A business tenancy can be created in one of three ways:
1. Oral agreement or by conduct between the landlord and the tenant.
For example the landlord being keen on letting premises allows a tenant to move in and take possession in return for the payment of rent on a weekly/ monthly/ quarterly basis.
This method should be avoided as it carries risks for both the landlord and tenant in the event of a dispute arising in the future.
2. By written agreement in the form of a lease which is in the form of a deed.
This method is more acceptable as long as all the terms are recorded in the deed, so that there is less risk of any dispute arising in the future.
3. By written agreement in the form of a tenancy agreement.
This is most often used in situations where the term for the intended occupation by the tenant will be 3 years or less.
We always advise landlords and tenants to set out their terms of agreement in writing at the outset – that way they both know where they stand.