Office licence vs lease: what you are actually signing
A serviced office agreement is a licence to occupy, not a lease. It is a genuinely different legal animal, and the differences decide how easily you can leave, what you owe at the end, and what happens if the operator fails.
The distinction
Exclusive possession is the dividing line
A lease gives you exclusive possession of a defined space for a defined term — an interest in land. A licence gives you permission to use space that remains in the operator's possession. In a serviced building the operator retains control of the floor, can in principle move you to an equivalent room, and provides services alongside the space. That is why what you sign is a licence.
The practical consequence is security of tenure. Business leases usually attract protection under the Landlord and Tenant Act 1954, which gives you a statutory right to renew. A licence does not. When the term ends, it ends, unless both sides agree otherwise. That is the trade you make for a five-page agreement and a one-month notice period instead of a five-year commitment and a dilapidations liability.
It also affects your accounts. Short, service-inclusive licences are generally treated differently from long leases under IFRS 16 and FRS 102 — worth a five-minute conversation with your accountant before you sign a twenty-four month term.
Side by side
Licence to occupy compared with a commercial lease
| Area | Indicative typical term (months) | What you get |
|---|---|---|
| Licence to occupy | £1–£24 | Service-inclusive, deposit of one to three months, notice of one to three months, no security of tenure, no dilapidations in most cases. |
| Managed office agreement | £24–£60 | Your own space and branding, single monthly bill, break options negotiated individually, may or may not be contracted out of the 1954 Act. |
| Commercial lease | £36–£120 | Rent plus rates, service charge, insurance and utilities separately; rent deposit; dilapidations at the end; security of tenure unless contracted out. |
Prices shown are indicative market estimates for guidance only, based on typical flexible workspace rates for this area. They are not quotes. Live availability and actual pricing are confirmed on enquiry — call us and we will benchmark real options for your team size and move-in date.
Read for these
Clauses worth ten minutes of your time
- Notice period, and whether it is calendar months from the anniversary
- The relocation clause — can the operator move you, and to what standard of space
- What happens if the operator loses its own lease on the building
- Renewal uplift mechanism and any cap
- Whether the deposit is held separately and the return timeline
- Personal guarantee — very common for new companies, and often removable
- Restrictions on registered office use, signage and out-of-hours access
- Service failure remedies if the internet or the lift is down for days
Frequently asked questions
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Important: where this page uses the words “rent”, “rental”, “lease” or “let” to describe workspace, those terms are used for descriptive and search purposes only. The agreement offered by flexible workspace operators is a licence to occupy, not a lease or tenancy, and it does not confer security of tenure under the Landlord and Tenant Act 1954. Prices shown are indicative estimates, not quotes or offers.