Using licences and tenancies at will
Using licences and tenancies at will

The following Property guidance note provides comprehensive and up to date legal information covering:

  • Using licences and tenancies at will
  • When is it safe to use a licence?
  • Terminating a licence
  • What can go wrong with a tenancy at will?
  • Can the parties agree that there will be no tenancy?

Pressure to secure a new letting often leads to the suggestion of early access on the basis of a licence or tenancy at will. The principal risk of this approach is that the courts will look to the substance of the agreement, not to the label that the parties have given to it. If early access is documented in an agreement that includes the 'hallmarks' of a lease, the result will be a lease.

The 'hallmarks' of a lease are:

  1. exclusive possession (which is not the same as exclusive occupation)

  2. of defined premises

  3. for a term which is certain

Payment of rent might also be an indication of a lease, but in fact rent is not required for a lease to exist. Although the term must be certain, this does not mean that a fixed term must be specified at the outset. If a periodic tenancy is created, the requirement of certainty is satisfied by reference to the notice that would be required to terminate that tenancy.

For commercial property the distinction is crucial. A lease will give a business occupier valuable rights under the Landlord and Tenant Act 1954 (LTA 1954) – primarily security of tenure, as was the case in London College of Business v Tareem Ltd. A genuine tenancy at will or licence to occupy will not. The same is true