Licence to occupy

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This document is a precedent licence to occupy premises.

Before using this precedent document, it is advisable to read the drafting notes accompanying it. If you have any queries or comments about this document or the drafting notes, use the contact tab at the top of the page.

The drafting notes contain warnings about using a licence to occupy in cases where the occupier will have exclusive possession of the premises. To ascertain whether an agreement for business occupation is a tenancy or a licence, one should apply the classic test of a tenancy given by the House of Lords in Street v Mountford [1985] AC 809: unless the surrounding circumstances indicate to the contrary, a court will infer a tenancy wherever there is exclusive possession of premises, at a rent (although this is not essential), for a term (either periodic or fixed). Just because an agreement says it is a licence does not mean that it is a licence: “The manufacture of a five pronged instrument for digging results in a fork even if the manufacturer, unfamiliar with the English language, insists that he intended to make and has made a spade." (Per Lord Templeman)

Also attached is a draft letter which is intended to provide a would-be tenant with access to a property pending settlement of the terms of a travelling draft lease (which is appended to the letter).

In all cases, the solicitor for the landlord/owner/licensor should consider using alternatives to a licence to occupy, such as (a) a contracted-out lease; (b) a short-term/short-form lease within section 43(3) Landlord and Tenant Act 1954; or (c) a tenancy-at-will.

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