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WHAT IS A COMMERCIAL TENANCY?
A Commercial Tenancy Agreement is similar to a lease, it is a legally binding written contract, which grants you exclusive possession of a property for business or commercial activity for an agreed period; or premises within a building complex. This includes properties such as office buildings, industrial space, restaurants, retail shops, and warehouses across England, Wales, Scotland, and Northern Ireland.
WHAT IS AN ORAL TENANCY?
WHAT FORMS OF TENANCIES ARE AVAILABLE?
Many tenancies can often fall into a grey area, where rights and responsibilities are not always black and white, here we explore different forms of tenancies.
This is a rolling tenancy contract (either on a monthly or quarterly basis); where an original commercial tenancy has come to an end. This kind of agreement can also arise when you move into a business as a contract is being drawn up, but for whatever reason, the contract was never finalized. It’s worth noting that after a certain period of time, you may become entitled to certain rights and privileges as per the Landlord and Tenant Act of 1954.
License to Occupy
Most tenancies stipulate that the owner may not simply ‘come and go’ as they please. Visits must be pre-arranged and approved. But not with a ‘license to occupy’ tenancies. In this agreement, the landlord can co-occupy the business premises with you. It is imperative that you are happy with this form of agreement before you proceed.
A tenancy-at-will is a: "month to month" or "at-will" written agreement, often created at the beginning of the landlord-tenant relationship, giving either party the flexibility to change rental situations easily and without breaking a contract. One problem is that it can be terminated at any time by either the tenant or the owner/landlord.
An Estate-at-will is another name for a Tenancy-at-will.
In this type of agreement, a tenant may legally occupy a property after their lease expires, but before the landlord issues a notice to vacate. The tenant has thus overstayed their welcome.
Public House (or Pub) Tenancy
This is a fixed-term tenancy agreement (as per the Landlord and Tenant Act 1954); whereby you will rent the premises from a landlord (such as a brewery or a Public House Company). This is typically up to five years - with the opportunity to extend an agreement. Rent is subject to the annual Retail Prices Index (RPI) which is capped. The landlord will be responsible for the structure of the building, whilst you will be responsible for the upkeep and maintenance of the property. The rent in many instances can include fixtures and fittings, stock, glassware, crockery, cutlery, fuel, and other essential supplies. Should any of these need replacing or repaired, you will be solely responsible for ensuring this happens.
Sub-clauses (or sections):
'Break' clause - where you can end the tenancy agreement early, at any time, with six months' notice (or more) and will often require a fee equal to a defined number of months' rent;
'Full tie' clause - where you must purchase stock (e.g. ales and cider from the pub landlord, as well as other drinks) and may require you to use other associated services (e.g, accountancy services);
‘Partial tie’ clause - where a tenant has more freedom to purchase products from other suppliers;
Disclaimer: In some instances, a Public House (or Pub) can be owned by a private investor, entrepreneur, or capital investor who will operate the premises as part of their business portfolio. You can be self-employed, work in partnership, or might even be employed as a manager running the business on behalf of the owning company.
The franchisor-franchisee model can be more complicated; a franchisor typically will be involved in sourcing or assisting with property searches for franchisees, with suitable premises with the ability to trade. For further information, get in touch.
An oral agreement is between a landlord and you, the tenant, whereby a business rent is verbally agreed upon and keys are exchanged for the premises. The main problem we find with this form of tenancy is that it is difficult to enforce. If disputes arise, a court judge would need to hear evidence from both parties, and decide whose version of the story to accept. So, as ever in business, it's wise to proceed with caution if you want to have protected rights.