Professional Lease: Does a Clause Prohibiting Assignment Justify an Increase in Rent?

You own a professional premises in Doullens and you are wondering how to set the rent upon renewal of the lease? Or perhaps you are a tenant and receive a new amount that seems excessive? A recurring question arises: should the advantages or restrictions of the lease be taken into account to adjust the rent?

A decision of the Court of Cassation of 1 March 1995 (No. 92-17.746) provides a clear answer: yes, a clause prohibiting assignment and subletting justifies an increase in the reference rent. But be careful, this increase must be justified by specific elements. Analysis.

What does the law of 23 December 1986 say? It governs professional leases and provides that the rent is set by reference to rents of similar premises. But if these references contain restrictions, the judge may adjust them. This is exactly what the Court of Appeal did in this case, and the Court of Cassation validated its reasoning.

The Facts: A Story That Happens Every Day

Imagine an oral lease granted in 1959 for a building used for professional purposes. The tenant, a company, has occupied the premises for decades. In 1988, the landlord wishes to revise the rent and demands an increase. The tenant disputes the proposed amount. The case comes before the commercial rent judge.

To set the new rent, the court orders an expert appraisal. The expert analyses ten lettings of comparable professional premises in the area. But surprise: almost all of these references contain a clause prohibiting assignment and subletting. However, the tenant's lease authorises these operations. The Court of Appeal of Amiens, hearing the dispute, then decides to increase the average rent of the references to take into account this advantage enjoyed by the tenant.

The landlord contests this increase. He argues that the law does not provide for such an increase and that the Court of Appeal exceeded its powers. The Court of Cassation, hearing the appeal, must decide: does a clause prohibiting assignment in the references justify an increase in rent?

The Reasoning of the Court — Analysed

The Court of Cassation dismisses the landlord's appeal. It validates the reasoning of the Court of Appeal. The legal basis? Articles 28 and 30 to 33 of the law of 23 December 1986 relating to professional leases. These texts provide that the rent is determined by reference to rents of similar premises, but the judge has full discretion to assess the comparison elements.

Specifically, the Court of Appeal found that almost all of the ten reference lettings had a clause prohibiting assignment and subletting. For it, this difference from the lease in dispute (which authorised these operations) justified an increase. Why? Because the possibility of assigning the lease or subletting increases the value of the leasehold interest for the tenant. In short, premises that can be freely assigned have more value than premises where assignment is prohibited.

The Court of Cassation recalls that the trial judge has full discretion to assess the references and necessary adjustments. It does not call into question the assessment of the Court of Appeal, which properly reasoned its decision. Thus, the increase is not an error of law, but a logical application of the principle of equivalence: compare what is comparable, and adjust what is not.

What This Changes for You — Practically

For landlord lessors: if you let professional premises with a clause authorising assignment or subletting, you can demand a higher rent than the references that prohibit these operations. Upon renewal of the lease, do not hesitate to raise this argument in your rent setting request. For example, in Camiers, an 80 m² premises with free assignment could justify a rent of €12/m², whereas references without assignment are at €10/m².

For tenants: if your lease prohibits assignment or subletting, you can conversely argue that references with free assignment are not comparable. You might obtain a lower rent. However, note that the increase is not automatic. It must be demonstrated by concrete elements, such as examples of rents actually charged.

For purchasers: if you buy a let premises, check the lease clauses. A prohibition of assignment may reduce the value of the property, as the tenant will not be able to assign the lease easily. Conversely, an authorisation of assignment increases the rental value.

Example in figures: in Doullens, a professional lease of 100 m², with free assignment, may see its rent increased by 10 to 15% compared to references with prohibition. On an annual rent of €12,000, this represents an additional €1,200 to €1,800 per year.

Four Tips to Avoid This Type of Dispute

• Draft a written and precise lease: An oral lease, as in the case, is a source of uncertainty. A written contract clarifies the rights and obligations of both parties, particularly regarding assignment and subletting.
• Have a professional rental appraisal conducted: Before setting or contesting a rent, commission a property expert. They will analyse references in the area and adjust rents according to the lease clauses.
• Keep all similar court decisions: Case law evolves. Having decisions like that of 1 March 1995 on hand can strengthen your position during a negotiation or trial.
• Negotiate before going to court: A trial costs time and money. If you are a landlord, propose an increase justified by references. If you are a tenant, ask for a reduction. Discussion can avoid litigation.

Further Reading: Related Case Law and Developments

This decision is part of a consistent line of the Court of Cassation: the trial judge has broad discretion to set the rent for professional leases. One can cite a judgment of 10 January 1996 (No. 93-21.456) which confirms that restrictive clauses (prohibition of activity, hours) may justify a reduction in rent.

The current trend is towards individualisation of rent according to the specific features of the lease. Courts increasingly accept adjustments to take into account the actual advantages or constraints of the tenant. This means that rent is not a simple figure, but a reflection of a contractual balance.

For the future, we can expect judges to further refine these criteria. In particular, the issue of the term of the lease or the permitted use of the premises could be taken into account. If you are faced with a dispute, do not hesitate to consult a specialist lawyer.

Checklist Before Acting

What to do if you are a landlord and wish to increase the rent:

1. Check whether your lease authorises assignment or subletting. If so, you can request an increase.
2. Gather references of rents of similar premises, noting their assignment clauses.
3. Call in an expert to quantify the justifiable increase.
4. Send a revision request to the tenant by registered letter with acknowledgement of receipt, stating the reasons for the proposed amount.

FAQ:

• What is a clause prohibiting assignment? It is a clause in the lease that prevents the tenant from selling their leasehold interest or transferring the lease to a third party without the landlord's consent.
• Can I contest the increase decided by the judge? Yes, if you believe the references are not relevant or the increase is excessive. You can appeal.
• What are the time limits to act? To contest a rent, you generally have 2 years from the notification of the new rent. After that period, you can no longer act.
• How much does a rental appraisal cost? Between €1,000 and €3,000 depending on complexity. It is a worthwhile investment if the stakes are high.
• Is an oral lease valid? Yes, but it is inadvisable because it creates uncertainty about the clauses. A written contract is better.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →