Deed of Variation of Lease UK: Commercial Guide

What this document is

A Deed of Variation of Lease is a formal written agreement that changes one or more terms of an existing commercial lease on a permanent basis. It is executed as a deed, which means it needs to be signed, witnessed, and delivered in line with the usual formalities for deeds in England and Wales.

The original lease continues to exist, but the varied terms take over from the parts that have been amended. Landlords and tenants often reach for this document when they want to adjust rent, extend or shorten the term, permit a different use, bring in an additional tenant, or relax a restriction.

Because the variation is permanent, it is treated differently from a temporary concession, which is usually dealt with by a side letter or waiver instead. A Deed of Variation is also distinct from a surrender and re-grant, where the old lease ends and a new one starts.

That distinction matters a great deal, because certain changes (particularly to the term length or extent of the demise) can legally amount to a surrender and re-grant even if the parties call the document a variation.

How to use this document

1. Work out whether a variation is actually the right route. Not every change belongs in a Deed of Variation. Extending the length of the term or adding extra land to the demise can be treated at law as a surrender of the old lease and the grant of a new one, which has knock-on effects for security of tenure, SDLT and guarantors. Before drafting anything, both sides should be clear about what they are trying to achieve.
2. Identify everyone who needs to be a party. The landlord and tenant are the obvious signatories, but any guarantor, former tenant with continuing liability, or superior landlord whose consent is required under the lease should be considered. Missing a party can leave the variation unenforceable against them, or release obligations that the landlord wanted to keep in place.
3. Describe the original lease and the changes precisely. The deed should reference the date of the original lease, the parties to it, and the property. It should then set out exactly which clauses are being amended, deleted, or added, using wording that can be read alongside the original lease without creating contradictions. Vague drafting here is where most disputes start.
4. Deal with consents, registration and tax. If the lease is registered at HM Land Registry, certain variations may need to be noted on the title. SDLT can become payable where the variation increases the rent or extends the term. Lender consent may be needed if the property is mortgaged. These practical points are easy to overlook and expensive to fix later.
5. Execute the document correctly as a deed. Each party signs in accordance with the execution rules that apply to them, whether that is an individual signing in the presence of a witness, or a company signing through its directors or under its common seal. The date of the deed, and the date the variation takes effect, should be clearly recorded.

Common questions