Letting of commercial premises/ tenancy agreements

Below are examples of the options available if you’re considering renting commercial premises:

Commercial lease

  • Time length can last from as little as 6 months to a maximum of 25 years.
  • Main advantage is that it gives a tenant a right of exclusive possession, this means that the landlord cannot enter the premises during the duration of the lease unless specific terms have been inserted into the lease agreement.
  • Leases must be for a fixed period however it is possible for a lease to run after the fixed period is over, as in periodic tenancies or tenancies at will.
  • Leases create a leasehold interest that is recognised and protected in property law.

Tenancy at will

  • Allows for flexible letting arrangements.
  • May arise by implication i.e. where a tenant is permitted to remain in possession after a lease has expired.
  • Tenant gets exclusive possession.
  • Usually used for short periods but is indefinite and so does not contain a fixed period.
  • Can be brought to an end by  one party giving notice to the other, the notice period usually ranges between 1 – 6 months however the parties may agree to a period that suits them. 
  • Automatically comes to end when the landlords interest is transferred, death of either party or a new tenancy is granted in relation to the same premises.
  • When granting a tenancy at will care should be taken to avoid creating a periodic tenancy.

Licence to occupy

  • Shorter and simpler than a lease agreement
  • Does not give tenant right of exclusive possession, so landlord may enter premises if he wishes.
  • As there is no exclusive possession, a leasehold interest is not created for a tenant.
  • Licence to occupy is usually used where the landlord and tenant need to share premises.

Periodic tenancy

  • More commonly used in residential lettings.
  • Can arise where a tenant is in occupation and pays rent for a lengthy period without a formal letting agreement.
  • Or where the tenant is in occupation and pays rent through the terms of the lease having been agreed ‘subject to contract or lease’ but the lease has not yet started.
  • When created continues for fixed period intervals until terminated by either party giving notice.
  • The ‘period’ depends on how frequent rent is paid under the agreement i.e. if rent is paid weekly, one weeks’ notice is required.

For further enquiries please contact info@lawdit.co.uk

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