- Commercial property
- March 12, 2020
Lease or licence? What’s in a name?
By Lawbite Team

Lease
- A lease gives the parties certainty as to the terms on which they occupy. It sets out who is responsible for what, such as repairs and maintenance. It enables the parties to plan ahead and budget for property costs.
- It restricts certain tenant activities without the landlord’s consent, such as assigning the lease, subletting and carrying out alterations. It therefore gives the landlord control over its property.
- It imposes obligations on the landlord to ensure the tenant can enjoy the premises without interruption and often requires the landlord to provide certain services for the benefit of the tenant.
- The Landlord and Tenant Act 1954 gives tenants of leases security of tenure, unless it is excluded by agreement in the lease. It is therefore essential that, before the lease is entered into, the parties address this issue and agree on it, otherwise, at the end of the term, the tenant is automatically entitled to a new lease of the premises (subject to certain provisions in the Act).
- The lease can contain break clauses, to bring the term to an end early, giving the parties flexibility, whilst retaining certainty.
- Exclusive possession
- Licence fee/rent
- Fixed term
Top tips
- Ask yourself the following questions:
- Will the occupier have exclusive possession of the premises?
- Will a "rent" be paid?
- Will the occupation be for a certain amount of time?
- If the answer is "Yes" to some or all of these questions, then what is being granted may be a lease and you need to take legal advice.
- Remember it does not matter what you call the document, as the court can look beyond this to see what is happening in practice and decide that, whilst called a Licence, what has been granted is, in fact, a Lease.
- If a lease is granted (whether intentionally or unintentionally) always consider the security of tenure implications and take legal advice.
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In closing
Nothing in this article constitutes legal advice on which you should rely. The article is provided for general information purposes only. Professional legal advice should always be sought before taking any action relating to or relying on the content of this article. Our Platform Terms of Use apply to this article.
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