How a limited company can be rid of a lease?
11 May 2025(2025 May) – How a limited company tenant can be rid of rent and lease liabilities.
Where a tenant is a limited company, it does not (normally*) need the landlord’s consent to assign the tenancy. The only necessity is to sell the shares in the company. Where the company has assets its director(s) want(s) to keep, before selling the shares transfer the assets to another company. Consult accountants on the tax implications. If the lease includes the name(s) of the seller company’s guarantor or surety, then apply to the landlord to transfer to the buyer’s guarantor or surety. Remember also do the same for any rent deposit, as otherwise the existing would continue.
If the landlord doesn’t agree, then arrange for an indemnity between the existing guarantor / surety and that of the buyer. That doesn’t solve the problem of the existing /surety remaining on the landlord’s hook and the risk that the buyer’s guarantor /surety would default.
* I say ‘normally’ because it’s unusual for a lease to allow for the possibility by including wording to prevent transfer of a tenant company’s shares to an unrelated party without the landlord’s consent.
Where the director(s) of the company want to be rid of the lease liability, but keep the company’s name, this is how I advise going about it.
Abbreviations:
A is the tenant company to begin with.
B is the new company.
1. Form a new company – B (Subject to Companies House approval, any name will do)
2. Change the name of company A to another name (ibid).
3. Change the name of B to A’s name as was (that is, the name you want to keep).
4. So far as the landlord is concerned, the company registered number of the legal tenant is unaffected, the only difference the company name.
The above works well where the landlord is an ‘armchair’ investor, as such are renowned for not keeping a watchful eye on corporate tenant activities.
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