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Licence


“I have been granted a licence to use business premises that I now want to terminate. Are there any restrictions on me doing so?”

The first question to decide is whether what has been granted is a licence or a lease, because this will affect how the agreement can be terminated.

A licence is no more than an owner’s permission to enter their land, whereas a lease grants a right to exclusive possessing of land for a period. The language used in the agreement will be indicative of what has been granted, and the only real test is whether the occupier has exclusive possession of the land, which means the ability to exclude all persons, including the landlord, from possession.

If what has been granted is a licence, then the right to terminate it will depend upon the terms of the licence, and termination in breach of the licence terms will be unlawful. Where the licence has no fixed term and no termination provisions, the licensee must still be given a reasonable time to vacate, which must be at least enough time for the licensee to make arrangements to move out.

If what has been granted is a lease, but it is for a fixed term of six months or less, it can still be validly terminated in accordance with any termination provisions or at the end of the contractual period.

The problem comes where the premises are occupied for business purposes and the lease if either periodic – not fixed term – or for a fixed term of more than six months. In these circumstances, the tenant is likely to enjoy security of tenure under the Landlord and Tenant Act 1954 and, regardless of the tenancy’s terms, it can then only be terminated in accordance with the procedures set out under the act. These may be extremely limited and involve the payment of compensation.

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