14.7.1 Tax implications for the tenant

The alternative to assigning the lease is to sub-let to a third party at a market rent which is lower than that payable under the tenant’s headlease (since this is an onerous lease, it is unlikely that a subtenant will take it on for a higher amount). The tenant continues to have obligations to pay the higher rentals under the ‘unwanted’ lease, but these can be netted off against the rents received from the subtenant. The result is that the tenant has effectively reduced his rental costs.

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