Posted on: 23 May 2016

A licence could be a benefit to a start-up or small business looking for a short term property solution. Typically a licence will be available for buildings occupying a number of businesses, but they are generally more flexible, offering contracts for a period of one year or less and can usually be terminated at short notice

“It’s flexible and can be a good way to get an indication as to whether your business would flourish in a certain area.” says Paul from RICS (Royal Institution of Chartered Surveyors).

You should consider the fact that a licence gives you no automatic right to renew once it has expired and that it is technically not a tenancy agreement (it requires no rental payments but rather a licence fee or series of fees).

 “The disadvantage is that regardless of how well you have been trading from the property, you may have no rights to stay if the licensor wants the building back.” adds Jonathan from Talkspace Group

Tip:  Terms vary considerably with licences so you should check how often your licence fee needs to be paid so you can factor this into your business finance plans.

Some of the advantages and disadvantages of taking a license

Advantages

Disadvantages

Licences cover a short period of time (usually 12 months and under) and most licences require just a months’ notice to terminate should you change plans – ideal for making a move from the home office

You do not have any tenancy rights and no rights to renew the licence

Licences are generally inexpensive and don’t require large upfront fees. You are usually asked to put your first month down

Short notice termination also applies to the landlord, the notice is usually one month but this means you can be asked to leave the premises at any time

The landlord is responsible for insuring the premises and for repairs/ maintenance to the building

You are not usually allowed to alter any part of the premises for business needs

 

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