If you have more office space than you need, it can be tempting to let part of it to another company. It lowers your own cost and can be a good way to fill empty desks. But anyone who wants to sublet commercial premises in Sweden has to follow rules in the Land Code (jordabalken) that are easy to miss, and the mistakes can at worst cost you your lease. Here we go through when you need the landlord's consent, what happens if you sublet without it, what applies to security of tenure and VAT, and what the sublease should contain.
Short answer: You may not sublet premises, or part of them, for independent use without the landlord's consent. If you do so anyway, the tenancy can be forfeited unless you put it right without delay when the landlord tells you to. Write a separate agreement with the subtenant, waive security of tenure in a separate document and check the VAT position before you set the price.
What counts as subletting commercial premises?
You are subletting (andrahandsuthyrning) when you let someone else use the premises, or part of them, for independent use. Typical examples are another company renting a room or a few desks in your office for its own business, or you letting the whole premises for a period when you are not using them.
You are still the tenant of the property owner and are responsible for the rent being paid and the premises being looked after. Towards the subtenant, you are the landlord yourselves, with the obligations that brings.
You need the landlord's consent
Under Chapter 12, Section 39 of the Land Code, a tenant may not sublet or otherwise give someone else the premises for independent use without the landlord's consent. The law's term "lägenhet" covers both homes and commercial premises.
The landlord has no obligation to say yes. Ask for consent in writing before you bring anyone in, and include:
- who the subtenant is, with their company registration number
- what business they will carry on and how much of the premises they will use
- for what period the sublease will apply
- whether the subtenant's business is VAT-liable
Also read your own lease. Most commercial leases have a subletting clause, and some require you to use a particular form or for consent to be given for a named tenant.
Can the Rent and Tenancy Tribunal give permission instead?
In theory, yes. Under Section 40, the Rent and Tenancy Tribunal (hyresnämnden) can permit subletting even if the landlord says no, and the rule applies to both homes and commercial premises. But two conditions must be met at the same time: the tenant must have substantial reasons, for example special family circumstances, age, illness, temporary work or studies elsewhere or a longer stay abroad, and the landlord must have no justified reason to refuse. The permission is always limited to a set period and may come with conditions.
The reasons are personal and rarely fit a company that wants to let surplus space. In practice, it is the landlord's consent that counts.
What happens if you sublet without consent?
If you sublet premises without consent or permission, the tenancy can be forfeited, and the landlord may then terminate the lease early (Section 42, first paragraph, point 4). For commercial premises there is an important protection: the tenancy is only forfeited if, after the landlord has told you, you do not without delay either put it right or apply for permission and have the application granted.
There is also a time limit for the landlord. Under Section 43, you cannot be removed from the premises on that ground unless the landlord has asked you to put it right within two months of learning about the subletting. If the tenancy is forfeited, the landlord is also entitled to damages.
That it can be put right afterwards is no reason to take the chance. The subtenant may have to move out at short notice, and your relationship with the landlord will be worse ahead of the next negotiation.
Subletting or assignment?
| Subletting | Assignment | |
|---|---|---|
| Who is the property owner's tenant? | You, as before | The new tenant takes over the lease |
| Who is responsible for the rent? | You | The new tenant, and you are released for the period after the assignment unless otherwise agreed |
| Requires | The landlord's consent | The landlord's consent, or the Rent and Tenancy Tribunal's permission when the business is transferred |
| Suits you when | You want to keep the premises but have space to spare | You are moving out or selling the business |
If you sell the business carried on in the premises, Section 36 lets you assign the tenancy to whoever takes over the business if the Rent and Tenancy Tribunal gives permission. Permission is to be granted if the landlord has no justified reason to object to the assignment. If you have had the premises for less than three years, exceptional reasons are required. If you assign with consent or permission, you are released from the lease's obligations for the period after the assignment, unless another condition has been set (Section 38).
Security of tenure for the subtenant
A subtenant of commercial premises gets the same indirect security of tenure (besittningsskydd) against you as you have against the property owner, once the tenancy has lasted more than nine consecutive months (Section 56). If you terminate the subtenant without an acceptable reason, you may therefore have to pay compensation of at least one year's rent.
It can be waived. The agreement must be in a separately drawn up document, not just a clause in the sublease. If it is signed before the tenancy has lasted nine months, approval from the Rent and Tenancy Tribunal is required as a main rule. For subletting there is an exception: the agreement is valid without approval if it covers no more than five years from the start of the tenancy and means that security of tenure will not apply when your own tenancy with the property owner ends. There is an established form for that agreement.
We go through how indirect security of tenure works in detail in our guide to security of tenure for commercial premises.
VAT when you sublet commercial premises
Commercial rent is VAT-exempt as a main rule, but someone who rents premises can use the rules on voluntary taxation (frivillig beskattning) when the premises are sublet (Swedish Tax Agency, Skatteverket). What decides it is how the premises are used at the last link in the chain. So you can charge VAT to the subtenant if they permanently use the space in a VAT-liable business.
Keep three things in mind:
- VAT-exempt subtenant. If the subtenant carries on, for example, healthcare, education or financial services, you cannot charge VAT on that part, and it can affect both your right to deduct and the property owner's.
- The VAT clause in your own lease. Standard leases often make you liable to compensate the property owner if they lose their right to deduct because of something you do, such as subletting to a VAT-exempt business.
- Invoicing. The invoice with VAT must be sent no later than six months from the first day of the rental period it covers.
More on the rules in our guide to VAT on commercial rent. Check with your accountant before you set the price.
What can you charge?
For homes, there is a rule that the rent for a sublet may not be higher than the rent you pay yourself, plus an addition for furniture and anything else included. There is no such rule for commercial premises. There, you and the subtenant set the price. The landlord can, however, set conditions when giving consent.
A common way to calculate it is for the subtenant to pay their share of the rent and supplements, based on the space they use, plus a share of the common areas and what is included, such as internet, cleaning, coffee and meeting rooms. Set the rent excluding VAT and state clearly what is included.
What the sublease should contain
| Item | What it should state |
|---|---|
| Parties | Names and company registration numbers for you and the subtenant |
| Landlord's consent | Reference to the consent, preferably as an appendix |
| The space | Which rooms or desks are let, and which common areas may be used, with a floor plan |
| Use | What business may be carried on, within the limits of your own lease |
| Term and notice | Start, end and notice period, and that the sublease ends if your own lease ends |
| Rent and VAT | Amount excluding VAT, what is included and when rent is paid |
| Security of tenure | A separate agreement on waiver, on the established form |
| Security | Deposit or bank guarantee |
| House rules and access | Keys, access cards, hours, guests, meeting room booking |
| Insurance | That the subtenant has its own business insurance |
| Reinstatement | The condition the space must be returned in |
The sublease can never give the subtenant more than you are entitled to yourselves. If your own lease, for example, only allows office use or prohibits certain alterations, the same restrictions should be in the sublease. More on what a commercial lease should contain, and a template to start from, is in our guide to commercial leases.
Letting part of your office to another company
The most common case is a company with a few rooms or desks to spare that lets them to another business. It often works well, but a few things are easy to forget:
- You answer for the subtenant. If they do not behave, you are the one responsible towards the property owner.
- Agree on day-to-day matters. Meeting rooms, the kitchen, cleaning, guests and noise cause more friction than the rent.
- Confidentiality. Have lockable rooms or cabinets if either of you handles sensitive information.
- Plan for the end. Agree a notice period so you can take the space back if you grow.
How to work out the numbers for sharing an office is covered in our guide to renting a desk or sharing an office.
For landlords
If you receive a request to sublet, you can say yes, yes with conditions, or no. Common conditions are that consent applies to a named tenant and a set period, that the business must be VAT-liable and that the head tenant remains responsible. If you discover subletting you have not approved, say so in writing and ask the tenant to put it right. This must happen within two months of learning about it, otherwise you can no longer rely on it as grounds for ending the lease. More on letting commercial premises is in our guide to letting office space.
Frequently asked questions
Can you sublet commercial premises in Sweden?
Yes, with the landlord's consent. Without consent, you risk forfeiting the tenancy unless you put it right without delay when the landlord tells you to.
Can the Rent and Tenancy Tribunal approve subletting of commercial premises?
Yes, but only if you have personal reasons such as illness, temporary work elsewhere or a longer stay abroad, and the landlord has no justified reason to refuse. A company that wants to let surplus space rarely meets the conditions.
Does a subtenant of commercial premises have security of tenure?
Yes, indirect security of tenure after nine months, unless you have waived it in a separate document. When subletting, it can be waived for up to five years without the Rent and Tenancy Tribunal's approval, on condition that the sublease ends when your own lease ends.
Should you charge VAT when subletting commercial premises?
You can charge VAT if the subtenant permanently uses the premises in a VAT-liable business. If your own rent includes VAT, that is usually what applies, but check with your accountant.
Can you charge more rent than you pay yourself?
For commercial premises there is no such limit in the law, unlike for homes. The landlord can, however, set conditions when giving consent.
What is the difference between subletting and assignment?
When subletting, you remain the tenant and are responsible for the lease. On assignment, a new tenant takes over the lease and you are normally released from it going forward.
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