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Free UK Commercial Underlease Template
A Commercial Underlease (sub-lease) is the deed by which a Headtenant — a tenant under an existing Headlease — sub-lets commercial premises (the whole or part) to an Undertenant for a term shorter than the residue of the Headlease. The Headtenant becomes the Landlord under the Underlease while remaining tenant under the Headlease. Use our free UK Commercial Underlease template to draft a deed-format sub-lease under English, Scots or Northern Irish law — covering the Landlord and Tenant (Covenants) Act 1995 covenant transmission framework and section 16 Authorised Guarantee Agreement on assignment, the Landlord and Tenant Act 1954 Part II security-of-tenure regime with section 38A contracting-out under SI 2003/3096, the Landlord and Tenant Act 1927 section 19(1A) consent restrictions, the LCLR 2009 section 132 upward-only rent review restriction for leases granted on or after 28 February 2010, the MEES Regulations 2018 EPC minimum E rating (with 2027 reform proposing minimum B), the Building Safety Act 2022 Part 5 higher-risk buildings regime, and the ECCTA 2023 PSC IDV layer that has been live for every UK director and PSC from 18 November 2025.
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UNDERLEASE
Commercial Sub-letting · England And Wales · 8 December 2026
LANDLORD (HEADTENANT)
Hartwell Asset Management Ltd
88 Wood Street, London, EC2V 7RS
UNDERTENANT
Calderwood Analytics Ltd
32 Borough High Street, London, SE1 1XU
4th Floor, Drapers House, 12-14 Throgmorton Avenue, London,
Term: 7 years · Rent: £548,000
This Underlease (the "Underlease") is made on 8 December 2026 between Hartwell Asset Management Ltd of 88 Wood Street, London, EC2V 7RS (Companies House no. 09438217) (the "Landlord", being the headtenant under the Headlease referred to below) and Calderwood Analytics Ltd of 32 Borough High Street, London, SE1 1XU (Companies House no. 13284726) (the "Undertenant"). The Landlord is the tenant under a headlease dated 14 March 2018 granted by The Trustees of the Worshipful Company of Drapers (the "Head Landlord") (the "Headlease") of the property described in clause 1. The Landlord with the consent of the Head Landlord underlets to the Undertenant the part of the Headlease premises specified in clause 1. This Underlease is executed as a deed for the purposes of the Law of Property (Miscellaneous Provisions) Act 1989 s.1 and the Companies Act 2006 s.46; the limitation period for any claim is twelve (12) years under section 8 of the Limitation Act 1980. The covenants in this Underlease are subject to the transmission regime in the Landlord and Tenant (Covenants) Act 1995 (ss.5-7) and (where this is an Underlease of registered land) the Land Registration Act 2002.
1.
PROPERTY AND HEADLEASE
1.1 Property. The property underlet is: 4th Floor, Drapers House, 12-14 Throgmorton Avenue, London, EC2N 2DL (office floor of approximately 8,400 sq ft net internal area (NIA), with allocated parking for 4 vehicles in the basement, shared use of common parts).
1.2 Scope. The Underlease is of part only of the Headlease premises.
1.3 Headlease. The Headlease dated 14 March 2018 between The Trustees of the Worshipful Company of Drapers and the Landlord is referenced. The Undertenant acknowledges that the rights and obligations under this Underlease are SUBJECT TO (a) the terms of the Headlease (excluding rent), and (b) the Head Landlord's consent to this Underlease and to any subsequent variation, assignment, alteration or subletting required under the Headlease.
1.2 Scope. The Underlease is of part only of the Headlease premises.
1.3 Headlease. The Headlease dated 14 March 2018 between The Trustees of the Worshipful Company of Drapers and the Landlord is referenced. The Undertenant acknowledges that the rights and obligations under this Underlease are SUBJECT TO (a) the terms of the Headlease (excluding rent), and (b) the Head Landlord's consent to this Underlease and to any subsequent variation, assignment, alteration or subletting required under the Headlease.
2.
TERM AND RENT
2.1 Term. The Underlease is granted for a term of 7 years from 15 December 2026, not to exceed the unexpired term of the Headlease less three days (contractus minus rerum).
2.2 Initial rent. The initial annual rent is £548,000 (exclusive of VAT, where elected).
2.3 Payment. Rent is payable quarterly in advance on the usual quarter days (25 March, 24 June, 29 September, 25 December).
2.4 First rent review. The first rent review takes place after 5 years of the term (clause 7 — Expert).
2.2 Initial rent. The initial annual rent is £548,000 (exclusive of VAT, where elected).
2.3 Payment. Rent is payable quarterly in advance on the usual quarter days (25 March, 24 June, 29 September, 25 December).
2.4 First rent review. The first rent review takes place after 5 years of the term (clause 7 — Expert).
3.
SERVICE CHARGE AND UTILITIES
3.1 Service charge. The Undertenant shall pay a service charge to the Landlord on the following basis: proportionate to the Undertenant's floor area as a percentage of the total floor area of the Headlease premises, calculated at 12.5%.
3.2 Utilities. The Undertenant shall pay all utility providers (electricity, gas, water, telecoms) directly.
3.2 Utilities. The Undertenant shall pay all utility providers (electricity, gas, water, telecoms) directly.
4.
GOVERNING LAW AND EXECUTION
4.1 Governing law. This Underlease and any dispute arising shall be governed by the laws of England and Wales. The parties irrevocably submit to the exclusive jurisdiction of the courts of England and Wales.
4.2 Execution. The Underlease is executed as a deed by both parties under their respective execution methods.
4.3 Limitation. The Underlease is executed as a deed; the limitation period is twelve (12) years under section 8 of the Limitation Act 1980.
4.2 Execution. The Underlease is executed as a deed by both parties under their respective execution methods.
4.3 Limitation. The Underlease is executed as a deed; the limitation period is twelve (12) years under section 8 of the Limitation Act 1980.
5.
REPAIR AND ALTERATIONS (EXPERT)
5.1 Repair. The Undertenant covenants on a FULL REPAIRING AND INSURING (FRI) basis to keep the Property in good and substantial repair and condition throughout the term, including structural, external and internal parts, with full reinstatement at lease end.
5.2 Alterations. Alterations permitted with prior written Landlord consent, such consent not to be unreasonably withheld (Landlord and Tenant Act 1927 s.19(1A)).
5.3 Double consent. Where alterations also require Head Landlord consent under the Headlease, the Undertenant shall obtain BOTH consents (Landlord + Head Landlord) before commencing alterations. The Landlord shall use reasonable endeavours to facilitate Head Landlord consent.
5.2 Alterations. Alterations permitted with prior written Landlord consent, such consent not to be unreasonably withheld (Landlord and Tenant Act 1927 s.19(1A)).
5.3 Double consent. Where alterations also require Head Landlord consent under the Headlease, the Undertenant shall obtain BOTH consents (Landlord + Head Landlord) before commencing alterations. The Landlord shall use reasonable endeavours to facilitate Head Landlord consent.
6.
ALIENATION AND LTA 1954 (EXPERT)
6.1 Assignment. The Undertenant may assign the whole of the Underlease with the prior written consent of the Landlord, such consent not to be unreasonably withheld under Landlord and Tenant Act 1927 s.19(1A).
6.2 Authorised Guarantee Agreement (AGA). On any assignment, the assignor Undertenant shall enter into an Authorised Guarantee Agreement under section 16 of the Landlord and Tenant (Covenants) Act 1995 guaranteeing the performance of the assignee's covenants for the duration of the assignee's tenancy (or until further assignment, whichever first occurs). The AGA shall be in the form attached as Schedule 2 (or as the Landlord reasonably requires).
6.3 Sub-letting. Sub-letting is permitted for the whole only, with prior Landlord consent.
6.4 LTA 1954 Part II. Security of tenure under Part II of the Landlord and Tenant Act 1954 is EXCLUDED by Section 38A notice + declaration. The Section 38A notice shall be served and the declaration sworn before this Underlease takes effect — the parties shall complete the 14-day notice-then-declaration procedure under SI 2003/3096 before grant. If the procedure is not completed, security of tenure is RETAINED.
6.2 Authorised Guarantee Agreement (AGA). On any assignment, the assignor Undertenant shall enter into an Authorised Guarantee Agreement under section 16 of the Landlord and Tenant (Covenants) Act 1995 guaranteeing the performance of the assignee's covenants for the duration of the assignee's tenancy (or until further assignment, whichever first occurs). The AGA shall be in the form attached as Schedule 2 (or as the Landlord reasonably requires).
6.3 Sub-letting. Sub-letting is permitted for the whole only, with prior Landlord consent.
6.4 LTA 1954 Part II. Security of tenure under Part II of the Landlord and Tenant Act 1954 is EXCLUDED by Section 38A notice + declaration. The Section 38A notice shall be served and the declaration sworn before this Underlease takes effect — the parties shall complete the 14-day notice-then-declaration procedure under SI 2003/3096 before grant. If the procedure is not completed, security of tenure is RETAINED.
7.
RENT REVIEW (EXPERT)
7.1 Mechanism. Rent is reviewed on an OPEN MARKET basis — the hypothetical rent that a Willing Lessor would receive from a Willing Lessee for a hypothetical lease on the same terms as this Underlease (save as to rent) for a term equal to the unexpired residue at the review date, with all standard market-review assumptions (Willing Lessor + Willing Lessee + open market + best rent + standard assumptions and disregards as in Schedule 3).
7.2 Upward / downward. The rent review may result in an UPWARD OR DOWNWARD adjustment of rent. This is the default for commercial leases granted on or after 28 February 2010 under section 132 of the Local Democracy, Economic Development and Construction Act 2009 (LCLR 2009).
7.2 Upward / downward. The rent review may result in an UPWARD OR DOWNWARD adjustment of rent. This is the default for commercial leases granted on or after 28 February 2010 under section 132 of the Local Democracy, Economic Development and Construction Act 2009 (LCLR 2009).
8.
INSURANCE, FORFEITURE AND BREAK CLAUSES (EXPERT)
8.1 Insurance. The Landlord shall insure the Property (or procure that the Head Landlord insures) for full reinstatement value and recharge to the Undertenant 12.5% of the insurance premium as additional rent.
8.2 Forfeiture. Forfeiture grounds: standard default grounds (rent arrears 14 days; material breach 21-day cure) PLUS specific grounds — (a) breach of Headlease where Headlease forfeiture risked; (b) insolvency; (c) unauthorised assignment or sub-letting; (d) repudiation of security of tenure exclusion.
8.3 Undertenant break. The Undertenant has a right to break this Underlease on 15 December 2031 by giving not less than 6 months prior written notice. The break is subject to (a) payment of all rent due to the break date; (b) vacant possession; and (c) no material outstanding breach of covenant.
8.2 Forfeiture. Forfeiture grounds: standard default grounds (rent arrears 14 days; material breach 21-day cure) PLUS specific grounds — (a) breach of Headlease where Headlease forfeiture risked; (b) insolvency; (c) unauthorised assignment or sub-letting; (d) repudiation of security of tenure exclusion.
8.3 Undertenant break. The Undertenant has a right to break this Underlease on 15 December 2031 by giving not less than 6 months prior written notice. The break is subject to (a) payment of all rent due to the break date; (b) vacant possession; and (c) no material outstanding breach of covenant.
9.
MEES, BSA 2022, ECCTA AND CLIMATE COMPLIANCE (EXPERT)
9.1 MEES — Compliant. The Property has an EPC rating of C, meeting the current Minimum Energy Efficiency Standards (MEES Regulations 2018; minimum E rating since 2018).
9.2 MEES warranty. The Landlord warrants MEES compliance at the date of grant.
9.3 MEES 2027 reform acknowledgement. The parties acknowledge that the UK Government has proposed raising the minimum MEES rating to B for commercial properties by 2027 (subject to confirmation in the Government's MEES consultation response). If the reform is implemented, the Landlord shall be responsible for upgrading the Property unless the parties agree otherwise.
9.4 ECCTA 2023 identity verification. Both Landlord and Undertenant (where corporate or LLP) acknowledge their obligation under the Economic Crime and Corporate Transparency Act 2023 identity verification regime (live from 18 November 2025 for individual directors / LLP members / PSCs; transition ends 18 November 2026 for existing officers). Each party warrants its compliance.
9.5 Climate / TCFD / SDR reporting. Where either party is subject to mandatory Task Force on Climate-related Financial Disclosures (TCFD) or FCA Sustainability Disclosure Requirements (SDR) reporting, the other party shall provide such reasonable information about the Property's carbon footprint and energy use as required to support that reporting.
9.2 MEES warranty. The Landlord warrants MEES compliance at the date of grant.
9.3 MEES 2027 reform acknowledgement. The parties acknowledge that the UK Government has proposed raising the minimum MEES rating to B for commercial properties by 2027 (subject to confirmation in the Government's MEES consultation response). If the reform is implemented, the Landlord shall be responsible for upgrading the Property unless the parties agree otherwise.
9.4 ECCTA 2023 identity verification. Both Landlord and Undertenant (where corporate or LLP) acknowledge their obligation under the Economic Crime and Corporate Transparency Act 2023 identity verification regime (live from 18 November 2025 for individual directors / LLP members / PSCs; transition ends 18 November 2026 for existing officers). Each party warrants its compliance.
9.5 Climate / TCFD / SDR reporting. Where either party is subject to mandatory Task Force on Climate-related Financial Disclosures (TCFD) or FCA Sustainability Disclosure Requirements (SDR) reporting, the other party shall provide such reasonable information about the Property's carbon footprint and energy use as required to support that reporting.
10.
EXECUTION
IN WITNESS WHEREOF this Underlease has been executed and delivered as a deed by the parties on the date set out at the start of this Underlease.
LANDLORD (HEADTENANT)
Hartwell Asset Management Ltd
Date: ____________________
UNDERTENANT
Calderwood Analytics Ltd
Date: ____________________
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What Is a UK Commercial Underlease?
A UK Commercial Underlease — also called a sub-lease — is the deed by which a Headtenant of commercial premises grants a sub-lease to an Undertenant for a term that must be SHORTER than the unexpired residue of the Headtenant's own Headlease (otherwise the document is in substance an assignment, not an underlease, under the rule in Milmo v Carreras [1946] KB 306). The Headtenant becomes the Landlord under the Underlease while remaining the Tenant under the Headlease, and the Undertenant takes possession of the demised premises subject to all the covenants of the Headlease that are passed down through the Underlease. Underleases are universally used in UK commercial property: a corporate tenant sub-letting unused space, a serviced-office operator running sub-tenancies under a master lease, a tenant relocating mid-term and sub-letting the residue, or a developer sub-letting individual units of an estate held under a single Headlease.
Three preliminary statutory and contractual hurdles apply to every UK Commercial Underlease. First, the Headlease almost certainly requires the HEAD LANDLORD's CONSENT to underletting under section 19(1A) of the Landlord and Tenant Act 1927 — the Headtenant must obtain that consent before granting the Underlease, and consent is typically conditional on the Headtenant procuring a direct covenant from the Undertenant in favour of the Head Landlord (to maintain a chain of accountability). Second, the LANDLORD AND TENANT ACT 1954 Part II security-of-tenure regime applies to any UK commercial Underlease of business premises — by default, the Undertenant has the right to renew the Underlease at expiry unless the parties have CONTRACTED OUT under section 38A through the declaration / statutory declaration procedure in The Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 (SI 2003/3096). The contracting-out procedure requires the Landlord to serve a section 38A notice on the Undertenant at least 14 days before the Underlease is executed (or a statutory declaration sworn before an independent solicitor for shorter notice); failure invalidates the contracting-out and the Undertenant retains security of tenure.
Third, the LANDLORD AND TENANT (COVENANTS) ACT 1995 framework governs the transmission of covenants on assignment. The Underlease is itself a "new tenancy" under LTCA 1995 (granted post 1 January 1996), so section 5 releases the original Undertenant on assignment subject to any AGA the Headtenant requires under section 16. The s.16 AGA must comply with the s.16(4) statutory limits (no binding after the assignee is released; no sub-guarantee per Good Harvest Partnership v Centaur Services [2010] EWHC 330 (Ch)) and the s.17 six-month landlord notification window applies. The Underlease also typically incorporates a flow-down of Headlease covenants — the Undertenant covenants directly with the Headtenant to comply with the tenant covenants of the Headlease — so that the Headtenant is not exposed to Head Landlord enforcement for Undertenant breaches. The 2025-26 regulatory layer adds the MEES Regulations 2018 EPC minimum E rating (with 2027 reform proposing minimum B), the Building Safety Act 2022 Part 5 higher-risk buildings regime, and the post-18-November-2025 ECCTA 2023 PSC identity verification for any corporate parties.
What's Covered in This Template
This UK Commercial Underlease covers the full sub-letting architecture for England & Wales and (with adaptation) Scotland and Northern Ireland, in a Free baseline for the core deal and an Expert tier for the full LTCA / LTA 1954 / LCLR / MEES / BSA / ECCTA overlay.
Headlease + Three-Party Block
Headlease date and Head Landlord identification; Headtenant (Landlord under this Underlease) and Undertenant with Companies House numbers, registered offices and named signatories.
Property Identification (Free)
Property address, description, and whether the demise is the whole of the Headlease premises or a specified part (with plan attached as Schedule 1).
Term and Initial Rent (Free)
Term in years (must be shorter than the unexpired residue of the Headlease per Milmo v Carreras), term start date, initial annual rent, rent payment frequency (monthly / quarterly — UK commercial standard quarter days / annual in advance).
First Rent Review (Free)
After 3 years / after 5 years (UK commercial standard) / no rent review.
Service Charge (Free)
Fixed percentage of total service charge / proportionate to floor area (UK SME standard) / no service charge (whole-headlease underlease).
Utilities (Free)
Undertenant pays providers directly / Landlord pays and recharges to Undertenant.
Governing Law + Execution (Free)
England and Wales / Scotland / Northern Ireland with matching exclusive jurisdiction. Deed execution under CA 2006 s.44 (two directors / director + secretary / director + witness).
Repairing Obligation (Expert)
Full repairing and insuring (FRI — Undertenant fully responsible — UK commercial standard) / internal repairing and insuring (IRI — internal only) / shared with Landlord (Landlord retains structural responsibility).
Alterations Consent (Expert)
Absolute prohibition / Landlord consent not to be unreasonably withheld (UK standard) / no consent required for internal non-structural — plus head-landlord consent flow-through.
Alienation — Assignment + AGA (Expert)
Permitted with consent / within group only / prohibited; AGA required on assignment per LTCA 1995 s.16; sub-letting permitted whole only / part / prohibited.
LTA 1954 Contracting Out (Expert)
Excluded under section 38A (security of tenure removed — UK commercial standard for shorter underleases) or retained (Undertenant has right to renew at expiry). Section 38A notice served / to be served before execution.
Rent Review Mechanism (Expert)
Open market review (UK standard) / RPI indexation / CPI indexation / fixed uplift / none.
Upward-Only Rent Review and LCLR 2009 (Expert)
Pre-2010 lease (upward-only permitted) / post-2010 with collar (LCLR 2009 s.132 restriction acknowledgement) / no upward-only.
Insurance (Expert)
Landlord insures and recharges (UK SME standard) / Undertenant insures direct / jointly named — with proportionate share where part.
Forfeiture + Break Clauses (Expert)
Standard default grounds + configurable specific grounds; Undertenant break date; Landlord break date.
MEES Regulations 2018 EPC Compliance (Expert)
EPC rating A-E with 2018 minimum E enforcement; Landlord warrants compliance OR Undertenant takes risk; 2027 minimum B reform acknowledgement.
Building Safety Act 2022 Part 5 (Expert)
Higher-risk building Yes / No / Unknown flag; Principal Accountable Person identification (Landlord / Undertenant / jointly) for buildings within scope.
ECCTA 2023 PSC IDV (Expert)
Express clause requiring corporate parties to complete identity verification per the regime live for all UK directors and PSCs from 18 November 2025.
TCFD / SDR Reporting (Expert)
Optional reporting obligation aligned with FCA-regulated landlord ESG disclosures — relevant where the Landlord is a regulated property fund or REIT.
Deed Execution + 12-Year Durability
Executed as a deed under s.44 / s.46 CA 2006 for corporates and s.1 LP(MP)A 1989 for individuals, giving 12 years of enforceability under section 8 Limitation Act 1980.
How to Create a UK Commercial Underlease
Follow these steps to draft a UK Commercial Underlease under the Landlord and Tenant (Covenants) Act 1995 framework with full LTA 1954, LCLR 2009 and MEES compliance.
- 1
Confirm Head Landlord Consent
Before drafting, confirm the Headlease permits underletting and obtain the Head Landlord's written consent under LTA 1927 s.19(1A). Typically requires a direct covenant from the Undertenant in favour of the Head Landlord.
- 2
Identify the Parties and the Property
Provide the Headlease date and Head Landlord. Provide the Headtenant (Landlord under this Underlease) and the Undertenant with Companies House numbers, registered offices and named signatories. Insert property address, description, and whether whole or part of the Headlease premises.
- 3
Set Term, Rent and First Review
Insert term in years (must be shorter than unexpired residue of Headlease per Milmo v Carreras), term start date, initial annual rent, payment frequency (monthly / quarterly / annual). Pick first rent review (after 3 / 5 years / none).
- 4
Set Service Charge and Utilities
Pick service charge basis (fixed percentage / proportionate to floor area / no service charge) and percentage if proportional. Pick utilities (Undertenant direct / Landlord recharge).
- 5
Pick Governing Law and Execution Format
England and Wales / Scotland / Northern Ireland. Pick deed execution format under CA 2006 s.44 (two directors / director + secretary / director + witness) for each corporate party.
- 6
Set Repairing and Alterations (Expert)
Pick FRI (UK commercial standard) / IRI / shared with Landlord. Pick alterations consent (absolute / not unreasonably withheld / no consent for internal non-structural). Tick head-landlord consent flow-through.
- 7
Set Alienation and LTA 1954 Status (Expert)
Pick assignment permitted with consent / within group / prohibited; tick AGA required on assignment; pick sub-letting whole / part / prohibited. CRITICAL: pick LTA 1954 contracting out and ensure s.38A notice or statutory declaration is served at least 14 days before execution.
- 8
Configure Rent Review (Expert)
Pick mechanism (open market / RPI / CPI / fixed uplift / none). Pick upward-only treatment (pre-2010 or post-2010 with LCLR 2009 s.132 collar / no upward-only).
- 9
Add Insurance, Forfeiture and Break (Expert)
Pick insurance arrangement. Pick forfeiture grounds. Add Undertenant break date and Landlord break date if applicable.
- 10
Address MEES, BSA 2022 and ECCTA (Expert)
Confirm EPC rating; tick Landlord warranty or Undertenant risk; tick 2027 B-rating reform acknowledgement. Confirm higher-risk building status and Principal Accountable Person under BSA 2022 Part 5. Tick ECCTA 2023 PSC IDV clause. Tick TCFD / SDR reporting if relevant. Review and download.
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Legal Considerations
UK Commercial Underleases engage the full UK commercial leasing statutory framework: LTCA 1995 covenant transmission, LTA 1954 security of tenure, LTA 1927 consent restrictions, LCLR 2009 rent review reform, MEES Regulations 2018 EPC compliance, Building Safety Act 2022 Part 5 higher-risk buildings, Land Registration Act 2002 registration regime, and the post-2025 ECCTA 2023 identity verification overlay.
This template is for informational purposes only and does not constitute legal advice. UK commercial Underleases are highly specialised — for any Underlease with annual rent above £50,000, any Underlease of premises above 1,000 square metres, any Underlease within a Building Safety Act 2022 higher-risk building, any Underlease where the head landlord consent is conditional on bespoke direct covenants, or any cross-border parties scenario, professional advice from real estate counsel is strongly recommended.
Reviewed for England & Wales, Scotland and Northern Ireland commercial leasing law
Milmo v Carreras and the Underlease vs Assignment Distinction
An Underlease must be granted for a term that is SHORTER than the unexpired residue of the Headlease. If the Headtenant purports to grant an Underlease for a term equal to or longer than the residue, the rule in Milmo v Carreras [1946] KB 306 deems the document an ASSIGNMENT in substance — the Headtenant has transferred its entire interest and the Underlease has no legal effect as a separate sub-tenancy. The practical implication: the head landlord becomes the direct landlord of the purported "Undertenant" with the Headtenant out of the chain, and the consent and AGA arrangements built into the Underlease have nothing to operate on. The template's Free tier prompts confirmation that the term is shorter than the residue.
LTA 1954 Part II Security of Tenure and Section 38A Contracting Out
The Landlord and Tenant Act 1954 Part II grants security-of-tenure rights to tenants of business premises in England & Wales, including the right to renew the lease at expiry on substantially the same terms (subject to limited grounds of opposition under section 30). Section 38A permits the landlord and tenant to AGREE TO EXCLUDE security of tenure — but only through a strict statutory procedure under The Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 (SI 2003/3096). The Landlord must serve a section 38A notice on the prospective Tenant at least 14 days before the lease is executed; the Tenant must sign a declaration acknowledging the consequences. For shorter notice, a statutory declaration sworn before an independent solicitor is required. Failure invalidates the contracting-out and the Tenant retains security of tenure — a common drafting trap. The Expert template surfaces both the notice / declaration step and the timing.
LTCA 1995 — Underlease as a New Tenancy + s.16 AGA
The Landlord and Tenant (Covenants) Act 1995 applies to all tenancies granted on or after 1 January 1996, including Underleases. Section 5 releases the original Undertenant on assignment of the Underlease — but section 16 permits the Headtenant (as Landlord under the Underlease) to require the assigning Undertenant to give an Authorised Guarantee Agreement guaranteeing the immediate assignee's performance. The s.16 AGA must comply with the s.16(4) statutory limits: it cannot bind the Undertenant after the assignee is itself released on further assignment, and cannot bind anyone other than the Undertenant (no sub-guarantee from a third party — Good Harvest Partnership LLP v Centaur Services Ltd [2010] EWHC 330 (Ch)). The s.17 six-month notification window then governs any Headtenant recovery against the original Undertenant under the AGA. The Doxuno UK Authorised Guarantee Agreement template is the companion document for any AGA the Underlease requires.
LCLR 2009 Section 132 — Upward-Only Rent Review Restriction
Section 132 of the Local Democracy, Economic Development and Construction Act 2009 prohibits upward-only rent review clauses in commercial leases of business premises in England & Wales granted on or after 28 February 2010 — except where the lease is granted to an existing occupier on substantially the same terms as a previous lease that contained an upward-only review. The prohibition voids any pure upward-only review clause; permitted alternatives are upward-or-downward reviews, upward-only with a CPI / RPI collar, or fixed uplifts. The Expert template's rent review configuration distinguishes pre-2010 leases (upward-only permitted) from post-2010 leases (collar required if upward-only desired).
MEES Regulations 2018 — EPC Minimum E (with 2027 B-Rating Reform)
The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 — implementing the Minimum Energy Efficiency Standards (MEES) framework — make it unlawful to let commercial property below an EPC rating of E since 1 April 2018 (subject to limited exemptions registered on the PRS Exemptions Register). The 2027 reform proposed in the UK Government's October 2023 consultation would raise the minimum to a B rating for commercial property — Landlords with C, D and E-rated stock face material capex or stranded-asset risk. The Expert template surfaces the current EPC rating, lets the Landlord warrant compliance or the Undertenant take risk, and includes a 2027 reform acknowledgement so both parties have visibility into the upcoming regime.
Building Safety Act 2022 Part 5 and the Principal Accountable Person
Part 5 of the Building Safety Act 2022 introduced the higher-risk buildings regime — defined under the Higher-Risk Buildings (Descriptions and Supplementary Provisions) Regulations 2023 as buildings of at least 18 metres in height OR at least 7 storeys, containing at least two residential units. Higher-risk buildings must be registered with the Building Safety Regulator; the Accountable Persons (with the Principal Accountable Person leading) carry ongoing duties around safety case reports, mandatory occurrence reporting, and resident engagement. Where the Underlease premises sit within a higher-risk building, the Underlease must identify the Principal Accountable Person (typically the Landlord or, where the demise includes structural elements, the Undertenant) and address the flow-down of BSA duties. The Expert template surfaces this with explicit configuration.
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