Landlord and tenant side letters – a business-friendly solution or a legal risk?

June 19, 2025

Landlord and tenant side letters – a business-friendly solution or a legal risk?

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By Non Kinsey

In the dynamic, fast-paced world of property transactions, no two lease agreements are the same. Each deal often comes with its own requirements and extra flexibility occasionally sought after. This could be to suit a particular tenant or to accommodate a landlord’s specific requests.

Side letters are often overlooked, but can be a powerful tool in commercial property transactions when implemented correctly.

Our expert commercial property solicitor, Non, breaks down what side letters are, highlighting their advantages and risks, showcasing why every business – whether landlord or tenant – should carefully consider when and how best to use them.

What is a side letter?

A side letter to a lease is contractual document which outlines a small number of supplementary arrangements between the parties.

It is often utilised by landlords and tenants to address temporary concessions, where formal variation of the lease is not required and may not be appropriate. For example, where a landlord wishes to offer a personal concession (e.g. a rent reduction or a slight alteration to the permitted use) to a tenant, and does not wish for this to be extended to future tenants.

How is a side letter formed?

Like any other contract, a side letter requires three things to be legally binding:

1. Clear agreement between the parties involved.
2. There must be some form of consideration present which is usually monetary (a nominal amount is sufficient)
3. Specific reference should be made to the side letter being legally binding.

Where a side letter clarifies details relating to the lease, or to document agreed changes of the lease terms, then the consideration requirement should be met.

What are the positives and negatives of using a side letter?

The positives

• Clarity – they provide clarity to or modify existing leases, recording last-minute changes if necessary.
• Speed & Flexibility – they are a quicker alternative to draft and agree if one is needed last-minute rather than introducing new clauses into a lease.

The negatives

• Limited scope – they are not suitable for any substantial or long-term matters, which require permanent changes to the lease.
• Not registerable at the Land Registry, and so can be more easily lost or overlooked by future owners or third parties.
• Unbalanced terms – there is a real risk that side letters may be interpreted as “landlord biased” by the courts. Therefore, it is key to ensure a balance is struck between the interests of both landlord and tenant.
• Limited protection for future owners – side letters do not necessarily bind successors in title, as a deed of variation would do.

Summary – a useful tool when used with caution

When drafted and implemented correctly, side letters can be an effective tool in commercial property lease transactions as a smart way to handle small, time-sensitive lease requirements. To ensure compliance with legal obligations, and to safeguard the wider commercial picture, it is always recommended to seek legal advice from experienced commercial property lawyers, who can best protect your interests.

If you’re looking to implement a side letter, please get in touch with one of our experts, nkinsey@darwingray.com or using our contact form, or simply contact a member of our Commercial Property team for a free initial chat, to see how we can help you.