In short
A sublease agreement lets a tenant grant another party occupation of all or part of the leased premises while the tenant remains the head tenant and stays liable to the landlord under the head lease. It requires landlord consent under almost every head lease, and needs to mirror or improve on the head lease terms so the tenant isn't caught between obligations it owes the landlord and rights it's granted the subtenant.
The tenant stays on the hook — always
Subletting doesn't transfer the tenant's obligations to the landlord the way an assignment does — the original tenant remains fully liable under the head lease for rent, outgoings and all other obligations, regardless of what the subtenant does or fails to do. This is the single most important thing for a prospective sublandlord to understand before subletting: if the subtenant stops paying or damages the premises, the head landlord's only recourse is against the head tenant, who then has to separately pursue the subtenant. We structure sublease terms — security deposits, insurance, indemnities — to give the head tenant real recourse against the subtenant rather than leaving that risk unmanaged.
Head lease consent and consistency
Almost all commercial and retail leases require landlord consent before subletting, and the retail Acts generally apply the same 'not unreasonably withheld' standard to subletting consent as to assignment consent. Beyond consent, the sublease terms need to sit within what the head lease actually permits — the sublease term can't extend beyond the head lease term (and in practice should end before it, to allow for reinstatement), the permitted use under the sublease must fit within the head lease's permitted use, and rent review or outgoings mechanisms need to be checked so the tenant isn't left absorbing a cost increase under the head lease that it has no matching right to pass through under the sublease.
Head lease obligations that need to flow through
A sublease should mirror the head tenant's key obligations to the landlord — make good, insurance, permitted use restrictions, compliance with building rules — so the subtenant's conduct doesn't put the head tenant in breach of the head lease. We cross-check the sublease against the head lease clause by clause, because gaps here (for example, a head lease make good obligation with no matching sublease obligation on the subtenant) leave the head tenant paying for reinstatement work caused by someone else's occupation.
Security, indemnities and step-in risk
We build in a security deposit or bank guarantee from the subtenant sized to genuinely cover the head tenant's exposure, an indemnity for loss caused by the subtenant's breach of the sublease or the head lease terms it's bound by, and clarity on what happens if the head lease is terminated (for the head tenant's own default or otherwise) — since a sublease generally can't survive termination of the head lease, leaving the subtenant with no independent right to occupy even if they've complied with every sublease term. Flagging this dependency clearly to the subtenant up front avoids disputes later.
Practical handover matters
Beyond the legal structure, we address shared facilities, signage rights, access arrangements where only part of the premises is sublet, and utilities and outgoings apportionment between the head tenant and subtenant, since partial sublettings in particular tend to generate disputes over shared costs and access that a well-drafted sublease can head off before they arise.
What the fixed fee covers
- Review of head lease subletting and consent provisions
- Preparation of the landlord consent request
- Drafting of the sublease mirroring relevant head lease obligations
- Security deposit, indemnity and insurance clauses for the subtenant
- Advice on head lease termination risk and its effect on the sublease
Mistakes we see
- Subletting without first obtaining head landlord consent
- Drafting a sublease term that runs longer than, or up to the same date as, the head lease term
- Failing to mirror head lease make good or insurance obligations in the sublease
- Taking no security or inadequate security from the subtenant
- Not explaining to the subtenant that the sublease ends if the head lease is terminated
Who this is for
- Tenants with excess space wanting to recover part of their occupancy cost
- Businesses downsizing but locked into a head lease term
- Franchise or multi-brand operators sharing premises between related entities
- Tenants bringing in a complementary business to share a larger space
Frequently asked questions
- Am I still liable to the landlord if I sublet part of my premises?
- Yes — subletting doesn't change your obligations under the head lease. You remain the landlord's tenant for the whole premises and need to manage the subtenant relationship separately to protect yourself against a subtenant's default.
- Does my head landlord need to approve the sublease?
- Almost always, yes. Head leases nearly universally require consent to subletting, and under the retail Acts that consent generally can't be unreasonably withheld, but it still needs to be sought and obtained before the subtenant moves in.
- Can the sublease run for the same length as my head lease?
- It shouldn't extend beyond, or even reach, the head lease expiry, since a sublease can't outlive the head lease and practical issues arise if there's no buffer for reinstatement or a final rent review under the head lease.
- What happens to the subtenant if my head lease is terminated early?
- The sublease generally terminates too, since the subtenant's rights derive entirely from the head tenant's interest, which is why this risk needs to be disclosed and, where possible, mitigated through direct landlord arrangements in higher-value subletting scenarios.
- Can I charge the subtenant more than my own rent per square metre?
- Generally yes, subject to what the head lease says about subletting terms — there's no automatic rule against a head tenant making a margin on a sublease, though the sublease needs to stand on its own commercial terms rather than simply mirroring the head lease rent.
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