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Land Leases & Licences

Bare Land Licences

Businesses and other people and organisations usually occupy their premises under a lease. A lease is a formal arrangement whereby the Tenant has exclusive use of the premises for a specified term. Leases usually contain detailed provisions as to what a tenant must and must not do in order to protect the value of the Landlord’s reversionary interest in the premises. 

Sometimes it is not appropriate to grant a lease. If the person or organisation is only going to occupy the premises for a short time (say, less than 6 months) or if the occupier is not going to have exclusive use of the land, it may be appropriate to grant a Licence.

A Licence is similar to lease in that it has a fixed term. However, a Licence is unlike a lease in that it is not an interest in land and a licensee cannot acquire security of tenure. An arrangement is a lease if the occupier has exclusive possession of premises for a fixed term. Such an arrangement is a lease whether or not the parties call it a lease. It cannot be a licence just because the parties call it a licence. The Licences in this subfolder are drafted in such a way that the licensee does not have exclusive occupation of the premises.

Beware of granting a “licence” that is really a lease. A court might decide that the licensee is really a tenant who has security of tenure. If there is any doubt as to whether a proposed arrangement will be a lease or a licence, the safest approach is to grant a lease which excludes the tenant’s right to security of tenure.

Bare Land Licences is part of Property. Just £38.50 + VAT provides unlimited downloads from Property for 1 year.

Frequently Asked Questions

Can I just call it a licence so my occupier does not get security of tenure? +
Not reliably. A court looks at what the arrangement actually does, not the word you use. If the occupier has exclusive possession for a term, it is a lease and can carry security of tenure even if the document is headed licence. These templates are drafted so the licensee shares use and has no exclusive occupation, which is what makes a licence genuine.
What actually makes something a genuine licence rather than a lease? +
The absence of exclusive possession. In a genuine licence the owner keeps control of the land, the user shares it or uses it alongside others, and the owner can move the user or come and go. Once you hand over exclusive possession for a fixed term you have almost certainly granted a lease, whatever the paperwork says.
What protection does a licensee have compared with a tenant? +
Much less. A licence is only permission to use land, not an interest in it, so the licensee cannot acquire security of tenure and the arrangement ends according to its terms. A tenant with a lease may have a right to renew under the Landlord and Tenant Act 1954. That difference is exactly why owners use a licence for short or shared use.
If I am unsure whether to grant a lease or a licence, what is safest? +
Grant a lease and exclude the tenant's right to renew. If there is real doubt, a licence that turns out to be a lease leaves you with a protected tenant you did not intend. A lease contracted out of Part II of the Landlord and Tenant Act 1954, using the notice and declaration procedure before it starts, gives you certainty and still lets you recover the land at the end.
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