Leases, licences and tenancies

When you rent out a commercial property you must decide what you want to do and what you will allow the commercial tenant to do, so that you can consider which letting document is most appropriate.

It is important to use the correct document to ensure the tenant does not obtain rights in the property and so you can easily remove the tenant if they do not pay the rent or breach any obligations in the agreement.

If the wrong type of document is used a tenant may obtain rights to remain at the property.

A Commercial lease is a right to exclusive possession of the property for a certain period of time. Exclusive possession means that the tenant can use the property and exclude the landlord and others from the property.

A lease is a contractual relationship between the landlord and the tenant.

A lease may be used to let a commercial property to a tenant for a set number of years. Read Entering a commercial lease for guidance if you are considering signing a commercial lease for your business premises as a tenant.

A licence is a permission for a licensee to do something on the owner’s property. A licence is a personal right or permission to the property.

The licensee does not keep the property and the owner can get the property back if required.

A licence may be appropriate for a short-term letting of a commercial property, such as an Office sharing agreement, a Car parking licence or a Garage licence.

A tenancy at will is an arrangement where occupation by the tenant can end immediately by either the landlord or the tenant at any time, and no notice period needs to be given. 

A tenancy at will is usually used for temporary, short-term use.