Licences, Tenancies at Will & Leases

Q: Does a commercial lease have to be one formal signed document for CRAR?

The statutory wording is that the lease must be evidenced in writing. Whether the available documents are sufficient should be assessed from the actual written evidence.

Direct answer

Lease, licence or tenancy at will?

A lease normally gives the occupier a legal or equitable tenancy in the premises. A licence gives permission to use premises without creating an estate in land. A tenancy at will is a tenancy that continues only for so long as both landlord and tenant are willing for it to continue.

The practical problem is that documents do not always match reality. An agreement called a “licence” may operate as a tenancy if its substance grants the rights associated with a tenancy. Conversely, exclusive occupation does not automatically produce a tenancy in every exceptional situation.

Key differences

Commercial lease vs licence to occupy vs tenancy at will

The correct classification depends on the agreement, the rights actually granted and the way the premises are occupied.

Comparison of commercial leases, licences and tenancies at will
Issue	Commercial lease	Licence to occupy	Tenancy at will
Nature of right	Tenancy / estate or equitable interest in land.	Personal permission to use premises without a tenancy, if genuinely a licence.	A tenancy continuing only while both parties remain willing.
Exclusive possession	Usually a major indicator of a tenancy.	A genuine licence usually does not confer the same exclusive possessory right as a lease.	May involve exclusive possession, but the arrangement remains terminable at will.
Fixed term	Common, though periodic tenancies also exist.	Can be time-limited, but duration alone does not turn it into a lease.	No fixed contractual term in the ordinary sense; it ends when either party determines the will.
1954 Act security	May apply to qualifying business tenancies unless excluded, contracted out or another statutory exception applies.	A genuine licence is not a tenancy and does not itself obtain Part II security.	A genuine tenancy at will is outside Part II protection ( Wheeler v Mercer ; Hagee (London) Ltd v AB Erikson and Larson ). The practical risk is recharacterisation: prolonged occupation, rent acceptance and the parties’ conduct may indicate that the arrangement is no longer genuinely at will and may instead amount to a periodic tenancy capable of attracting statutory protection.
CRAR capable?	Potentially yes, if all CRAR conditions are met.	No, not merely because licence fees are unpaid. CRAR requires a lease.	Potentially yes: section 74 expressly includes a tenancy at will, provided it is evidenced in writing and the other CRAR conditions are met.
Possession route	Depends on lease terms, breach, expiry, 1954 Act status, forfeiture rights and occupation.	Depends on the licence terms, revocation/expiry and whether the arrangement is genuinely a licence.	Often capable of determination at will, but facts and documentation should be checked before possession action.

Commercial Rent Arrears Recovery

Why occupation status matters for CRAR

CRAR is statutory. It cannot be created by agreement where the statutory conditions are absent.

1. There must be a lease

Section 72 gives CRAR to a landlord under a lease of commercial premises. A genuine bare licence does not meet that starting point.

2. “Lease” is deliberately broad

Section 74 includes a tenancy in law or equity, including a tenancy at will. A tenancy at sufferance is expressly excluded.

3. The arrangement must be evidenced in writing

The legislation does not simply say “signed formal lease”. It says the lease must be evidenced in writing, so the documents and surrounding written record matter.

A common mistake: “tenancy at will means CRAR cannot be used”

That is too broad. A tenancy at will is expressly included in the statutory definition of lease for CRAR. The real questions are whether a genuine tenancy at will exists, whether it is evidenced in writing, whether the premises are commercial for CRAR purposes, whether qualifying rent is due and whether all other statutory conditions are satisfied.

View CRAR service Read the CRAR legal guide

Security of tenure

Landlord and Tenant Act 1954: do not decide protection from the document title

Part II of the 1954 Act is concerned with qualifying business tenancies. The legal status of the occupation therefore matters before a landlord assumes that renewal rights do — or do not — exist.

Business tenancies

Section 23 of the Landlord and Tenant Act 1954 applies Part II, subject to the Act, to a tenancy where the premises are occupied by the tenant for the purposes of a business. A qualifying tenant may have statutory continuation and renewal rights unless the tenancy falls outside the regime or has been validly contracted out.

Government guidance describes contracting out as the process by which a landlord and future tenant agree, before the lease is granted and using the required formalities, that statutory renewal rights will not apply.

Exclusive possession

Why “licence” on the front page may not be enough

Control of the premises

Who can exclude others? Can the occupier exclude the landlord except for limited contractual rights of entry? Those facts can be important.

Reality of reserved rights

A clause giving a landlord broad access or sharing rights will not necessarily decide status if those rights are artificial and inconsistent with the real arrangement.

Substance over terminology

Words such as “licence fee”, “licensee” or “permission to occupy” are relevant drafting, but they do not conclusively override the legal substance of the occupation.

Ending occupation

The possession route changes with the legal status

Before locks are changed, notices are served or enforcement is mobilised, identify what right is actually being brought to an end.

Identify the agreement

Lease, licence, tenancy at will, expired lease, holding-over arrangement or another status.

Check termination rights

Review expiry, notice, contractual termination, forfeiture provisions and any statutory continuation rights.

Check occupation

Who is physically present, what part is occupied, whether residential use exists and whether third parties are in occupation.

Select the route

CRAR, forfeiture, notice/service, negotiated surrender, possession proceedings or another appropriate process.

Do not treat “licence expired” as automatic authority to change the locks

If the arrangement has in substance created a tenancy, or the occupier's status is disputed, relying only on the document heading can create significant risk. Status should be resolved before an operational possession step is taken.

Common commercial risks

Where landlords and managing agents get caught out

Long-running “temporary” occupation

A short interim arrangement can become harder to classify where negotiations drag on, rent is accepted and the parties' conduct changes.

Informal written evidence

Emails, heads of terms, invoices, rent demands and correspondence may become important when deciding what arrangement exists and whether CRAR's writing requirement is met.

Mixed commercial and residential use

CRAR requires a lease of commercial premises. Under section 75, the premises are not commercial premises if any part of the demise is let or occupied as a dwelling, subject to the statutory exceptions for residential letting or occupation in breach of the relevant lease. Separately demised units may require their own analysis.

Accepting rent after expiry or breach

Post-expiry or post-breach conduct can affect the landlord's position. Do not assume that continued payment and acceptance are legally neutral.

Licence fees mistaken for CRAR rent

Calling a payment “rent” or “licence fee” is not enough. CRAR depends on the statutory lease/rent framework, not the invoice label.

Forfeiture and CRAR used interchangeably

CRAR is primarily a rent-recovery remedy used while the lease subsists, although section 79 preserves it after the lease ends in limited circumstances. Forfeiture is a possession remedy that ends the lease. The routes have different legal effects and should not be selected as if they were interchangeable.

Related commercial property routes

Where to go next

Rent recovery

Commercial Rent Arrears Recovery

Eligibility, notice, fees and instruction route for qualifying commercial rent.

CRAR service

Possession

Commercial Lease Forfeiture

Recovering qualifying commercial premises where a right of re-entry has arisen.

Lease forfeiture

Lease breach

Section 146

Notice issues commonly arising before forfeiture for non-rent breaches.

Section 146 guidance

Decision guide

CRAR or Forfeiture?

Compare payment recovery with possession and the consequences of selecting each route.

Compare the routes

Non-rent sums

Service Charge Arrears

Why commercial service charges are not generally recoverable through CRAR.

Service charge recovery

Goods

Goods Left Behind

Torts notices and practical management of goods remaining after possession.

Torts package

Primary sources

Legislation and authority

Tribunals, Courts and Enforcement Act 2007 — sections 72 to 75

Legislation.gov.uk — CRAR, landlord, statutory definition of lease and commercial premises.

Landlord and Tenant Act 1954 — Part II

Legislation.gov.uk — security of tenure for qualifying business tenancies.

Wheeler v Mercer [1957] AC 416

Authority for the orthodox position that a genuine tenancy at will is outside Part II of the Landlord and Tenant Act 1954.

Hagee (London) Ltd v AB Erikson and Larson [1976] QB 209

Applied the same approach to an express tenancy at will and reinforces that the real risk is recharacterisation rather than Part II protection of a genuine tenancy at will.

Street v Mountford [1985] UKHL 4

BAILII judgment — leading authority on the distinction between a tenancy and a licence and the importance of substance over label.

Government business-lease guidance

GOV.UK — renewal, ending and contracting-out guidance for business leases.

Frequently asked questions

Commercial occupation FAQs

Can CRAR be used against a tenant at will?

Potentially, yes. Section 74 of the Tribunals, Courts and Enforcement Act 2007 expressly includes a tenancy at will within the meaning of “lease” for CRAR. The arrangement must be evidenced in writing and all the other CRAR conditions must also be met.

Can CRAR be used against a licensee?

Not merely because money described as rent or a licence fee is unpaid. CRAR begins with a landlord under a lease of commercial premises. If the arrangement is genuinely only a licence, that statutory starting point is absent.

Does a commercial lease have to be one formal signed document for CRAR?

The statutory wording is that the lease must be “evidenced in writing”. Whether the available documents are sufficient should be assessed from the actual written evidence rather than assuming that only one form of document can ever satisfy the requirement.

If the agreement says “licence”, is it definitely a licence?

No. The legal effect depends on the substance of the arrangement. The courts can look beyond the label, including at exclusive possession, the agreement as a whole and the surrounding circumstances.

Does a genuine commercial licence have 1954 Act security of tenure?

A genuine licence is not a tenancy and does not itself attract Part II business-tenancy security. The risk arises where an arrangement described as a licence is in substance a tenancy.

What is a tenancy at sufferance?

It is a distinct holding-over status arising in particular circumstances after a tenancy has ended. For CRAR, section 74 expressly excludes a tenancy at sufferance from the statutory definition of lease.

Can a landlord simply change the locks when a licence ends?

That should not be assumed from the document heading alone. The actual legal status, termination provisions, occupation and any dispute should be checked before possession action is taken.

When should a solicitor be involved?

Legal advice is sensible where status is disputed, the arrangement is informal or long-running, the 1954 Act position is unclear, there is residential or mixed use, or the proposed possession route could be challenged.

Operational review

Reviewed by Craig Whinray

Craig Whinray is Director of UK Bailiff Services Ltd and a Certificated Enforcement Agent with more than 20 years' frontline enforcement experience.

This guide is reviewed from an enforcement and commercial-property perspective. It explains operational consequences of occupation status but does not determine legal status or replace advice from an appropriately qualified solicitor where the position is disputed or uncertain.

Editorial owner: UK Bailiff Services Ltd · Last reviewed 4 October 2026 · Review following material legal or operational change and at least annually.

Commercial occupation problem?

Tell us what the occupier has, what they owe and what outcome you need.

Send the agreement or written evidence, payment history, occupation details and the outcome required. We can identify the apparent enforcement or possession route and tell you what further information is needed before an instruction can be accepted.

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