What does 'License to Assign' mean when buying a property?
Find out what License to Assign means when you are buying a property. 'What does License to Assign mean?' plus over 150 other property related terms and jargon in plain English
License to Assign
Licence to assign is a requirement involved in the sale of most leasehold properties. It takes a bit of explaining but overall its pretty simple.
Say I own a building that is split into several flats and I sell one of the flats to you on a 99 year lease for £100,000. That means you have the right to live in that flat for the next 99 years.
In the lease there will be some obligations I'll be wanting from you - all the way from being a reasonable neighour to those who live in the other flat up to paying me some money every year (known as the Service Charge) for maintaining the actual block.
Now say five years later you decide that you want to sell the flat to someone else. More accurately you are not selling the flat but the lease - the right to live in the flat for the next 94 years.
It might say in the lease that you can only sell the lease if you get my (the freeholder's) permission. I mean, hey, I sold it to you ... not someone else.
Most freeholders don't really care when leases are sold but it does mean the lease is going to be assigned to someone else which means there is going to be some paperwork involved.
But rather than having to get out of bed and do that paperwork I can give you a license to assign the lease to someone else.
Now I said "Most freeholders don't really care". Some do, passionately! Yes they may give you the license to assign eventually but they may also want the buyer to jump through some hoops first.
I know of a number of apartment buildings in England where potential buyers must sit an interview in front of the freeholder or a panel of current leaseholders before license to assign is considered. In most of these cases its simply to check if you are posh enough or rich enough.
But remember not all sellers need a license to assign. Its only required if the lease states that a leaseholder selling the remaining lease to someone else needs the freeholders permission to do so.
To find out more about how to purchase leasehold properties the smart way pick up a copy of my ebook How to Really Buy a Property.