What is the difference between Lease and Let?
Commercial leases have terms that exceed 7 years. In addition, leased office space grants tenants the right to exclusive possession. In other words, tenants can determine who is allowed into their property and under which conditions. Letting agreements have a duration of 3 years or less, do not entail exclusive possession, and stipulate that the landlord is responsible for repairs.
Sooner or later, the majority of business owners and first-time office occupiers will have to decide between the different types of business tenancies available. Most of the time, this means choosing between a lease and a let. The difference between these two types of tenancies goes beyond pure terminology and involves legal and practical aspects.
Generally speaking, one of the main differences between a lease and a let is the duration of the rental agreement. Leases are generally longer, as they cover a period of 7 years or more. In the United Kingdom, 99-year leases are common, although commercial properties are often leased for periods of 10 years. On the other hand, letting agreements usually have a maximum length of 3 years. But more importantly, these two types of tenancy agreement differ from each other in the type of rights they bestow on tenants.
Leased office space gives tenants a number of property rights. As per UK law, after 7 years leased property has to be registered with the Land Registry. Doing this gives tenants exclusive possession rights, which is one of the fundamental aspects of lease agreements. Exclusive possession entitles tenants to determine who can access and use the leased business premises, including the property's landlord, who must request permission and give adequate notice to enter the premises unless a contract clause says otherwise. This also means that tenants are able to determine what constitutes trespassing in their leased property. However, whenever exclusive possession rights apply, both tenants and landlords are required to be reasonable in granting access to business premises. Exclusive possession rights are not part of letting agreements.
Another important difference between a lease and a let has to do with who is responsible for repairs and for the expenses associated with the general upkeep of a commercial property. According to Section 11 of the Landlord and Tenant Act of 1985, landlords are responsible for carrying out any necessary repairs to the exterior and interior of a rented property, as long as the lease terms are under 7 years. This includes anything from foundations to boilers. If a commercial property has been leased for 7 years or more, the lease agreement will stipulate who is responsible for carrying out repairs.
Both lease and letting agreements limit the use of business premises to a specific purpose, and require tenants to seek permission from the landlord should they want to make changes in this respect or to carry out structural alterations.
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