Office Tenancy at Will and Licence Agreements
Listed below are a selection of Tenancy at Will Agreements and Licences for Offices.
Business premises are usually occupied 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 business is only going to occupy the premises for a short time (say, less than 6 months) or if the parties are in the process of negotiating a lease but the Tenant needs to occupy the premises immediately, the parties may wish to use a Tenancy at Will or a Licence. A Licence may also be appropriate where a Landlord is providing serviced office accommodation.
A Tenancy at Will has no fixed term and can be terminated by either party at any time with immediate effect. It is therefore only suitable for very short term arrangements.
A Licence is more like a 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.
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Frequently Asked Questions
A tenant needs to move into my office before the lease is signed, what can I use? +
Use a tenancy at will. It lets the occupier take possession immediately while the lease is negotiated, and either party can end it at any time with no notice. Because it can be ended on demand and has no fixed term, it does not give the occupier security of tenure under the Landlord and Tenant Act 1954. It suits a genuine stop-gap only: if occupation settles into a regular pattern of rent, a court may find a periodic tenancy has arisen instead.
What is the difference between a tenancy at will and a licence for office space? +
A tenancy at will has no fixed term and ends the moment either side asks for possession. A licence usually has a fixed term but gives only permission to occupy, not exclusive possession, so it creates no estate in land. Neither gives security of tenure. The trap is exclusive possession: if the occupier has exclusive use of defined office space for a term at a rent, a court treats the arrangement as a lease whatever it is called.
Can I use a licence so my office occupier never gets the right to renew? +
Only if the arrangement is genuinely a licence. A licence avoids security of tenure because it is not an interest in land, but that holds only where the occupier does not have exclusive possession, for example in serviced or shared offices. If you grant exclusive possession of a self-contained office for a term at a rent, the document is a lease whatever its title, and the tenant may acquire security of tenure. Where you need certainty, grant a lease contracted out of the 1954 Act instead.
How quickly can I get my office back under a tenancy at will? +
Immediately. A tenancy at will can be determined by either party at any time, so you can ask for possession without giving a notice period. That flexibility is the point of the document, but it cuts both ways: the occupier can also leave at once, so a tenancy at will gives neither side any security. For a guaranteed minimum period use a short lease or a fixed-term licence instead.
