Sometimes A Lease Isn’t Actually A Lease…..

The landlord and the tenant have agreed, terms –  rent, rent reviews, break dates, etc the tenant moves in and gets cracking with its business.

Does it really matter if the arrangement is legally a lease? It’s easy to see why either party may not really think about it at that stage when the landlord wants the property occupied, with rental income coming in and the tenant just wants to get on with running a business.

But when the initial period is coming to an end it becomes extremely important for both the landlord and the tenant to know whether their arrangement is a lease or not. This is because the Landlord & Tenant Act 1954 allows tenants to request a new lease from the landlord and it makes it hard for the landlord to refuse.

Most of the time it’s clear cut when an arrangement is a lease and when it isn’t. Courts have been quite clear that it doesn’t matter whether you call an arrangement a lease or a licence – it is the substance behind the word that matters in deciding whether it’s a lease (which has the benefits of the Landlord & Tenant Act 1954) or a licence (which doesn’t). Courts have also emphasised the importance of a tenant under a lease being the only entity able to possess and occupy the property (lawyers call this “exclusive possession”) but a recent case (July 2025) has highlighted another key aspect: there must be a precise end date. The recent case involved an arrangement which was called a lease, was for a minimum period of 10 years but after that 10 years, could then be ended on 12 months’ notice.

In this recent case (AP Wireless II (UK) Ltd v On Tower (UK) Ltd)  it was the landlord who wanted the arrangement to be a lease because then the landlord could get a higher rent (it was a dispute to do with mobile phone masts so the Electronic Communications Code would apply if the arrangement was not a lease) but in most other cases I think it will be the tenant who will benefit if the arrangement is a lease. The landlord tried to argue that after the initial 10 years, the arrangement transformed into a periodic rolling arrangement but the court disagreed. The court said – at the point the arrangement was first made, there was no certainty as to when the arrangement would end and therefore it was a licence not a lease.

It’s really important to get legal advice before signing up to a lease.

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