Tenancy at Will for Landlords UK

What Is a Tenancy at Will?

A tenancy at will exists where a person occupies land with the owner's permission and that permission can be withdrawn at any time, without notice, by either party. It is 'at will' because it lasts only as long as both parties are willing — the tenant can leave at any time and the landlord can demand possession at any time. Unlike a fixed-term tenancy (which ends on the term date or earlier by break clause) or a periodic tenancy (which requires a notice period to end), a tenancy at will can be ended instantaneously. For a tenancy at will to be genuine, the arrangement must not have any of the characteristics of a periodic tenancy: there must be no requirement to pay rent at periodic intervals, no fixed term that has not yet expired, and the arrangement must be genuinely interim and revocable. The arrangement is typically documented in a short letter or email agreement.

• Definition: tenant in occupation with landlord's consent; either party can end the arrangement immediately and without notice
• No fixed term: a tenancy at will has no defined end date — it continues until determined
• No periodic obligation: genuine tenancy at will does not require periodic rent payment — any payments should be expressed as licence fee or mesne profits, not rent
• Revocable by either party: landlord can demand immediate possession; tenant can vacate at any time — no notice period on either side
• Typically interim: most commonly arises when negotiating a new lease or when an existing lease has expired and renewal is under discussion

When Does a Tenancy at Will Arise?

Tenancies at will arise most commonly in three commercial scenarios. First, where a landlord permits a new tenant to go into occupation of business premises before the new lease has been executed — both parties intend to enter into a formal lease but the tenant wants to start fitting out or trading before all terms are agreed. Second, where an existing fixed-term lease has expired and the tenant holds over with the landlord's consent while the parties negotiate renewal under LTA 1954 Part II or outside it. Third, where a landlord allows a buyer to take early occupation of a commercial property before completion of the purchase. In each case, the critical factor is whether the arrangement is genuinely at will — a court will look at all the circumstances, not just the label the parties apply. A tenancy expressed to be 'at will' that in practice requires monthly rent payments may be characterised as a periodic tenancy.

• Pre-lease occupation: tenant enters premises during lease negotiation — documented as tenancy at will to avoid inadvertently granting security of tenure
• Holding over: existing tenant's lease expires; parties negotiating renewal; tenant remains in occupation with consent — at will until new terms agreed
• Pre-completion occupation: buyer permitted early occupation before purchase completion — at will to avoid creating a tenancy in the interim
• Implied at will: even without express agreement, a tenancy at will can arise by implication from the circumstances
• Hagee (London) Ltd v AB Erikson and Larson [1976] QB 209: Court of Appeal confirmed that a tenant in occupation under an arrangement genuinely at will has no security of tenure

The Critical Risk — Inadvertent Conversion to Periodic Tenancy

The greatest risk for commercial landlords using a tenancy at will is inadvertently converting it into a periodic tenancy by accepting rent on a periodic basis. Where a landlord accepts monthly payments of a regular sum from a business tenant in occupation, a court may find that the arrangement has ceased to be genuinely at will and has become a monthly periodic tenancy — which carries LTA 1954 Part II security of tenure and requires a valid s.25 notice to terminate. The test is objective: whether a reasonable person would understand the occupation to be at will or on a periodic basis. Key risk factors are: regular monthly payments of a fixed sum; continuing occupation for an extended period (months or years) without any new written agreement; absence of any documentation recording the at-will nature of the occupation. To preserve the at-will characterisation: document the arrangement in writing; express any payments as 'mesne profits' or 'licence fee' rather than 'rent'; and do not allow the arrangement to continue indefinitely without progressing towards a formal lease.

• Conversion risk: accepting rent monthly from a business tenant in at-will occupation may convert the arrangement to a monthly periodic tenancy
• Monthly periodic tenancy: would attract LTA 1954 Part II security of tenure — landlord must serve valid s.25 notice to recover possession
• Objective test: court looks at all circumstances, not just the label applied by the parties
• Preserve at-will: document arrangement in writing; express payments as mesne profits not rent; avoid extended continuation without new lease
• Maximum duration: a tenancy at will should be genuinely short-term; if negotiations are protracted, consider whether a short excluded tenancy (with s.38A procedure) would be safer

Tenancy at Will vs Contracted-Out Tenancy

Landlords sometimes face a choice between allowing a tenant into occupation on a tenancy at will basis versus granting a short excluded tenancy (contracted out of the LTA 1954 under s.38A and the RRO 2003). The tenancy at will has the advantage of simplicity — no warning notice, no declaration, no formal deed — and terminates without notice. The contracted-out tenancy is more robust: the documentation makes it clear exactly when the tenancy ends and that there is no security of tenure. The risk with a tenancy at will is the conversion to a periodic tenancy described above. For pre-lease occupation lasting more than a few weeks, a short excluded licence to occupy or excluded tenancy is often preferable to relying on a tenancy at will characterisation. Where the parties genuinely expect to agree a new lease quickly, a tenancy at will with good documentation and no periodic rent payments is appropriate.

• Tenancy at will: no formalities; terminates without notice; no LTA 1954 protection — but vulnerable to periodic tenancy conversion
• Contracted-out tenancy: warning notice and declaration required (RRO 2003); clear end date; no security of tenure risk — but requires formalities
• Licence to occupy: alternative approach; genuine licences (not tenancies — Street v Mountford test applies) carry no LTA 1954 protection
• Practical choice: for very short pre-lease periods (2–4 weeks), tenancy at will with clear documentation is appropriate; longer periods warrant excluded tenancy
• Document clearly: always record the at-will basis in writing; state that any payments are mesne profits; set a review date for progressing the formal lease

LTA 1954 and Tenancy at Will — Scotland

The Landlord and Tenant Act 1954 Part II applies only in England and Wales. A tenancy at will in the commercial property context in Scotland is not well-established as a formal legal category under Scots law. Scottish commercial tenancies are governed by common law and any lease terms agreed between the parties. Unlike England and Wales, there is no general statutory right to renewal for business tenants in Scotland — commercial leases simply expire on their contractual date (subject to any tacit relocation provisions that continue the lease on the same terms if neither party gives notice to quit). The concept of 'holding over' under a tenancy at will to avoid inadvertently creating a statutory periodic tenancy is therefore not a concern in Scotland in the same way. Scots landlords should be alert to tacit relocation — where a lease expires and neither party gives notice, the lease may continue on the same terms for a further year.

• LTA 1954: applies only in England and Wales — tenancy at will as a device to avoid security of tenure has no equivalent importance in Scotland
• Scots commercial leases: expire on contractual date unless continued by tacit relocation — no general statutory right to renewal for business tenants
• Tacit relocation: if a Scottish commercial lease expires without either party giving 40 days' notice (or the notice required by the lease), the lease continues on the same terms for a further year
• NI: Business Tenancies (NI) Order 1996 — equivalent to LTA 1954; tenancy at will principles likely to apply similarly in a Northern Irish commercial context
• Welsh commercial property: LTA 1954 Part II applies in Wales on the same basis as England — all above guidance applies

Frequently asked questions