Most of our commercial property owning clients now have little vacant space and in order not to have any rent void it is becoming more common to allow occupiers in on a short term basis.
Any short-term occupancy must be documented properly; the main ways of dealing with this are by way of Lease, Tenancy at Will and Licence to Occupy.
The key points of each are:
- Lease – the tenant enjoys exclusive possession. It should be excluded from the security of tenure provisions of part 2 of the Landlord and Tenant Act 1954, otherwise the occupier will have a statutory right to remain in occupation and to renew their Lease at the end of the term. A Lease is preferable to use for a period of longer than, say, six months of occupancy.
- Tenancy at Will – either party can terminate a Tenancy at Will at any time, on immediate notice and for no reason. Exclusive possession is given. The security of tenure provisions do not apply. It is useful for short-term occupancy, for example between lettings or during negotiations for a longer occupancy.
- Licence to Occupy – this is a personal arrangement between the parties, giving the tenant (Licensee) the ability to use the property - exclusive possession must not be given. It is generally for a fixed period of time. It is useful for a tenant who has entered into an Agreement for Lease, and either party needs to do works to the premises before completion.
There are pitfalls involved in all of these occupancies, and you should contact a member of our Commercial Property Team if you are considering either allowing someone in to short-term occupation, or are taking up short-term occupation.