Commercial Property Licence Solicitors

What are the benefits of a licence to occupy?

There are a number of benefits with a licence to occupy, including:

• Speed: A licence is quicker to arrange and therefore cheaper to prepare than a lease.
• Stamp duty exemption: Stamp duty is not payable on a licence to occupy, but it can be payable on commercial leases.
• Flexibility: A licence also offers a greater degree of flexibility for both the landlord and the tenant than a lease.
• Improved security: New businesses that need a property but cannot predict their sales into the future often find that a licence is preferable to the longer-term commitment of a lease.
• Freedom to move: A licence gives a business the freedom to move into smaller or larger accommodation as needed by giving the landlord just a few weeks’ notice.
• Sometimes there is the option to rent additional space within the same building, such as storage space or an extra office.

Businesses looking for temporary premises, such as a Christmas shop, can also benefit from a short-term licensing arrangement.

What types of property can be occupied under a licence?

Licences to occupy are most often used for:

• Serviced office spaces (sometimes called co-working spaces), studios and workshops. The premises might be shared by several other businesses, including the landlord themselves.
• Properties that are intended to be leased or sold. The property owner may grant a short licence, so they have an income until they find a buyer or a lessee.
• Properties that are in the process of being leased. A licence may be granted by a landlord if a business needs to occupy premises straight away before a lease has been finalised.
• Concessions operating in department stores. A concession is a business that operates in a department store’s premises as a shop with its own identity, staff, furniture, displays, etc.

Why should I seek legal advice for a commercial property licence?

You should seek legal advice for a commercial property licence regardless of whether you are a landlord or a tenant to ensure the terms and conditions of a licence are carefully drafted and scrutinised, and your business interests are protected. At Davisons, our commercial solicitors are dedicated to negotiating the most favourable licence terms for our clients.

Important Considerations – Tenants

If you are a tenant, these are some questions you need to ask before signing a commercial property licence, including:

• What equipment and shared facilities are included under the licence? (Internet access, shared kitchen, etc.)
• What services are included? (Cleaning, photocopier maintenance, etc.)
• How much will the landlord charge for extra services such as printer use?
• Are you allowed to put up signage to advertise your business?
• What are the arrangements for parking?
• Are you permitted to access the premises out of office hours if needed?
• What happens in the event of any loss or damage to property and equipment?
• How will your deposit money be protected if the landlord goes bankrupt? Unlike with a lease agreement, the landlord has no legal obligation to pay your deposit into a government-approved deposit protection scheme.
• Under what conditions will money be deducted from your deposit?
• Are you happy with the notice period specified under the licence?

Important Considerations – Landlords

If you are a landlord, it is important to make sure that a licence agreement does not unintentionally become a lease with all the associated landlord’s and tenant’s rights and obligations under the law.

Granting a tenant exclusive possession of a property is a lease and not a licence. If a tenant can lock you out of the property then you have granted them a lease – the fact that you have called it a licence does not matter.

Providing for a fixed term or using incorrect terminology (for example, ‘rent’ instead of ‘licence fee’) also means a lease may have been granted rather than a licence. A licence that is correctly drawn up by an experienced commercial property solicitor eliminates this risk.

Why choose Davisons

Whether you are a landlord or a tenant, if you are planning to enter into a licence to occupy, our specialist commercial property solicitors can utilise their decades of combined experience to help ensure all documentation is written up correctly and legally compliant.

With our free initial assessment and same-day response promise, you can easily find out what your options are before planning your next steps, so get in touch today.

To arrange your free initial assessment today please call 0808 304 7471.