Lease or licence?

Posted: Friday, 4 September 2009 @ 12:09

Landlords of commercial premises often try to prevent occupiers enjoying the protection of the Landlord & Tenant Act by giving them a licence rather than a lease.  Unfortunately, they very often get it wrong.

First things first.  Calling a document a licence doesn't make it a licence.  It is well-established law that if the nature of the arangement between the owner of premises and the occupier creates a lease then just calling it a 'licence' does not change the legal nature of the relationship.

So how do you know if the nature of the relationship creates a lease?  The critical factor which tends to give a tenant a lease rather than a licence is 'exclusive possession'.  Exclusive possession is the right for someone to occupy premises to the exclusion of all others (including the landlord).  In other words, if the owner of premises draws up a 'licence' which gives the occupier the sole right to use defined premises (eg a particular lock-up unit, office or shop) then that occupier will almost certainly have a lease.

The significance of having a lease rather than a licence is that the tenant then enjoys the protection of the Landlord & Tenant Act and crucially enjoys the right to a new lease when the existing one expires.  As landlords normally grant 'licences' to make sure they can regain possession of the premises at the end of the term of the licence, this is a critical difference.

There are a number of ways to ensure an occupier isn't treated as a tenant protected by the Landlord & Tenant Act and Cousins Business Law offer a range of fixed-price packages to landlord to achieve this objective at a sensible cost.

Contact Steve Petty by email or call 01926 629005 for further details.

Steve Petty, Commercial Property Solicitor

This blog is not intended to constitute legal advice, nor is it intended to be a complete and authoritative statement of the law, and what we say might be out of date by the time you read it. You should always seek legal advice to confirm whether or how any information in this article applies to your particular situation. We offer a free telephone consultation to discuss your particular circumstances.

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