How Can I Let My Property as Business Premises?

If you own a commercial property that you do not currently occupy, you may want to lease it to someone, like a small business. This way, you can earn income from your investment. The business owner who chooses your property may use it as their commercial premises, such as for office space. They will pay you rent in return for this space and, potentially, any business rates. To lease your property as a business premises in the UK, it is essential to know the various methods available.  Each comes with its own set of rules, and the choice between them depends on both your intentions and those of the commercial tenant. This article will explain the different ways you can let your property as business premises in the UK. 

Commercial Lease

A common way to let your property as business premises is through a commercial lease. A commercial lease is where you grant an owner exclusive occupation of your business property as their premises. This means they will have the same rights on the property as you usually have and can stop you or third parties from entering the property. However, you can reserve rights to legally enter the property in particular circumstances, such as to carry out repairs or organised inspections. 

A commercial lease will contain an agreement with the details of the lease. This is known as a lease agreement and is a type of legal contract. However, it is important to note that a commercial lease can also exist without a contract. This is because it is an estate of land. Therefore, a tenant can pass the lease to a third party to take over. This is an assignment.

The term of a commercial lease can vary. Office leases will often last between 5 to 10 years, while restaurant leases are approximately 25 years and retail leases often 10 years. However, a commercial lease term can be much shorter than this. 

Tenancy at Will

One way you can let your property as commercial premises to a business owner is through a tenancy at will. Here, the business owner will have occupation of your property as their business premises in return for rent. A tenancy at will can be an express tenancy or one you and your tenant imply through conduct. For instance, you might allow a business owner to stay in your property and accept regular payments from them in exchange. Even if you do not enter a formal lease agreement or written contract, a court might imply that your conduct creates a tenancy at will.

The significant features of a tenancy at will are that:

• it is a relationship that already exists between you as the landlord and the business owner as your tenant;
• you or your tenant can determine its existence at any time during the period they use your property as their business premises;
• it will not always be for a specific period of time; and
• either you or your tenant can terminate it with virtually no notice, such as two weeks or even immediate termination;
• the tenant has no estate on your land; and
• a tenant cannot assign a tenancy at will. 

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An express tenancy will usually apply to a short period of occupation. Given the short timescale your tenant will be in occupation for, you must be realistic about the tenancy terms to ensure they are possible and fair for your tenant to complete. For example, a term may be that they must leave the premises as they found it rather than in a better state of repair.

You may decide that this tenancy suits you. This could be a way to let your property for business premises where you are negotiating a commercial lease, and the tenant expresses a desire to move in beforehand.

Licence

With a license, you can let your property to a tenant for a short period. This will usually be shorter than when you have a tenancy at will. If you choose to give your tenant a licence to occupy your property as their business premises, they will not have exclusive possession. This is the critical difference between a licence to let your property and a short-term lease. 

Where the business owner does not have exclusive possession, you can:

• enter the premises as you wish; and
• relocate the tenant to another property immediately if you want.

A licence gives permission or a personal right to be involved in the property to do something. If you sell your property to another person, the licence no longer exists for the business owner to use your previous property as their premises.

Key Takeaways

A property owner like yourself can let your property as business premises in different ways. You can let your property as a commercial lease, with a licence or as a tenancy at will. When you let your property as a commercial lease, this grants the tenant sole occupation of the property. Additionally, you can terminate the tenancy at any point, and this type of tenancy can be implied or expressed. Alternatively, if you let your property through a licence, your tenant will not have sole occupation, and you may enter the property as you wish. If you need help understanding how to let your property, 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 f. So call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions

How can I let my property as business premises in the UK?

As a property owner in the UK, you can let your property as a business premises through a commercial lease, a licence or as a tenancy at will. 

What is a commercial lease?

A commercial lease is when you grant a business owner exclusive occupation of your property as their business premises. You can do so through a lease agreement, which is a contract, yet your tenant will also have an estate of land.