The two categories of rental agreement most frequently used by landlords of commercial premises are a lease or a licence.
A lease will normally extend over a period of several years, although short-term leases are also an established feature in the commercial property rental market. A leasing agreement provides a tenant with possession of the property for a specified term in return for the agreed rental payments.
However, some commercial landlords prefer to offer premises on a licence, which will normally be more flexible and less legally binding. Being a simple contractual agreement, they can also save on solicitor’s fees when it comes to drawing them up.
Licences are frequent in the rental of serviced office space but are also used in other areas of the commercial property market. Their flexibility can be advantageous to business tenants as well as landlords, especially for start-ups or companies in the process of change or expansion that may wish to rent on a temporary basis. Nevertheless, it is important to understand how the terms of a licence could affect your business operations before going ahead.