What is a Lease?
A Lease is usually a written agreement between a Landlord (usually the owner of the building) and the Tenant (the occupier of either the whole or part of the building). It is important to have a written agreement to regulate the relationship between the Landlord and the Tenant, particularly to avoid any ambiguity arising between the two.
The Lease brings certainty as to the term of the Lease; the rent payable; rent reviews; repairing and maintenance obligations; and when action can be taken and by whom in order to terminate the Lease. There will also be provision to confirm whether or not the Tenant will be entitled to renew the Lease at the end of the term.
The Lease provides a guarantee for the Tenant for use of the premises and guarantees to the Landlord receipt of rent. The terms of the Lease, once completed, cannot be changed unless all parties to the Lease agree to such variations.
The Lease will provide clarity to both parties as to their respective obligations and rights in relation to any breaches that may occur during the term of the Lease. Following completion of the Lease, it is usual that the Lease is unlikely to be looked at again until such time as a dispute has arisen or where clarification is sought by the parties as to any particular circumstances that have arisen.
In contrast, whilst a licence may permit an occupier to the use premises, but a licence is usually subject to termination at the will (i.e. at any time) of either party. There are no particular formalities that need to be observed to bring occupation pursuant to a licence to an end.
It is strongly advised that long-term tenancies are regulated by having a suitably completed Lease and if applicable, attending to stamp duty land tax with HMRC and registration formalities at the Land Registry.
In order to ensure that the relationship between the Landlord and the Tenant is on a level playing field, it is prudent to ensure that the tenancy document is reviewed by suitably qualified professionals prior to it being completed by the parties. Whilst there will be potentially conflicting interests of the respective parties, we seek to take a pragmatic and commercial view to ensure that deals are not unnecessarily hindered. We would seek to strike a balance between the protection sought by the Landlord and the needs of the Tenant.
Please contact Santokh Singh if you would like more information about the issues raised in the article or any aspect of commercial property law.