Often when a landlord has a vacant property, in order to preserve an income, the landlord will allow a proposed tenant into occupation before a formal lease or tenancy agreement is drawn up.
In these circumstances, unless properly documented, the landlord will create an arrangement with the occupier that can be difficult to terminate. Depending on the terms agreed between the landlord and occupier, the basis of occupation can be in the form of a licence to occupy, a tenancy at will, or a periodic tenancy.
A licence to occupy is generally a personal agreement between a landlord and occupier for non-exclusive use of the land for a short period of time. Where a licence to occupy has been created, the landlord is entitled to revoke the licence at any time and the occupier will have to vacate the premises.
Often a landlord will grant exclusive use of property to an occupier, while the terms of a tenancy are being negotiated, or renegotiated following the expiry of an existing agreement. Where the landowner grants the occupier exclusive use of the land on this basis, in return for payment of a rent, there is a presumption that this arrangement will create a tenancy at will, which can be terminated at any time by either party.
Where a landlord grants an occupier exclusive possession in return for a rent, a periodic tenancy is created. A periodic tenancy provides greater protection to the occupier, as a landlord cannot terminate the tenancy without providing notice. Furthermore, without a documented tenancy agreement, the landlord may be unable to control use of the premises, or alienation. The occupier, under that arrangement, would have the ability to assign the premises to anyone of their choosing. Further, where a periodic tenancy is created, the Landlord and Tenant Act 1954 requires a landlord to give between 6 and 12 months’ notice of termination and the right for the tenant to acquire a new lease unless specified grounds of objection (such as disrepair, arrears of rent and other breaches of covenant) can be proved by the landlord.
Before granting occupation of your premises to anyone, it is vital that a written document, prepared by a specialist lawyer, is in place. Recovering your premises without a written document in place can be a far more expensive and stressful process.