A guide to licences and leases for office spaces

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A guide to licences and leases for office spaces

There is no denying the fact that work takes up a substantial part of our everyday life. On average, we spend about 30% of our time at work, meaning that it is part of our every day in the same way that spending time with family is. It directly impacts our motivation, enjoyment and wellbeing. But looking at it from another perspective, it also has a huge impact on the figures in the balance sheet.

One of the most daunting things for company managers is to find a new office for their company. This is especially the case when they are busy with various other aspects of their work, which demand time and attention. Without a universal approach to employ, it is best to always be familiar with some of the basics, in order to handle the job without too much stress. The space committed for work is relevant because it enables the retention of the top-tier workforce.

Pick the right office space

Committing to an office space is not always easy, especially if the person doesn’t have a clear idea of what license and lease are, as well as the major differences between them. These are important terms to take note of, and getting them confused is a big mistake. In the following guide, we will go over each of the terms and what makes them important.

All about licence

A lease is essentially an agreement, which enables one to occupy a space for a flexible amount of time. It could be anywhere between a few months and a few years. This enables for licences to be drawn quickly and enable fast commitment. They are ideal for serviced offices or in case someone wants to rent out the spare desks at an office within another main workspace owned by someone else.

  • The pros – the main benefit of licences lies with the option to move out quickly. With a short notice period, the contract allows the person to scale their needs and act quickly if they require more or less space depending on that. The costs are all-inclusive, be it per desk/month, or a total cost per month. This makes it much easier to budget for. The work environment that licences enable is one of socialisation and collaboration. The timeline to occupation is usually very short – between 1 and 4 weeks.
  • The cons – tenants don’t have the luxury of long-term security of the office space with licences. The landlord can serve them a notice at any time. Tenants are also not allowed to alter the space in any major way.

lease and license - office space

All about leases

In regards to leases, there is always a time commitment that comes with them. They come with exclusive occupation, as well as a specified rent. It is not easy to terminate a lease before its expiry period unless there is some sort of a break clause. When negotiating the terms, tenants will often require specialist advice in order to avoid mistakes and ensure they get the best terms. Leases are mostly a good long-term solution.

  • The pros – gives tenants an agreed rent and security of office space for the future. The tenant can often sublet parts of the space, as long as they negotiate the terms correctly. Overall costs can be smaller if the office space is committed to for the long run. The tenant gets exclusive occupation and can make significant alterations to the office space.
  • The cons – there can be major up-front and back-end costs, such as fit-out costs, agent’s fees, dilapidations, etc. The timeline for occupation is binding for a bigger period of time.

© Occupa Commercial Property Consultants

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