Exploring the Differences Between a Licence and a Lease

What is a Licence?

A licence allows the tenant (licensee) to use an office space granted by the owner (licensor) at a flexible duration. Unlike a lease, a licence doesn’t confer exclusive possession rights. It's akin to renting a coworking space where you lack full control of the workspace.

Moreover, a significant difference between lease and licence is that the latter generally lacks the equivalent legal protections present in a lease agreement. Yet, in terms of flexibility, a licence offers more adaptability than a lease. 

Coworking spaces often fall under licence agreements. They are much more flexible regarding terms of agreement, making it much easier to scale up or downsize your business when renting a shared office, coworking space, or private workspace.

What is a Lease?

A lease is an agreement where the landlord (lessor) grants the tenant (lessee) an “exclusive possession” of the office space for a long-term period. Unlike a licence, this arrangement demands a lot more commitment and can lead to a waste of space when a business attempts to downsize in difficult times. 

These empty spaces are usually rented under long-term commitments, and tenants are responsible for creating the infrastructure and investing in the furniture before they move in. This can make it much more time-consuming to rent a space. On the other hand, coworking spaces are ready for you from the day you rent them. This is because most are fully equipped! It can cut your effort in half. 

Differences Between a Licence and a Lease

Understanding the differences between licence agreement vs. lease agreement is crucial. It's not merely about identifying which one is more advantageous, but also about determining which aligns best with our financial, efficiency, and growth objectives. 

Let’s explore the differences below!

Nature of Agreement

One significant difference between a licence and a lease is that a lease provides the tenant with exclusive possession of the space. This allows the tenant to customise it according to their preferences. 

However, leases like conventional spaces might not suit businesses aiming for excellent scalability. Leases often bind businesses to long-term agreements, spanning multiple years, making it challenging to scale up or downsize when necessary.

On the other hand, licenses offered by coworking spaces offer unparalleled flexibility. Such agreements typically span weeks or months, which is ideal for businesses seeking immediate scalability options. The flexibility further extends to space availability, with many coworking spaces operating 24/7.

Furthermore, licenses may offer limited customisation options. However, this can easily be solved through a private coworking space that allows you a certain level of branding and customisation.

At the end of the day, what holds the utmost importance in an ever-evolving business landscape is the flexibility and scalability of the space. This is what coworking spaces provide!

Responsibility

In a leased conventional space, the responsibilities often fall upon the tenant. Throughout the agreed-upon tenancy period, you're generally accountable for maintenance, repairs, and other aspects related to the upkeep of the conventional space. 

Maintaining a well-kept workspace is beneficial but often a hassle for many businesses. Some opt to address this by hiring or partnering with maintenance providers to handle regular upkeep. However, this isn’t always a convenient or cost-effective choice, particularly for startups and those with budget constraints.

In this regard, licensing coworking spaces emerges as a smarter choice for businesses of all sizes. You're relieved of the burden of maintenance and repairs within coworking spaces. The workspace provider consistently handles property upkeep and management.

Furthermore, licensing coworking spaces isn't solely about reducing your responsibilities; it also guarantees workplace security. Coworking spaces typically boast robust security systems, including surveillance cameras, card-based entry systems, and on-site security personnel. These measures ensure round-the-clock safety and protection for occupants.

Keep reading to discover more about the differences between a licence and a lease!

Costs

Leasing a space might not be suitable for startups or businesses with tight budgets due to the high upfront costs typically associated with it. In leases, you're usually responsible for acquiring, setting up, designing, furnishing, and maintaining, all the necessary office essentials for your workspace. 

Moreover, an office for lease poses risks, particularly in an era where we are continuously experiencing rising inflation in the UK. Remember, a leased space restricts scalability, making it challenging for a business to downsize if cost-cutting becomes necessary.

Therefore, opting to license a coworking space proves strategic in avoiding such concerns. Within coworking spaces, you only pay for the space you use, unlike leases, where you're also charged for any unused areas.

Moreover, coworking spaces provide all-inclusive pricing, typically encompassing utilities, furniture, amenities, and maintenance. These comprehensive packages also offer flexible payment plans, ensuring you have the most cost-effective option.

Lease vs. Licence: Which is More Business-Friendly?

After weighing the differences between a licence and a lease, let us now consider which is more business-friendly. A lease provides authority to customise and manage the space according to preferences. However, it does come with drawbacks.

Leases, particularly conventional spaces, tend to be more expensive and require building everything from equipment to furniture, making it costly and time-consuming. Moreover, they lack the flexibility demanded by many businesses today.

For a budget-friendly option, consider licensing agreements like coworking spaces. These spaces are cost-effective and offer greater flexibility, which is a top choice for many businesses nowadays.

Coworking spaces eliminate the lengthy process of setting up an office. Their primary benefits include access to premium amenities and business support services, fostering a supportive community for networking, and facilitating easy scalability for businesses. With all these advantages, it is undeniable that spaces under licencing agreements are a smarter choice for your business. 

Explore Office Space for Rent in UK Now!

We might have established the basic differences between a licence and a lease. However, choosing a workspace for your business can still be hard. Lucky you! You landed at the perfect site!

Meet Office Hub, a global leading provider of flexible office spaces for businesses of all sizes. 
We cover every need, from coworking spaces, private offices, and virtual offices to enterprise, shared, serviced, and sublet spaces!

Our dedicated team of talented individuals is just a call away, ready to offer expert advice on workspaces. We streamline your journey to acquiring your ideal workspace, making the process easier and stress-free. We're excited to welcome you and contribute to your success!

Drop us a message today! 

Note: For legal advice concerning licensing or leasing, it's advisable to consult a professional real estate lawyer.