How to Use This Checklist
Click each checkbox to mark items as complete. Your progress is automatically saved to your browser. Use this checklist to verify every requirement before, during, and after creating your Commercial Property Licence.
✅ Preparing Your Commercial Property Licence
1. Before starting: Gather property details, both parties' information, and agreed licence fee
2. While completing: Verify every section against all 49 compliance points
3. Before signing: Check licence vs lease distinction is properly maintained, termination rights are clear, and insurance requirements are adequate
⚠️ Key Commercial Property Licence Requirements
📋 Legal Status: A licence to occupy grants personal permission to use premises without creating a tenancy. The critical distinction is that a licence does not grant exclusive possession — if it does, courts may reclassify it as a lease regardless of the label.
⚖️ Key Legislation: Street v Mountford [1985] (licence vs lease test), Landlord and Tenant Act 1954, and common law principles of licences.
🚫 Critical Requirements: Clear statement that no exclusive possession is granted, licensor retains right of access and control, licence is personal and non-assignable, and termination at will.
📝 Common Issues: Accidentally creating a tenancy by granting exclusive possession, failure to retain meaningful control over the premises, using lease terminology in a licence, and inadequate termination provisions.
🔵 Understanding Importance Levels
🔴 Critical: Must have — legally required or essential for enforceability
🟡 Important: Should have — protects your position and prevents disputes
🔵 Recommended: Nice to have — best practice for comprehensive coverage
Licensor's Full Legal Name
The property owner's or management company's registered legal name exactly as it appears at Companies House (for companies) or full legal name (for individuals). Essential for identifying who grants the license and for serving legal notices.
🔴 Critical
Licensor's Registered/Business Address
The registered office address (for companies) or correspondence address (for individuals). Required for legal notices and ensures licensee knows where to send formal communications. Must match Companies House records if applicable.
🔴 Critical
Licensee's Full Legal Name
The occupying business's or individual's full legal name. For companies, must match Companies House registration. For sole traders or individuals, full legal name as on ID documents. Critical for enforcing terms and pursuing any breach claims.
🔴 Critical
Licensee's Business/Correspondence Address
The licensee's registered office (for companies) or correspondence address. Essential for serving notices, particularly termination notices. May be different from the licensed premises address.
🔴 Critical
Full Property Address
Complete postal address of the licensed premises including building name/number, street, town, and postcode. Must be unambiguous and identifiable. For units within larger buildings, include unit/suite/floor number.
🔴 Critical
Detailed Property Description
Specific description of licensed space: office suite, desk position, room number, floor area, or workspace location. For flexible licenses (hot desks), describe the type of space rather than fixed location. Should match any attached floor plan.
🔴 Critical
Shared Facilities Specification
List of shared/common areas the licensee can use: reception, kitchen, meeting rooms, toilets, parking, lifts, corridors. Sharing facilities with licensor or other licensees reinforces license (not lease) status.
🟡 Important
Non-Exclusive Possession Statement
Clear statement that licensee does NOT have exclusive possession. The licensor retains the right to use the premises simultaneously or grant access to others. This is the fundamental distinction between a license and a lease under Street v Mountford [1985].
🔴 Critical
Licensor's Right of Access
Explicit right for licensor to enter premises at any time (or with reasonable notice). Unlike a lease, a license allows the licensor to retain control and access without needing consent. This right must be genuine, not just on paper.
🔴 Critical
Relocation Rights
Licensor's right to relocate the licensee to alternative premises within the building. This demonstrates licensor control and supports license characterisation. Must be a genuine right that can be exercised, not just theoretical.
🟡 Important
Services Provision
Statement that licensor provides services (reception, cleaning, maintenance, IT support). Providing services supports license characterisation - bare property rights suggest a lease. The more services provided, the stronger the license argument.
🟡 Important
Commencement Date
Clear start date when the license begins and licensee can take occupation. Essential for calculating fee payments, notice periods, and any break clause dates. Must be unambiguous (specific date, not "on completion").
🔴 Critical
Term Type Specified
Whether the license is: (a) Fixed term with specific end date, (b) Rolling/periodic (weekly, monthly, quarterly), or (c) Fixed term with break clause. Each has different termination rules. Rolling licenses are common for flexible arrangements.
🔴 Critical
End Date or Period Length
For fixed terms: specific expiry date. For rolling: the periodic interval (weekly, monthly, etc.). For break clauses: when break can be exercised. Critical for understanding duration of obligations.
🔴 Critical
Break Clause Details (if applicable)
If break clause included: when it can be exercised (e.g., after 6 months), notice required, any conditions (fees paid up, premises returned properly). Break clauses offer flexibility for both parties.
🟡 Important
⚡
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License Fee Amount
Clear statement of periodic fee amount (e.g., £1,500 per month). Should state whether this is exclusive or inclusive of VAT. For variable fees (e.g., based on usage), state calculation method clearly.
🔴 Critical
Payment Frequency
How often fees are paid: weekly, monthly, quarterly, or annually. Most commercial licenses are monthly in advance. Must align with rolling period if applicable. State clearly whether payment is in advance or arrears.
🔴 Critical
Payment Due Date
Specific date each period when payment is due (e.g., "1st of each month", "Every Monday"). Important for determining when late payment occurs and when termination rights arise for non-payment.
🟡 Important
VAT Treatment
Whether VAT applies to license fees. Commercial property licenses may be subject to VAT (20%) if licensor has opted to tax. Must state if fees are exclusive of VAT (VAT added) or inclusive, or if exempt. Critical for budgeting.
🔴 Critical
Deposit Requirements
Whether a deposit is required, amount (typically 1-2 months' fees), and conditions for return. Unlike residential tenancies, commercial license deposits don't need to be protected in a government scheme. State deduction rights for damage/unpaid fees.
🟡 Important
Fee Review Mechanism
Whether and how fees can increase: fixed for term, annual RPI/CPI increase, or open market review. For rolling licenses, may increase with notice. Important for licensee budgeting on longer agreements.
🔵 Recommended
Included Services List
Comprehensive list of what's included in the license fee: electricity, heating, water, cleaning, security, reception, internet, building insurance, refuse collection. Be specific to avoid disputes. Inclusion of services supports license characterisation.
🔴 Critical
Separately Charged Services
Services the licensee pays for directly or as extras: telephone, excess utilities, additional parking, premium meeting rooms. Avoid disputes by clearly distinguishing included vs extra charges.
🟡 Important
Business Rates Responsibility
Who pays business rates: licensee directly to council, included in license fee, or shared/apportioned. For small spaces within larger premises, licensor often includes in fee. For separate units, licensee typically pays directly.
🔴 Critical
Service Level Standards
Any commitments about service quality: cleaning frequency, reception hours, internet speed, maintenance response times. Not essential but helpful for managed offices. Can be in separate service level agreement.
🔵 Recommended
Permitted Use Description
Clear definition of what business activities are allowed on the premises. Must align with planning permission and any head lease restrictions. Be specific (e.g., "general office purposes for digital marketing services") but allow reasonable flexibility.
🔴 Critical
Prohibited Uses List
Activities explicitly NOT permitted: residential use, food preparation, retail, manufacturing, illegal purposes, anything causing nuisance. Important for protecting building use, other occupiers, and insurance compliance.
🟡 Important
Maximum Occupancy
Maximum number of people who can occupy the licensed space. Important for fire safety, building regulations, and facilities sizing. Also prevents overcrowding that could disturb other occupiers.
🟡 Important
Planning Compliance
Confirmation that permitted use complies with planning permission for the building. Licensee should not use premises for purposes that breach planning. Licensor typically warrants planning allows the stated use.
🔵 Recommended
Care and Maintenance Duties
Licensee's obligations to keep premises clean, tidy, and in good condition. Report damage promptly. Not cause damage beyond fair wear and tear. Important for preserving property value and ensuring smooth handover at end.
🔴 Critical
No Alterations Without Consent
Licensee cannot make alterations, additions, or attach anything to walls without prior written consent. Protects property and ensures licensor retains control. Even minor changes should require approval for licenses.
🔴 Critical
Health & Safety Compliance
Licensee must comply with all health and safety legislation, fire regulations, and building safety rules. Cooperate with fire drills. Not block fire exits. Report hazards. Essential for building safety and insurance compliance.
🔴 Critical
No Sub-Licensing
Licensee cannot sub-license, share occupation, or assign the license without consent. Maintains licensor's control over who occupies premises. Essential for license characterisation - leases commonly allow assignment, licenses typically don't.
🟡 Important
⚡
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Access Rights for Inspections
Licensor's right to enter premises for inspections, repairs, maintenance, and to provide services. Unlike a lease, licensor can retain meaningful access rights. State notice period if any (or that access can be at any reasonable time).
🔴 Critical
Emergency Access Without Notice
Right to access immediately in emergencies (fire, flood, security breach) without prior notice. Essential for safety and property protection. Must be genuine emergency right, not abused for routine access.
🟡 Important
Relocation Rights
Licensor's right to move licensee to alternative equivalent space within the building. Supports license characterisation by demonstrating licensor control. Should specify comparable space at same fee, with reasonable notice.
🟡 Important
Right to Make Alterations
Licensor's right to make alterations, improvements, or repairs to the building (with reasonable notice to licensee). Essential for building maintenance and development. Demonstrates licensor's continuing control over property.
🔵 Recommended
Building Insurance (Licensor)
Confirmation that licensor maintains building insurance covering structure, common parts, and landlord's fixtures. Usually included in license fee for managed offices. Licensee should verify coverage and note any excesses.
🟡 Important
Contents Insurance (Licensee)
Requirement for licensee to insure their own contents, equipment, and stock. Licensor's building insurance won't cover licensee's property. Should specify whether this is mandatory or recommended.
🟡 Important
Public Liability Insurance
Minimum public liability cover required (typically £2,000,000). Protects against claims from visitors, clients, or third parties injured on premises or by licensee's activities. Essential for most commercial occupiers.
🔴 Critical
Professional Indemnity (if applicable)
Whether professional indemnity insurance is required (typically for professional services firms). Specify minimum cover level if required. May be relevant depending on licensee's business type.
🔵 Recommended
Licensee Notice Period
Notice the licensee must give to terminate: typically 1 week to 3 months depending on license type. For rolling licenses, notice usually matches the periodic term (monthly license = 1 month notice). Must be in writing.
🔴 Critical
Licensor Notice Period
Notice the licensor must give to terminate. Can be different from licensee notice. Licenses typically allow shorter licensor notice than leases. Must comply with any statutory minimum (usually none for pure commercial licenses).
🔴 Critical
Immediate Termination Grounds
Circumstances allowing immediate termination without notice: non-payment (typically 14 days overdue), material breach, insolvency, illegal use, causing damage/nuisance. Protects licensor from serious breaches.
🔴 Critical
Handover Requirements
What licensee must do on termination: remove belongings, return keys/access cards, leave premises clean and in good condition, settle outstanding fees. Clear handover prevents disputes at end of license.
🟡 Important
Governing Law and Jurisdiction
Which country's laws apply (England & Wales, Scotland, or Northern Ireland) and which courts have jurisdiction. For UK commercial licenses, English law is standard. Essential for clarity if disputes arise.
🔴 Critical
Entire Agreement Clause
Statement that the written license contains all agreed terms and supersedes prior negotiations. Prevents parties claiming "but you promised..." based on earlier discussions. Standard protective clause.
🟡 Important
Notices Provisions
How formal notices must be delivered: by hand, recorded delivery, email. Addresses for service. When notices are deemed received. Critical for termination notices and other formal communications.
🟡 Important
Signature Blocks for Both Parties
Proper signature blocks for licensor and licensee with name, position (for companies), and date. License isn't binding until signed by both parties. Electronic signatures are legally valid. Both parties should retain signed copies.
🔴 Critical
⚡
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Next Steps
Now that you've reviewed the compliance checklist, you have three options:
✅ Use Our Ready-Made Template
Save hours of research and drafting. Our professionally-crafted Commercial Property Licence template covers all 49 compliance points with proper licence vs lease distinction, retained licensor control, non-exclusive possession provisions, and flexible termination rights. Available in both Smart Interview (guided) and Classic Editor (direct editing) modes for just £20.
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📝 Draft Your Own Commercial Property Licence
Use this checklist as your guide, but remember: the distinction between a licence and a lease is critical. If a court determines exclusive possession has been granted, the arrangement may be reclassified as a tenancy regardless of what the document is called, potentially granting the occupier security of tenure under the 1954 Act.
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Disclaimer: This checklist is for general informational purposes only and does not constitute legal advice. While we strive to keep information accurate and up to date, the law is complex and subject to change. Every situation is unique. This checklist applies to commercial property licences under England and Wales law. Last updated: May 2026.
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