A lease is quite often a significant obligation on the part of businesses. It is both a financial commitment, and a time commitment.
Traditionally, the majority of the time, a business would look for security of tenure, and a landlord for a long-term tenant.
The lease was an appropriate arrangement suiting the needs of both parties equally.
However, an insistence on occupancy by way of a lease on the part of landlord prevents businesses from engaging in more experimental ventures.
With smaller or newer businesses particularly, risks cannot be taken with their business model when they have rent to pay for the coming fortnight; and so rental obligations may push them into a certain conservatism with their business, a reluctance to try different things and be different, for fear of insolvency.
Such risks are often mitigated with a Licence to Occupy affords an occupant many of the same rights as a lessee or tenant under a Lease, though usually for the short-term.
There are other legal distinctions between a lease and a licence, a summary of which can be found below, though the primary difference of interest in a commercial sense is the greater scope of risk-taking a business may undertake with a licence to occupy.
For a more detailed discussion of the commercial and legal differences between these two types of property law agreements please refer to our blog article “Licences to Occupy - A viable Alternative to Leases?" [coming soon] by Suk Jae Chung | Virtual Intern at Blue Ocean Law Group℠.