Using licences and tenancies at will

The following Property practice 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?

Using licences and tenancies at will

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

Whilst the decision in Street v Mountford suggested that payment of rent is an essential hallmark of a lease, it was confirmed in Ashburn Anstalt that it is not. Therefore, payment of rent might be an indication of a lease, but it is not, in fact, required for a lease to exist.

The suggestion in Ashburn Anstalt that a term could be sufficiently certain where one party could make an otherwise uncertain term certain (eg by serving a notice) was overruled in Prudential, in which it was decisively held that there cannot be a tenancy for an uncertain term. However, although the term must be certain, this does not mean that a fixed term must be specified at the outset. If a periodic

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