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Lease or License?

Although you call something a license, if the terms actually put it within the boundaries of a lease then the courts will see it as a lease regardless of how you name it. The distinction is as follows: a lease is where a tenant pays rent to a landlord for exclusive possession of a property and a license is where permission is granted to use a property for a purpose.

The danger is if you want to grant a license (giving someone permission to use your property for a purpose) and the license relates to use by a business but then it is decided the agreement is actually a lease it will give the tenant the protection of the Landlord and Tenant Act 1954 which essentially allows the tenant to indefinitely stay in the property past the end date of the lease and ask for a renewal on the same terms.

Top tip Talk to a solicitor so you can make sure the terms of your agreement reflect what you name it.

For Commercial Property advice contact Christopher Sykes Head of Commercial Property.