Licences for “Pop-Up Shops” Over the Christmas Period
Commercial property solicitor Trethowans examines legal aspects of Pop-Up Shops
It is now less than three months until Christmas but many of us will not start thinking about shopping for a few weeks yet. However, retailers have been planning for Christmas for most of the year as it is usually their most profitable period.
When you do decide to start your Christmas shopping, what you will see is a number of temporary shops opening up on the high street. These 'pop-up shops' are only there to take advantage of the significant increase in sales during the build-up to Christmas and will disappear very quickly after the January Sales.
When is a licence not a licence?
When considering a short term let, the temptation is to use a licence to occupy as it does not attract Stamp Duty Land Tax, there are no security of tenure rights and the arrangement can be terminated by either party at any time. However, an agreement to occupy will not be a licence if it grants exclusive possession for a fixed term. This is usually the case when dealing with the letting of a retail unit. Consequently, if a licence is actually a lease then the tenant could acquire security of tenure rights and have the right to renew the tenancy at the end of the term.
Landlords should therefore proceed by way of a fixed term lease with an option to break by either party at any time.
Leases for a term of less than six months do not have security of tenure unless:
• The lease contains provisions for renewing the term or extending it beyond six months; or
• The tenant has been in occupation for a period which exceeds twelve months (and this includes occupation by a previous tenant carrying on the same business as the current tenant).
To avoid any potential issues, the short term pop-up shop lease should be contracted out of the security of tenure provisions contained in the Landlord and Tenant Act 1954.
Meanwhile use leases
Meanwhile use leases were introduced in December 2009 as part of the “Community and Local Governments Meanwhile Project”. The idea is to encourage the temporary occupation of vacant retail units by organisations such as charities, artists, musicians and other community projects.
In return for leasing the premises rent free, the landlord avoids having to pay empty property rates and ensures that the premises are maintained. The landlord can continue to market the property and, once a commercial tenant has been found, he can terminate the meanwhile use lease.
There are three templates available for meanwhile use leases and they can be downloaded free of charge from the Communities and Local Government website (www.communities.gov.uk)
For more information about Commercial property solicitor Trethowans and the services they provide, visit the Trethowans website at http://www.trethowans.com/
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Page Updated Last on: Mar 22, 2011