With the current economic climate, landlords are increasingly
finding that they have vacant units which they will often wish to
secure occupation of on a short term basis, while they market the
unit for a longer term let.
Landlords are using standardised short term tenancy agreements
(e.g. tenancies at will, licences to occupy etc), without seeking
full legal advice. This certainly seems to make sense,
especially where the landlord wishes to minimise professional fees
and is keen to let the premises without delay.
Licence to occupy – pros and
cons
However, landlords should be cautious of the inherent
dangers in following this route. For example, frequent use is
made of a licence to occupy on the basis that a licence does not
give the licensee a formal interest in the land.
Care should be taken that the intended licence arrangement does
not end up being construed by the licensee as a lease with the
benefit of security of tenure. This can result where the basis of
the licensee's occupation amounts to exclusive possession of
the premises in question. In these situations, the landlord runs
the risk of the licensee failing to vacate the unit in good time
for the landlord to permit occupation of the unit by a long term
tenant.
Where a licensee claims that the arrangement amounts to a lease,
courts will look at the substance of the agreement between the
licensor and licensee to ascertain whether it is a 'true
licence'. This therefore makes licences more suitable to
arrangements perhaps in a department store where a concession is
wishing to occupy retail space, serviced or office space made
available for a short period of time or where a perspective
landlord and tenant may between exchange of an agreement for lease
and the grant of a lease.
Tenancies at will – pros and
cons
So what other options do landlords have open to them where the
wish to let their vacant units on a short term basis? Tenancies at
will are an attractive option. Such tenancies may be expressed or
implied but they are often difficult to distinguish from a licence
to occupy. A tenancy at will does not grant an estate in land
and they are often used where the parties are in negotiation for a
lease to be granted for a fixed term and want to document short
term occupational arrangement pending completion of the
lease.
If the tenancy at will is not properly drawn up, what may be
intended as a "tenancy at will" could evolve as a
periodic tenancy where longer periods of notice would be required
to terminate. Landlords may not appreciate that a tenancy at
will is not usually made subject to a fixed term or period and can
be determined instantly by the occupier. Consequently, from a
landlord's perspective, they do not confer a fixed period of
income which can be relied upon.
Get in touch
These are just some of the points a landlord must bear in mind
when dealing with short term lets without seeking legal
advice. We would always recommend taking advice before
entering into a short term let – please get in touch with me
or your usual BDB contact if we can help.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
