Pitfalls of Moving Office 2021 - Part 2

Step 2.

Last week I talked through the basics of exiting a leased office contract - which basically boiled down to either getting your timing right or paying out a lot of money. Today a quick note about exiting a license agreement.

I would also like to thank everyone that looked at or commented on the last post (and the person who pointed out the spelling mistake - you know who you are!) I'm going to try and keep this going with a bit of free advice but again I should say that this in my opinions based on my experience and not to be taken as gospel.

What is a License Agreement?

A license agreement differs from a lease in a number of ways - I'm not a solicitor so I won't go into the legal differences and I think the full list is worthy of a post in itself, but one thing to bear in mind is that you do not have the same protections as a tenant that a leaseholder has.

Leases can all be very different but tend to follow a vaguely standardised format, licenses whilst normally shorter and easier to read can all be very different, from a rolling weekly contract to a 2-year term, from an 'all-in' cost, to a rent only with additions for everything from booking meeting rooms to corkage to use your own internet provider. The key to licenses - as with leases is the wording of the contract.

The End Point

Some licenses will allow you to break under certain circumstances, but most are short enough to have a fixed start and end date and *most* fall away naturally at this point. This is always worth checking - I worked with a FTSE 250 company several years ago who were convinced that they would be able to move at the end of their license agreement with a serviced office provider. They clearly hadn't read their contract properly, hidden in the small print was an automatic roll-on clause. They ended up being tied into a contract for another 6 months at list price. If in doubt - get a solicitor or property professional to check, it's a costly mistake if you're wrong!

Because of the shorter nature of license agreements, you don't normally have the alienation options you have with lease - no subletting or assigning possible. Basically, you're stuck there to the end of your term, the key thing to remember is checking the wording of the contract and making sure you have served notice if required.

Next week onto the much more fun topic of planning the new office!

PS. The pics in this article are of 48 Russell Square - various spaces available, details here. https://www.theworkplacecompany.co.uk/48-49-russell-square.html