There are three principle ways in which one can take an agreement to occupy commercial premises.

The normal means is with a formal lease. This is governed by the 1954 Landlord & Tenant Act and provides tenants with significant protection under the law, particulary in relation to the end of the lease, renewal of the lease and compensation in the event of the lease not being renewed. Such leases are normal when both landlord and tenant want a long term agreement, providing the landlord with steady income and the tenant with security of tenure so that they can build their business.

At the other end of the spectrum are licenses. These are designed for short-term occupation only and do not normally provide any significant security of tenure. The law is structured against such contracts UNLESS they genuinely are not do not designed to provide exclusive occupation. A classic example of this is services offices, whereby the landlord has access for regular office cleaning and both sides can alter or terminate what space is occupied. Outside this example, licenses are not a proper means of agreement and can be interpreted by a Court as a lease protected by the 1954 Act.

If one wants a short term lease and both sides agree that the protection of the 1954 Act is not appropriate, then rather than granting a licence, one should submit the lease to Court for what id often described as "contracting out". This formality is whereby the court certifies that both sides understand that the provisions of the 1954 Act do not apply. Such contracting out adds a small cost to the legalities of creating such a lease, but is well worthwhile in order to ensure the lease is created in the manner that both sides intend.

For more detailed advice please contact John Lewis on 01932 700063 or email john.lewis@anthonyjlewis.com