Licence to Occupy Commercial Premises
This Licence to Occupy Commercial Premises should be used where a Licensor
permits a Licensee to use part of the Licensor’s building for commercial
use on a temporary basis. This might be because the Licensee is only going
to occupy the premises for a short time (say, less than 6 months) or if the
Licensee is not going to have exclusive use of the land, and it would
therefore be appropriate to grant a Licence.
Here at Simply-Docs there are a number of template licences to occupy which
are for specific commercial uses. This template Licence to Occupy
Commercial Premises can be tailored to suit many commercial uses including
studios and guest houses.
A Licence is similar to 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.
A court might decide that the licensee is really a tenant who has security
of tenure. It cannot be a licence just because the parties call it a
licence. This Licence is drafted in such a way that the licensee does not
have exclusive occupation of the premises.
The Licence is also drafted on the basis that the Licensee occupies part of
a building so that the Licensor is responsible for repairs and maintenance
and for providing the facilities and services to the building that are
needed on a day to day basis. If the Licensor is not providing a
significant level of services and/or the Licensee is occupying the whole of
the building it would be advisable to use a lease instead and exclude the
tenant’s 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.
Clause 1 contains the definitions. The “Licence Fee” should include a
charge for any services provided by the Licensor if there is to be no
separate service charge. Provision of services is covered in Clause 4. If
there is a separate service charge do not include the charge for any
services in the Licence Fee and make sure to include the service charge
provisions in Clause 5.
The definition of Premises makes optional reference to a plan. It is
recommended that a plan is included, showing the Premises edged red, so
that the extent of the Premises is clear.
The “Permitted Hours” should reflect the building’s opening hours.
Clause 2 contains the grant of the Licence and the procedure for
terminating it before the end of the Licence Period.
Clause 3 contains the Licensee’s covenants. These cover payment of the
Licence Fee and other outgoings, use, alterations and the Licensor’s right
Clause 4 contains a covenant regarding the provision of facilities and
services. The list of services should be checked carefully and amended to
reflect the services the Licensor will actually provide. Clause 4 also
provides for the Licensee to have access to the Premises via the common
parts of the building, use certain facilities in the building (if
necessary), and park in the car park on the Licensor’s adjoining premises
Clause 5 contains service charge provisions. Include these provisions if
you are charging a separate service charge.
Clause 6 contains some standard clauses including a requirement for notices
(e.g. a notice to terminate the Licence) to be served in accordance with
section 196 of the Law of Property Act 1925. This means that notices should
be delivered by hand or sent by recorded or special delivery post. If the
notice is sent by recorded or special delivery post, service is deemed to
occur at the time at which the letter would “in the ordinary course” be
Optional phrases / clauses are enclosed in square brackets. These should be
read carefully and selected so as to be compatible with one another. Unused
options should be removed from the document.
This Licence to Occupy Commercial Premises is in open format. Either enter
the requisite details in the highlighted fields or adjust the wording to
suit your purposes.
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