McGuireWoods London partner Callum Hassall authored a Nov. 14, 2024, article in Property Week — the UK’s leading publication for commercial and residential property market news — outlining why corporate occupiers should pay close attention to operators’ standard terms and conditions for flexible working space.
“With demand for best-in-class space high, there is often little room for negotiation, putting occupiers under pressure to act quickly or risk losing out,” wrote Hassall, who leads McGuireWoods’ London real estate team. Many occupiers agree to terms “without fully understanding the implications, particularly regarding their occupational rights and the practical consequences that may arise.”
In the article, Hassall explained key differences between a lease and a licence to occupy and how the distinctions apply in practice. A lease typically gives an occupier “more security and control over a space,” Hassall noted, with more flexibility to make alterations to a space, for example. Hassall also pointed out that “most licences give the operator and the occupier a right to terminate on short notice and have less onerous conditions.” In addition, Hassall highlighted how a lease and licence are treated differently for stamp duty land tax purposes — “a licence to occupy is exempt from the stamp duty land tax, whereas a lease is not.”
“Before signing any agreement for a flexible workspace, occupiers must consider how they plan to use the space both now and in the future as their business evolves,” Hassall wrote. “Any concerns or uncertainties should be addressed directly with the operator before committing to ensure that the arrangement provides the right amount of flexibility or control an occupier requires.”