Consider this if…
- You want to let someone occupy space without granting a lease
- You have been offered a licence and are not sure what it actually gives you
- You are taking a pop-up, concession, desk space or storage
- You are a tenant letting another business use part of your premises
- Your licence has no end date, no notice provision, or both
- Someone has told you your licence is really a lease
How it works
Tell us the arrangement
Who occupies what, how much of it, for how long, whether they can be moved, and whether anyone else uses the same space. Those facts decide more than the drafting does.
Today
We tell you whether a licence is safe
Whether the arrangement can properly be a licence, or whether it is a lease in substance and should be documented as one.
First thing we do
We draft or review the document
Fees, term and renewal, the space and whether it can be relocated, hours and access, insurance, what each side may and may not do, and how it ends.
Quoted before we start
We deal with the head landlord if needed
Where you are a tenant licensing part of your premises, your own lease usually controls whether you may — and doing it without consent can put you in breach.
Quoted before we start
Fee
Quoted in writing before we start
GST inclusive
We quote a fixed fee in writing before any work begins.
Lease or licence — what is the difference?
Broadly, a lease grants a tenant exclusive possession of defined premises for a term. A licence grants a licensee permission to use space without that exclusive possession — a right to occupy, not a tenancy. The relationship underneath is different too: landlord and tenant on one side, licensor and licensee on the other.
The test is the substance of the arrangement, not the label. The questions are practical: can the occupier exclude everybody, including the owner; is the space defined; can they be relocated; are they there for a term. Where the answers point to exclusive possession, the arrangement can be a lease regardless of the heading — and every consequence of that follows, including, where the retail regime applies, statutory protections that operate whatever the parties wrote down. That exposure sits with the owner, which is why the owner should be the one most interested in getting the structure right.
When is a licence agreement used?
Licences suit occupation that is short, shared, or not tied to a particular piece of space:
- another business occupying part of your premises
- shared office arrangements and desk space
- pop-up retail and seasonal trading
- kiosks and concessions inside a larger store
- temporary occupation while a tenant's own premises are prepared
- storage areas, car spaces, rooftops and equipment sites
- use of common areas
- short-term commercial occupation generally — anywhere a lease is not appropriate
What these have in common is that the occupier does not need — and the owner does not want to grant — the settled, exclusive possession of defined premises that a lease creates. In each case the document is a licence to occupy commercial premises, and it works only if the arrangement beneath it genuinely is a licence.
What the document needs to deal with
The space. What is being used, and whether the owner can move the occupier. The ability to relocate is one of the practical markers of a genuine licence.
Term, renewal and ending. How long it runs, whether it renews, and how either side ends it. Termination and notice periods should be explicit.
Licence fee. What is payable, when, and what it covers — outgoings, utilities, cleaning, after-hours access. Whether a security deposit is held.
Permitted use and conduct. What the occupier may do, hours of access, what they may not do, and whose rules apply in shared areas.
Insurance, indemnity and repairs. Public liability cover, contents, who carries the risk for what, and how maintenance and repairs are divided.
Fit-out and alterations. What can be installed, who owns it, and what has to be removed at the end.
Assignment and sub-licence. Whether the occupier can pass the arrangement on to anyone else — usually not.
No tenancy. A clear statement that no lease or tenancy is intended — useful, though not decisive on its own.
If you are a tenant licensing part of your premises
This is common and it is where problems usually start, because most leases restrict parting with possession or permitting occupation by others. The head lease governs, and consent is normally required. Two documents have to work together: your lease, and the licence you are granting. We check both.
Where the arrangement is more substantial — a defined area, a real term, a business operating from it — a sublease is often the honest answer rather than a licence.
Not sure whether you need a lease or a licence?
That is usually the first real question, and it is much cheaper to answer before the arrangement is on foot. We can advise on the appropriate structure before you enter into it — and if a lease is the right instrument, we can review the commercial lease or the retail lease itself.
Frequently asked questions
What is the difference between a licence and a lease?
Broadly, a lease grants exclusive possession of defined premises for a term; a licence is permission to use space without that exclusive possession. The test looks at the substance of the arrangement rather than the label, so a document called a licence can still be a lease if the occupier in truth has the space to themselves and cannot be moved.
Why does it matter which one it is?
Because leases carry consequences licences do not: registration questions, security of tenure, and, where the retail regime applies, statutory protections and obligations that operate whatever the document says. An owner who thought they had granted a licence can find they have granted a lease with protections attached.
Can a licence be ended at short notice?
That depends entirely on what the document says, which is why the notice provision is the clause both sides should look at first. A licence with no stated term and no notice provision is a dispute waiting to happen.
I am a tenant. Can I license part of my premises to someone else?
Usually only with the landlord's consent, because most leases restrict parting with possession or allowing others to occupy. Doing it without consent can be a breach of your own lease, so check before the other business moves in rather than after.
Is a licence cheaper than a lease?
The document is usually shorter and simpler, so the work is smaller. That is only a saving if a licence is genuinely the right instrument. Using one to avoid the obligations of a lease, where the arrangement is really a lease, costs far more than it saves.
What is a licence to occupy?
A licence to occupy is the same idea by its working name: permission to use commercial premises — an office, retail space, a warehouse, or part of premises — without a lease being granted. People encounter it under both names, and the legal question is identical either way: does the arrangement give the occupier exclusive possession, in which case it may be a lease regardless of the label?
Should I have a licence agreement reviewed before signing?
Yes, and for the same reason as any other occupancy document: the clauses that decide what happens when things change — notice, termination, the fee and what it covers, insurance, liability — are the ones being signed now. A review before signing also tells you whether the document genuinely does what you think it does, or whether the arrangement is in truth a lease.
Related services
Tell us who occupies what, and for how long.
Talk to us about a licence