I let my business premises on a license and I would now like to terminate. How do I do this and are there any restrictions?
First of all are you sure this is a license and not a full tenancy? A license is purely an owner’s permission to use the land as opposed to a lease which gives exclusive possession and a legal interest in the land.
The difference between a license and a full tenancy is often contensious and could be difficult and/or expensive to determine through the courts if the situation is not clear cut. It matters little what the agreement is called, lease or license, it’s what it says and intends but ultimately it’s the situation that counts.
For a true license situation to exist the landlord must have some form of control over the letting and the tenant must not have exclusive possession – ie he cannot exclude others, including the landord, from his allocated space. Serviced offices would be a good case in point, where the landlord or his staff control the premises as a whole.
If this is a true license then the wording of the termination clause would determine the notice procedure and notice period. If the agreement is silent on the matter, then a “reasonable” period of notice would be required. One full rent period may be approriate here, but certainly enough time for the licensee to make alternative arrangements.
If, on the other hand, it turns out to be a full tenancy then a business tenant may have the full protection of the Landlord & Tenant Act 1954. In other words he has security of tenure and a right to renew at the end of the lease on similar terms.
Where the lease is for a fixed-term of more than 6 months or is a periodic tenancy, then regardless of any terms in the agreement, the tenancy can only be terminated in accordance with the terms set out in the Act, which are extremely restrictive and could involve the landlord in payment of compensation.
The only exceptions would be if the tenancy fixed-term was for 6 months or less, in which case the tenancy can be terminated after the last day of the fixed-term, or where the landlord and tenant agreed at the out-set (and have the correct documentary evidence to prove it) to disregard statutory protection. This is known as letting “outside the Act”.
By Tom Entwistle,
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©LandlordZONE All Rights Reserved – never rely totally on these general guidelines which apply primarily to England and Wales. They are not definitive statements of the law. Before taking action or not, always do your own research and/or seek professional advice with the full facts of your case and all documents to hand.