What does underlease mean?
An underlease is a lease created by a tenant, rather than by the property's owner, granting another person the right to use or occupy the property for part of the tenant's term. In legal terms, it is the arrangement behind a subtenancy: the original landlord remains the head landlord, the tenant remains the head tenant, and the person receiving the underlease becomes the undertenant. Such an arrangement may require the head landlord's consent and can be restricted by the terms of the original lease. The term is chiefly associated with British property law, although it is understood in the United States as well. It is useful because it names the precise legal character of a nested tenancy rather than merely describing a tenant's informal permission for someone else to occupy the premises. Although similar in meaning to sublease, underlease is more traditional and formal.
nounA lease of property granted by a lessee to another person, for all or part of the lessee's term. It is the legal arrangement that creates a subtenancy.
- A lease granted by a lessee to another person, creating a subtenancy for all or part of the lessee's term.
"The landlord consented to the tenant's underlease of the shop to a local café."
"The landlord consented to the tenant's underlease of the shop to a local café."
"Under a written underlease, the underlessee may occupy the apartment for the remainder of the tenant's term."
The plural is normally written with an ordinary final -s and takes the verb form 'underleases' in the present tense.
"The landlord reviewed all the underleases before consenting to the tenant's proposal."
An underlease is literally a lease inside a lease: a tenant lending the property they rent to someone else.
Reviewed by Deb Chak, Editor. AI-assisted content curated by RJS Tech Solutions LLP.
Where does underlease come from?
The word was formed in English by combining the prefix under- with the established noun lease, following the broader practice of adding relational prefixes to legal and commercial terms. Lease itself entered English through Anglo-French from a Latin verb meaning 'to let or loose'; lessee and lessor belong to the same historical leasing vocabulary. Underlease developed as a technical property-law term for a grant made by someone who already held property under a lease.
Related word forms
How underlease is actually used
This is a specialized property-law term and is normally written as one word. It describes a granted tenancy rather than merely informal permission for another person to use the property.
Easily confused with underlease
An underlease and a sublease often describe the same arrangement; underlease is the more traditional British legal term, while sublease is the common general and US term.
An underlease is the lease or arrangement granting a tenancy, whereas a subtenancy is the resulting tenant's position or holding.