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Advantages and Disadvantages of a Tenancy at Will

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As a business owner looking for commercial space to operate your business, you might consider entering a lease. However, other legal ways exist to occupy commercial property, which may suit your circumstances better. One way tenants can occupy a landlord’s commercial premises is through a tenancy agreement as a tenancy at will. To decide if this is suitable for you, this article will explain some of the advantages and disadvantages of a tenancy at will.

What Is a Tenancy at Will?

A tenancy at will is a legal way for a business owner to have the sole occupation of a commercial property as their business premises. It is a type of rental agreement where the property owner, as the commercial landlord, consents to their occupancy. In return, the tenant will pay an agreed rent. Either the commercial landlord or the tenant can determine a tenancy at will.

A tenancy at will is not a formal lease agreement. Therefore, the arrangement may or may not be detailed in writing. It might simply be an oral agreement or implied by the conduct of the landlord and tenant. It also contains no fixed term of occupation. This means that a tenant may occupy a space for an indefinite period. Therefore, either party can end the commercial property arrangement at any time with immediate notice.

Advantages  

A tenancy at will may be advantageous for short-term and temporary property use. For example, you might temporarily occupy a space with upcoming plans to enter a formal commercial lease soon. However, to legally access the commercial space before the lease commences, you might agree to a tenancy at will.

A tenancy at will can also be advantageous if a business owner needs to occupy a property quickly, but there is limited time to prepare a commercial lease. For example, you might need to negotiate the lease terms or carry out due diligence. In contrast, a tenancy at will takes little time to prepare.

A further advantage of this arrangement is its flexible nature. The commercial landlord or tenant can terminate the arrangement anytime without a reason or specific notice. Therefore, if a commercial tenant suddenly requires larger commercial premises and finds a suitable property, they can occupy it quickly. 

If you are a startup business owner, a tenancy at will may benefit you. While you have yet to establish how much profit your business makes monthly, you can enter a low-commitment agreement. Also, a tenancy at will tends not to incur Stamp Duty Land Tax.

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Disadvantages

The most significant disadvantage of a tenancy at will is that neither the commercial tenant nor landlord has security regarding the occupation of the property. For example, the commercial landlord could suddenly end up without a tenant and, therefore, lose money on their property. They will also incur time and costs looking for new tenants. Likewise, a commercial tenant could suddenly find themselves without premises to conduct their business activities. 

A further disadvantage is that a tenancy at will offers less protection than a commercial lease. Commercial lease terms can be very detailed and list several rights and obligations of each party. It follows that everyone clearly understands their lease obligations. However, a tenancy at will may not be as detailed, especially if parties do not record their agreement in writing. Further, if a dispute arises, both parties will have less legal protection or an agreed way to resolve disputes. 

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Key Takeaways

A tenancy at will is where a business owner occupies the commercial property with the landlord’s consent. There is typically no formal end date for this arrangement, and it may be unwritten, implied or an oral agreement. This option has both advantages and disadvantages. For example, a tenancy at will can be suitable for a temporary or quick occupation. It is also more flexible than a formal lease agreement. However, this arrangement might lack stability due to a lack of detailed terms.

For more information on a tenancy at will, our experienced leasing lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

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