026 between Hartwell Trading Limited (Companies House No. 07623941) of 12 Cavendish Place, London, W1G 9DR (the "Outgoing Tenant" and "Guarantor"); Northwood Hospitality Group Limited (Companies House No. 12894571) of 8 Mortimer Street, Fitzrovia, London, W1T 3JJ (the "Incoming Tenant" or "Assignee"); and Crowne Estate (Mayfair) Limited of Crowne House, 27 Berkeley Square, London, W1J 6HB (the "Landlord"). This AGA is entered into pursuant to section 16 of the Landlord and Tenant (Covenants) Act 1995, as a condition of the Landlord's consent to the assignment by the Outgoing Tenant to the Incoming Tenant of the lease described below. This AGA is executed as a deed.
1.
THE ORIGINAL LEASE, PREMISES AND ASSIGNMENT
1.1 Original Lease. A lease dated 15 March 2018 for a term of 15 years from and including 25 March 2018 (the "Original Lease"), the leasehold premises being situate at Ground Floor and Basement, 28 Cavendish Square, London, W1G 0PQ and more particularly described as: Ground floor and basement restaurant premises (approximately 312 sq m / 3,355 sq ft) including kitchen, public areas, customer WCs, deliveries area, plant room — together with the use of the rear servicing yard (in common with other tenants)..
1.2 Rent. The current passing rent under the Original Lease is £185,000 per annum.
1.3 Assignment. The Outgoing Tenant is on 30 June 2026 assigning the Original Lease to the Incoming Tenant. The Landlord has consented to that assignment subject to the giving of this AGA, as permitted by section 19(1A) of the Landlord and Tenant Act 1927.
1.2 Rent. The current passing rent under the Original Lease is £185,000 per annum.
1.3 Assignment. The Outgoing Tenant is on 30 June 2026 assigning the Original Lease to the Incoming Tenant. The Landlord has consented to that assignment subject to the giving of this AGA, as permitted by section 19(1A) of the Landlord and Tenant Act 1927.
2.
GUARANTEE [STATUTORY AGA UNDER LTCA 1995 S.16]
The Outgoing Tenant (as Guarantor) hereby guarantees to the Landlord the due performance and observance by the Incoming Tenant of all of the tenant covenants of the Original Lease (the "Guaranteed Covenants"). The Guaranteed Covenants are guaranteed only insofar as they relate to liabilities arising on or after the date of the assignment and before the date on which the Incoming Tenant is released from those covenants by virtue of section 5 of the Landlord and Tenant (Covenants) Act 1995 (typically on the next assignment, save for assignments excluded by section 11 of that Act).
3.
GOVERNING LAW AND JURISDICTION
This AGA, and any dispute or claim arising out of or in connection with it, shall be governed by and construed in accordance with the laws of England and Wales. The parties irrevocably submit to the exclusive jurisdiction of the courts of England and Wales.
4.
STATUTORY LIMITS [LTCA 1995 S.16(4)]
4.1 Release on further assignment. Notwithstanding any other provision of this AGA, the Outgoing Tenant's liability as Guarantor shall absolutely cease on the date on which the Incoming Tenant is released from its tenant covenants under section 5 of the Landlord and Tenant (Covenants) Act 1995 (typically on the next assignment by the Incoming Tenant, save for assignments excluded under section 11 of that Act). This is a STATUTORY limit imposed by section 16(4)(a) LTCA 1995 and may not be derogated from by agreement.
4.2 No sub-guarantee. Notwithstanding any other provision of this AGA, the Outgoing Tenant does not guarantee, and shall not be liable to guarantee, the performance of any covenant by any person other than the Incoming Tenant (specifically: not by any subsequent assignee of the Original Lease). This is a STATUTORY limit imposed by section 16(4)(b) LTCA 1995; following Good Harvest Partnership LLP v Centaur Services Ltd [2010] EWHC 330 (Ch), any provision purporting to extend the guarantee to a subsequent assignee is void.
4.3 Construction. If any provision of this AGA is or becomes inconsistent with the statutory limits in this clause, that provision shall be deemed amended (or, if not possible, severed) so as to give effect to the statutory limits, and the remainder of this AGA shall continue in full force and effect.
4.2 No sub-guarantee. Notwithstanding any other provision of this AGA, the Outgoing Tenant does not guarantee, and shall not be liable to guarantee, the performance of any covenant by any person other than the Incoming Tenant (specifically: not by any subsequent assignee of the Original Lease). This is a STATUTORY limit imposed by section 16(4)(b) LTCA 1995; following Good Harvest Partnership LLP v Centaur Services Ltd [2010] EWHC 330 (Ch), any provision purporting to extend the guarantee to a subsequent assignee is void.
4.3 Construction. If any provision of this AGA is or becomes inconsistent with the statutory limits in this clause, that provision shall be deemed amended (or, if not possible, severed) so as to give effect to the statutory limits, and the remainder of this AGA shall continue in full force and effect.
5.
PERMITTED PROVISIONS [LTCA 1995 S.16(5)]
5.1 Primary obligation. The Outgoing Tenant's obligations under this AGA shall be construed as primary obligations and not as obligations of mere suretyship. The Landlord may proceed directly against the Outgoing Tenant without first proceeding against the Incoming Tenant. This is expressly permitted by section 16(5)(a) LTCA 1995, as confirmed in K/S Victoria Street v House of Fraser (Stores Management) Ltd [2011] EWCA Civ 904.
5.2 Joint and several liability. The Outgoing Tenant and the Incoming Tenant shall be jointly and severally liable for the performance of the Guaranteed Covenants. This is expressly permitted by section 16(5)(b) LTCA 1995.
5.3 Covenant to take new lease. If, during the term of the Original Lease, forfeiture of the Original Lease by the Landlord or disclaimer of the Original Lease by a liquidator or trustee in bankruptcy of the Incoming Tenant occurs, the Outgoing Tenant shall, on the Landlord's written demand (made within 6 months of forfeiture or disclaimer), accept and execute a new lease of the Premises on the terms of the Original Lease (or such substantially similar terms as the Landlord reasonably requires), for a term equal to the unexpired residue of the Original Lease at the date of forfeiture or disclaimer. This covenant is expressly permitted by section 16(5)(c) LTCA 1995.
5.2 Joint and several liability. The Outgoing Tenant and the Incoming Tenant shall be jointly and severally liable for the performance of the Guaranteed Covenants. This is expressly permitted by section 16(5)(b) LTCA 1995.
5.3 Covenant to take new lease. If, during the term of the Original Lease, forfeiture of the Original Lease by the Landlord or disclaimer of the Original Lease by a liquidator or trustee in bankruptcy of the Incoming Tenant occurs, the Outgoing Tenant shall, on the Landlord's written demand (made within 6 months of forfeiture or disclaimer), accept and execute a new lease of the Premises on the terms of the Original Lease (or such substantially similar terms as the Landlord reasonably requires), for a term equal to the unexpired residue of the Original Lease at the date of forfeiture or disclaimer. This covenant is expressly permitted by section 16(5)(c) LTCA 1995.
6.
NOTIFICATION AND RECOVERY [LTCA 1995 S.17]
6.1 s.17 notice. Before recovering from the Outgoing Tenant any "fixed charge" (rent, service charge, or other liquidated sum) under the Original Lease, the Landlord shall serve on the Outgoing Tenant a written notice under section 17 of the Landlord and Tenant (Covenants) Act 1995, identifying the sum owed and the period to which it relates. The notice must be served within 6 months of the charge becoming due (otherwise the Outgoing Tenant has NO liability for that sum). The Landlord shall serve a fresh s.17 notice for each new period in respect of which a fixed charge becomes due.
6.2 Payment. Following service of a valid s.17 notice, the Outgoing Tenant shall pay the sum identified within 30 days of the date of the notice.
6.3 Interest. Unpaid sums shall bear interest from the due date until actual payment at Bank of England base rate plus 4%, accruing daily and compounded monthly.
6.4 Overriding lease. If the Outgoing Tenant pays in full the sum demanded in a s.17 notice, the Outgoing Tenant may by written notice to the Landlord (within 12 months of payment) require the grant of an overriding lease under section 19 of the LTCA 1995, on the terms set out in that Act.
6.2 Payment. Following service of a valid s.17 notice, the Outgoing Tenant shall pay the sum identified within 30 days of the date of the notice.
6.3 Interest. Unpaid sums shall bear interest from the due date until actual payment at Bank of England base rate plus 4%, accruing daily and compounded monthly.
6.4 Overriding lease. If the Outgoing Tenant pays in full the sum demanded in a s.17 notice, the Outgoing Tenant may by written notice to the Landlord (within 12 months of payment) require the grant of an overriding lease under section 19 of the LTCA 1995, on the terms set out in that Act.
7.
COSTS, INDEMNITY AND GENERAL PROVISIONS
7.1 Costs. The Outgoing Tenant shall pay to the Landlord on demand all reasonable costs and expenses (including legal costs on a full-indemnity basis) incurred by the Landlord in enforcing the Outgoing Tenant's obligations under this AGA.
7.2 Indemnity. The Incoming Tenant shall indemnify the Outgoing Tenant against all liabilities arising under this AGA that result from the Incoming Tenant's breach of the Original Lease. This indemnity is between the Incoming Tenant and the Outgoing Tenant and does not affect the Landlord's rights against the Outgoing Tenant.
7.3 Variation. Any variation of this AGA shall be in writing and signed by all parties. Variations of the Original Lease made after the date of this AGA shall not impose any greater liability on the Outgoing Tenant than would have applied under the Original Lease as originally granted (s.18 LTCA 1995).
7.4 Entire agreement. This AGA constitutes the entire agreement between the parties in relation to the guarantee of the Incoming Tenant's obligations under the Original Lease.
7.5 Counterparts. This AGA may be executed in any number of counterparts. Electronic execution (DocuSign, AdobeSign or equivalent) is permitted.
7.6 Anti-avoidance. Any provision of this AGA that purports to exclude or limit the operation of section 25 of the LTCA 1995 (anti-avoidance) is void to that extent.
7.2 Indemnity. The Incoming Tenant shall indemnify the Outgoing Tenant against all liabilities arising under this AGA that result from the Incoming Tenant's breach of the Original Lease. This indemnity is between the Incoming Tenant and the Outgoing Tenant and does not affect the Landlord's rights against the Outgoing Tenant.
7.3 Variation. Any variation of this AGA shall be in writing and signed by all parties. Variations of the Original Lease made after the date of this AGA shall not impose any greater liability on the Outgoing Tenant than would have applied under the Original Lease as originally granted (s.18 LTCA 1995).
7.4 Entire agreement. This AGA constitutes the entire agreement between the parties in relation to the guarantee of the Incoming Tenant's obligations under the Original Lease.
7.5 Counterparts. This AGA may be executed in any number of counterparts. Electronic execution (DocuSign, AdobeSign or equivalent) is permitted.
7.6 Anti-avoidance. Any provision of this AGA that purports to exclude or limit the operation of section 25 of the LTCA 1995 (anti-avoidance) is void to that extent.
8.
EXECUTION AS A DEED
IN WITNESS WHEREOF this AGA has been executed as a deed by the parties (or their duly authorised representatives) and delivered on the date set out at the start of this AGA. Where a party is a company, execution is in accordance with section 44 of the Companies Act 2006; where a party is an individual, in accordance with section 1 of the Law of Property (Miscellaneous Provisions) Act 1989.
OUTGOING TENANT
Olivia G. Marston, Director
Hartwell Trading Limited
Date: ____________________
INCOMING TENANT
Northwood Hospitality Group Limited
Date: ____________________
LANDLORD
Crowne Estate (Mayfair) Limited
Date: ____________________
Available as a print-ready PDF or an editable Microsoft Word (.docx) file.
What Is an Authorised Guarantee Agreement?
An Authorised Guarantee Agreement (AGA) is the statutory form of guarantee that an Outgoing Tenant gives the Landlord on assigning a UK commercial lease — covering the assignee Tenant's performance of the tenant covenants in the lease. The AGA replaces the open-ended privity-of-contract liability that applied to leases granted before 1996, under which an original tenant remained on the hook for rent and other tenant covenants for the entire term of the lease regardless of how many times the lease had been assigned. From 1 January 1996, the Landlord and Tenant (Covenants) Act 1995 (LTCA 1995) released the original tenant on assignment (s.5) but allowed the Landlord to require the Outgoing Tenant to give an AGA under s.16 as a precondition of consent.
An AGA only operates for "new tenancies" granted on or after 1 January 1996 in England & Wales and Northern Ireland (Scotland has its own distinct commercial leasing regime and does not use AGAs). The form and content of the AGA is tightly constrained by statute: section 16(4) LTCA 1995 prohibits the AGA from binding the Outgoing Tenant after the Incoming Tenant is itself released on a further assignment (so the Outgoing Tenant guarantees only the IMMEDIATE assignee, not the assignee's assignee), and prohibits it from binding anyone other than the Outgoing Tenant (so a sub-guarantee from a third party is unenforceable — Good Harvest Partnership LLP v Centaur Services Ltd [2010] EWHC 330 (Ch)). Section 16(5) sets out what the AGA MAY contain: a primary obligation (the Outgoing Tenant promises performance directly, not just as a secondary guarantor), joint and several liability with the Incoming Tenant, and a covenant to take a new lease on the same terms if the original lease is forfeited or disclaimed on the Incoming Tenant's insolvency.
AGAs are MANDATORY for landlord consent in many commercial assignments under the Landlord and Tenant Act 1927 s.19(1A) — which permits a Landlord of a commercial lease granted on or after 1 January 1996 to withhold consent to assignment on conditions agreed in the lease, almost always including the giving of an AGA. The practical effect for UK commercial Tenants: the Outgoing Tenant's contractual exit from a lease through assignment is not a clean break — they remain economically on the hook for the Incoming Tenant's performance for as long as the Incoming Tenant holds the lease, subject only to the s.17 six-month landlord notification window for any fixed-charge recovery and the s.16(4) statutory ceiling on the period of guarantee.
What's Covered in This Template
This UK AGA template covers the full statutory architecture of section 16 LTCA 1995, with a Free baseline for the simple guarantee and an Expert tier covering the s.16(5) permitted content and s.17 protective limits.
Three-Party Block
Outgoing Tenant, Incoming Tenant and Landlord with Companies House numbers, registered offices and named signatories.
Original Lease Reference
Date of grant, term, premises description and address — confirming the lease is "new" (granted on or after 1 January 1996) and therefore within the LTCA 1995 regime.
Assignment Particulars
Date of assignment and annual rent payable under the Original Lease — anchors the AGA to the specific transaction.
Core Guarantee Scope (Free)
All tenant covenants under the Original Lease (UK Landlord standard) or specified covenants only (Outgoing Tenant-favoured for high-value or specialised covenants).
Governing Law
England and Wales or Northern Ireland with matching exclusive jurisdiction — Scotland excluded (different commercial leasing regime).
s.16(4) Statutory Limits (Expert)
Express restatement of the protective limits — AGA cannot bind after Incoming Tenant is released on further assignment; AGA binds only the Outgoing Tenant (no sub-guarantee per Good Harvest v Centaur).
Primary Obligation (s.16(5)) (Expert)
Outgoing Tenant covenants performance directly, not just as secondary guarantor — permitted by s.16(5)(a) and confirmed enforceable in K/S Victoria Street v House of Fraser [2011] EWCA Civ 904.
Joint and Several Liability (Expert)
Outgoing Tenant and Incoming Tenant jointly and severally liable for the tenant covenants — Landlord may pursue either or both.
New Lease Covenant on Forfeiture (Expert)
Outgoing Tenant covenants to take a new lease on the same terms if the Original Lease is forfeited following Incoming Tenant default.
New Lease Covenant on Disclaimer (Expert)
Outgoing Tenant covenants to take a new lease if the Original Lease is disclaimed by an Incoming Tenant insolvency office-holder or trustee in bankruptcy.
Maximum New Lease Term (Expert)
The new lease takes effect for the unexpired residue of the Original Lease term — typically the s.16(5) maximum.
s.17 Six-Month Notification (Expert)
Express restatement of the Landlord's obligation to serve a section 17 notice within six months of any fixed-charge liability arising — failure to serve releases the Outgoing Tenant.
Recovery Period and Interest (Expert)
Time within which the Outgoing Tenant must pay following demand under a s.17 notice; interest on unpaid sums at the rate in the Original Lease.
Costs of Recovery (Expert)
Landlord's legal costs of any enforcement action against the Outgoing Tenant — typically on an indemnity basis.
Third-Party Indemnity (Expert)
Outgoing Tenant indemnity against any third-party claim arising from the assignment, where the Outgoing Tenant has structured the assignment to defeat the Landlord's rights.
Deed Execution
Executed as a deed under s.44 Companies Act 2006 (corporate) or s.1 Law of Property (Miscellaneous Provisions) Act 1989 (individual) — necessary because the AGA is gratuitous from the Outgoing Tenant's perspective.
Counterparts (Expert)
Permitted execution in counterparts — practical for multi-party three-way signature flows.
Electronic Execution (Expert)
eIDAS-compliant electronic signing under Law Commission 2019 guidance and case law — accepted for deeds where formalities followed.
Land Registration
Assignment of a registered leasehold estate is registrable at HM Land Registry; the AGA is noted against the Landlord's title where appropriate.
Original Lease Cross-Reference
Detailed cross-reference back to the Original Lease tenant covenants — the AGA picks up everything the assignee Tenant must do under the lease.
How to Create an Authorised Guarantee Agreement
Follow these steps to give a UK statutory AGA on assignment of a commercial lease.
- 1
Confirm the Lease Is New
Check the Original Lease was granted on or after 1 January 1996. AGAs only apply to "new tenancies" under LTCA 1995 — older leases continue under the privity-of-contract regime.
- 2
Enter Three-Party Details
Provide the Outgoing Tenant (giving the AGA), Incoming Tenant (assignee) and Landlord with addresses, Companies House numbers and named signatories.
- 3
Reference the Original Lease
Insert the date of grant, term, premises description, address and annual rent of the Original Lease — these anchor the AGA to the specific transaction.
- 4
Set Assignment Date
Enter the date of the assignment — the AGA takes effect from this date.
- 5
Pick Guarantee Scope (Free)
Choose all tenant covenants under the Original Lease (UK Landlord standard) or specified covenants only (Outgoing Tenant-favoured).
- 6
Restate s.16(4) Limits (Expert)
Tick the express restatement of the s.16(4) protective limits — AGA cannot bind after further assignment; no sub-guarantee.
- 7
Configure s.16(5) Permitted Content (Expert)
Tick primary obligation, joint and several liability, new lease covenant on forfeiture and on disclaimer. Set the maximum new lease term (typically the unexpired residue).
- 8
Restate s.17 Six-Month Notification (Expert)
Tick the express restatement of the Landlord's obligation to serve a s.17 notice within six months of any fixed-charge liability arising.
- 9
Add Costs and Indemnity (Expert)
Tick Landlord costs of recovery and (if applicable) third-party indemnity against assignment-defeating structures.
- 10
Review, Execute as Deed and Download
Preview the AGA and download as a free PDF or, with Expert, an editable Microsoft Word (.docx) for execution as a deed by all three parties.
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Legal Considerations
UK AGAs sit at the precise intersection of the Landlord and Tenant (Covenants) Act 1995 (release and guarantee), the Landlord and Tenant Act 1927 (assignment consent), the Law of Property Act 1925, and the deed-execution formalities under the Companies Act 2006 and Law of Property (Miscellaneous Provisions) Act 1989. Each must be addressed correctly or the AGA risks being void as exceeding the s.25 anti-avoidance limits or unenforceable through defective execution.
This template is for informational purposes only and does not constitute legal advice. UK commercial lease assignments and AGAs are highly specialised — for any lease with annual rent above £50,000, any lease of premises above 1,000 square metres, any group reorganisation assignment, or any lease with sub-letting or sub-guarantee structures, professional legal advice from real estate counsel is strongly recommended.
Reviewed for England & Wales and Northern Ireland commercial leasing law
LTCA 1995 s.5 Release and s.16 AGA
Section 5 of the Landlord and Tenant (Covenants) Act 1995 releases the assigning tenant from the tenant covenants of the lease on assignment of a "new tenancy" — a tenancy granted on or after 1 January 1996. This reversed the privity-of-contract rule under which an original tenant remained liable for the entire term of the lease regardless of subsequent assignments. Section 16 then permits the Landlord to require the assigning tenant to give an Authorised Guarantee Agreement under which the Outgoing Tenant guarantees the IMMEDIATE assignee's performance — not the assignee's assignee, and not anyone other than the Outgoing Tenant. The combined effect is a single-step economic liability chain: the Outgoing Tenant remains on the hook until the Incoming Tenant itself assigns onwards.
Section 16(4) Statutory Limits — Good Harvest v Centaur
Section 16(4) LTCA 1995 sets out the protective limits on AGA content: paragraph (a), the AGA must not bind the Outgoing Tenant after the Incoming Tenant is itself released on a further assignment; paragraph (b), the AGA must not bind any other person (i.e. a sub-guarantee from a third party is unenforceable). Good Harvest Partnership LLP v Centaur Services Ltd [2010] EWHC 330 (Ch) confirmed that a sub-guarantee given by a director of the Outgoing Tenant (in an attempt to secure a chain of guarantees through subsequent assignments) is void under s.16(4)(b) — a Landlord cannot drag third parties into the AGA chain. K/S Victoria Street v House of Fraser (Stores Management) Ltd [2011] EWCA Civ 904 confirmed that the s.16(5) permitted-content list is exhaustive but generous — primary obligation drafting per s.16(5)(a) is valid.
Section 17 Six-Month Notification — Hard Landlord Deadline
Section 17 LTCA 1995 imposes a strict procedural condition on any landlord recovery of a fixed charge (rent, service charge, insurance rent, interest) from the Outgoing Tenant under an AGA. The Landlord must serve a section 17 notice on the Outgoing Tenant within SIX MONTHS of the fixed charge becoming due. If the Landlord fails to serve a s.17 notice within the six-month window, the Outgoing Tenant is released from liability for that fixed charge in full. The notice must specify the nature of the charge, the amount, and that the Landlord intends to recover from the Outgoing Tenant. The six-month deadline runs separately for each instalment of rent and is the single most important protective limit on Outgoing Tenant exposure under an AGA.
Landlord and Tenant Act 1927 s.19(1A) — Conditional Consent
Section 19(1A) of the Landlord and Tenant Act 1927 (inserted by LTCA 1995 s.22) permits a Landlord of a commercial lease granted on or after 1 January 1996 to withhold consent to assignment on conditions agreed in the lease — almost always including the requirement that the Outgoing Tenant give an AGA. This contrasts with the general s.19(1) reasonableness test for residential and pre-1996 commercial leases. The practical effect: where the Original Lease contains an AGA-consent condition (and most modern UK commercial leases do), the Landlord is entitled to require an AGA without any further reasonableness scrutiny. The Outgoing Tenant cannot avoid the AGA by arguing the Landlord is being unreasonable — the lease itself has predetermined that an AGA is reasonable in the parties' eyes.
Section 16(5) Permitted Content — New Lease Covenant
Section 16(5) LTCA 1995 sets out the matters that an AGA may permissibly cover. Paragraph (a) permits the Outgoing Tenant to give a primary obligation — promising performance directly rather than just as a secondary guarantor (K/S Victoria Street confirms this is valid and not a disguised privity-of-contract revival). Paragraph (b) permits joint and several liability with the Incoming Tenant. Paragraph (c) permits a covenant by the Outgoing Tenant to take a new lease on substantially the same terms if the Original Lease is forfeited by the Landlord or disclaimed by an Incoming Tenant insolvency office-holder or trustee in bankruptcy. The new lease covenant is the most commercially significant of the s.16(5) permissions — it gives the Landlord a fallback tenant on the same terms if the chain breaks.
Section 25 Anti-Avoidance and EMI v O&H Q1
Section 25 LTCA 1995 voids any agreement that purports to exclude, modify or frustrate the operation of the Act — in particular, the s.5 release and the s.16(4) limits. EMI Group Ltd v O&H Q1 Ltd [2016] EWHC 529 (Ch) addressed a structural attempt to defeat the s.25 anti-avoidance regime by assigning the lease back to the original tenant. The court held that such an assignment back is void where it is structured to revive privity-of-contract liability that LTCA 1995 had released. The implication for AGA drafting: the AGA must operate exactly within the s.16 statutory envelope — any attempt to extend the guarantee beyond the immediate assignee, or to drag in third parties, or to revive original-tenant liability after release, is void under s.25.
Frequently Asked Questions
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