Short Term Lets - Landlords Should Apply Caution!

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...