In order to instruct a bailiff company to issue CRAR (Commercial Rent Arrears Recovery), there needs to be a written lease in place.

CRAR applies to all tenancies of commercial premises, whether the tenancy is legal or equitable (including tenancies at will). However, the tenancy must be in writing for CRAR to apply. If the tenancy is unwritten, CRAR cannot be exercised.

Here we explain the difference between leases, licences and tenancies at will.

A Lease is a contract that grants a tenant the right to exclusive possession of a property for a fixed period in exchange for rent.

The tenant is responsible for the costs of all repairs, rates, taxes, outgoings, and insurance, unless expressly excluded. A business tenant would benefit from a statutory right to continue to occupy the premises after the tenancy has come to an end by virtue of Part II of the Landlord and Tenant Act 1954, known as 'security of tenure'

A licence to occupy is a type of agreement that allows a person or a business to use a property for a specific purpose, without having exclusive possession or ownership of it. A lease, on the other hand, is a type of contract that grants a tenant the right to occupy and use a property exclusively for a fixed period of time, usually in exchange for rent. A licence to occupy is different from a lease in several ways, such as:

• A licence to occupy does not create a landlord-tenant relationship, but a licensor-licensee relationship. This means that the licensor can enter the property at any time, and the licensee does not have any rights to the land or the property1.
• A licence to occupy does not grant security of tenure, which means that the licensee does not have the right to stay on the property after the expiry of the agreement, unless the licensor agrees to renew it. A lease, however, may give the tenant security of tenure under the Landlord and Tenant Act 1954, which means that the tenant can renew the lease or apply to the court for a new lease, unless the landlord can prove certain grounds for possession2.
• A licence to occupy cannot be transferred or assigned to another person, as it is a personal permission that depends on the identity of the licensee. A lease, however, can be transferred or assigned to another person, subject to the terms of the lease and the consent of the landlord
• A licence to occupy is usually for a shorter term than a lease, and it can be terminated more easily by either party. A lease is usually for a longer term, and it can only be terminated by following the terms of the lease or by mutual agreement of both parties4.

A licence to occupy can be suitable for some situations, such as when the property owner wants to share the property with the occupier, or when the occupier only needs the property for a temporary or flexible purpose. A lease can be more suitable for other situations, such as when the property owner wants to grant exclusive possession and security of tenure to the occupier, or when the occupier wants to have more control and stability over the property.

A tenancy at will is an agreement that allows a tenant to occupy a property without any fixed term or security of tenure.

A tenancy at will is a type of agreement that allows a person or a business to use a property for a specific purpose, without having exclusive possession or ownership of it. A tenancy at will can be terminated by either party at any time, without giving any notice or reason. A tenancy at will is usually used as a temporary or flexible arrangement, while a more formal lease is being negotiated or prepared. A tenancy at will has some advantages and disadvantages for both the landlord and the tenant, such as:

• Advantages: A tenancy at will allows both parties to have more freedom and flexibility, as they can end the agreement whenever they want. It also allows the tenant to occupy the property quickly, without having to sign a long-term contract or pay a deposit. It also allows the landlord to retain control and access to the property, and to avoid granting security of tenure or other rights to the tenant.
• Disadvantages: A tenancy at will does not provide any security or stability for either party, as they can lose the property or the income at any time. It also does not protect the tenant from rent increases or eviction, or the landlord from damage or non-payment. It also does not specify the terms and conditions of the occupation, such as the rent, the maintenance, the insurance, or the liability.