The Landlord and Tenant Act 1954: Why It Matters to the Flexible Office Industry

Flexible office operators talk constantly about licences, memberships, short-term agreements and managed workspace. But behind much of this sits a piece of legislation that dates back more than 70 years: the Landlord and Tenant Act 1954.

For anyone operating, investing in or occupying flexible workspace, understanding the Act is important because it helps explain one of the fundamental differences between traditional commercial property and flex: why a flex operator generally wants to give its customers a licence to occupy rather than a lease.

The reason is simple.

A traditional lease gives an occupier an interest in property. A flex licence is intended to give the customer access to a service and the use of workspace, without giving them the same rights and control over the property that a tenant would have.

That distinction can have significant consequences.

What is the Landlord and Tenant Act 1954?

The Landlord and Tenant Act 1954 is an English and Welsh law that provides protections to certain business tenants.

Its most important provisions for commercial property are contained in Part II, which deals with security of tenure for business tenants.

The basic principle is that where a qualifying business tenancy exists, the tenant may have a statutory right to remain in the premises when the contractual term ends and seek a new tenancy.

In other words, a qualifying commercial tenant does not necessarily have to leave simply because the lease has reached its contractual expiry date.

This is known as security of tenure.

The purpose was historically to protect businesses that had established themselves in premises and invested in their businesses, goodwill and customer base.

The legislation therefore creates a balance between the interests of landlords and tenants.

A landlord does not necessarily have an unrestricted right to recover possession simply because a lease has expired, while a tenant can obtain considerable protection against being forced out.

Why does this matter to flex?

The traditional commercial property model is relatively straightforward:

Landlord → Tenant → Business

The landlord grants the tenant a lease over a defined area of property. The tenant occupies that property, generally has exclusive possession and pays rent.

The flex model is very different:

Landlord → Flex Operator → Multiple Occupiers

The operator may take a large building or floor on a lease and then provide offices, desks, meeting rooms and other services to multiple customers.

The operator therefore needs to be able to control:

• who occupies which space;

• how long customers remain;

• when customers can move;

• which offices can be allocated to which businesses;

• how space can be reconfigured;

• when customers can be relocated;

• access to shared facilities;

• cleaning and servicing;

• reception and hospitality;

• meeting rooms;

• communal areas; and

• ultimately, who has possession of the space.

This is fundamentally different from granting a conventional commercial lease.

Lease versus licence

The distinction can be summarised quite simply.

A lease generally gives the tenant an interest in land and, importantly, exclusive possession of the premises for the agreed term.

A licence is generally a personal contractual permission to occupy or use space. It does not normally give the occupier an estate in the land.

For flexible workspace, the latter is usually much more useful.

However, there is an important warning:

You cannot simply call an agreement a "licence" and assume that it is legally a licence.

The substance of the arrangement matters.

Courts look at the actual rights and obligations created by the agreement and the way the arrangement operates. Exclusive possession is particularly important when determining whether an arrangement is really a lease or a licence.

This is one of the most important legal principles for flex operators to understand.

Why flex operators prefer licences

Imagine a company takes a conventional five-year lease of 5,000 sq ft.

It has exclusive possession of the premises.

The company can control who enters the space, subject to the terms of the lease. It cannot normally be moved to another floor simply because the landlord wants to reorganise the building.

Now compare that with a serviced office customer.

The customer might take a private office for six months.

The operator may provide:

• furniture;

• Wi-Fi;

• reception;

• cleaning;

• utilities;

• meeting rooms;

• communal areas;

• kitchen facilities;

• IT services;

• security;

• maintenance; and

• a range of other services.

The customer is buying workspace as a service, rather than simply renting a piece of property.

The operator therefore wants its agreement to reflect that reality.

A properly structured licence can provide significantly greater operational flexibility.

1. Shorter commitments

Flex customers typically want shorter commitments than conventional commercial tenants.

A customer might want:

• one desk;

• three desks;

• a private office;

• a team suite;

• six months;

• twelve months;

• rolling monthly arrangements; or

• something completely bespoke.

The operator needs the ability to accommodate those requirements without creating a long-term property interest.

2. The ability to move customers

Flex buildings frequently need to change.

A customer may grow from four people to eight.

Another customer may shrink from twenty people to ten.

An operator may want to consolidate customers onto one floor or move them into a larger suite.

The ability to relocate an occupier can therefore be commercially valuable.

A conventional lease over a defined demise makes this much more difficult.

A licence, properly structured and operated, can allow the operator considerably more flexibility.

3. Space can be sold repeatedly

This is perhaps the most important commercial distinction.

A traditional landlord effectively sells the right to occupy a particular piece of property for a particular period.

A flex operator is trying to monetise the same space repeatedly.

A 10-person office might be occupied by one customer today, another customer next year and potentially a different customer after that.

The operator therefore needs control over the space.

It cannot afford to give every customer rights that could interfere with its ability to operate the building as a flexible workspace.

4. The customer is buying a service

A strong flex agreement is not simply:

"You can have this room."

It is more like:

"You can use this workspace, together with the services and facilities we provide, subject to our operating rules."

That distinction is commercially important.

The product being sold is the workspace experience, not simply square footage.

What happens if a flex operator accidentally creates a lease?

This is where the 1954 Act becomes particularly relevant.

Part II applies to qualifying business tenancies. Section 23 provides that the legislation applies to a tenancy where premises are occupied by the tenant for the purposes of a business carried on by them.

If a supposed "licence" is actually found to be a tenancy, the occupier may potentially acquire statutory rights that the operator never intended to grant.

That can create serious problems.

For example, imagine a flex operator gives a company:

• exclusive possession of a particular office;

• for a fixed term;

• at a fixed rent;

• with limited services;

• with no meaningful ability for the operator to relocate the customer; and

• with the customer effectively controlling the premises.

Calling the document a "Licence Agreement" does not necessarily solve the problem.

The arrangement may look much more like a conventional lease.

And if it is legally a tenancy, the 1954 Act may become relevant.

Security of tenure is the key issue

The major concern for an operator is security of tenure.

A qualifying business tenant can have a statutory right to seek a new tenancy when its existing tenancy ends.

That is potentially the opposite of what a flex operator wants.

Imagine a customer occupies a ten-person office for five years.

At the end of the agreement, the operator wants to:

• refurbish the floor;

• convert the office into meeting rooms;

• move the customer to another part of the building;

• increase the price;

• combine the space with another office; or

• allocate the space to another customer.

If the occupier has acquired statutory security of tenure, the operator may not simply be able to say:

"Your agreement has expired. Please leave."

The Act contains procedures governing termination and renewal, and there are limited statutory grounds on which a landlord can oppose a new tenancy.

For a conventional landlord this is an accepted part of commercial property law.

For a flex operator, it can fundamentally interfere with the business model.

Why not simply use leases and contract out of the 1954 Act?

This is an important question.

It is possible for landlords and tenants to contract out of the security-of-tenure provisions of the 1954 Act.

There is a formal procedure for doing this before the tenancy begins. The landlord must generally serve the appropriate warning notice and the tenant must make the required declaration acknowledging that it is giving up its statutory rights.

So why don't flex operators simply grant short leases and contract them out?

They sometimes can, and this approach can be appropriate in certain circumstances.

But it does not necessarily provide the same operational flexibility as a genuine licence model.

The flex proposition is fundamentally different from a conventional lease.

The operator may want to provide a bundle of services, share facilities, retain control of the building, move customers, change configurations and manage the space dynamically.

A licence can be much better suited to that model.

The operator's own lease is a different question

There is another important distinction.

A flex operator may itself occupy the building under a long commercial lease from the property owner.

The operator's relationship with the building owner might therefore look like:

Property Owner → Commercial Lease → Flex Operator

The flex operator then creates its own customer relationships:

Flex Operator → Licence → Customer

These are two completely different legal relationships.

The operator may have a conventional property interest in the building while deliberately avoiding creating equivalent property interests for its customers.

This is one of the foundations of the serviced-office model.

The importance of control

The commercial success of a flex operation depends heavily on the operator retaining control over its inventory.

Think of a flex centre as a hotel.

A hotel does not grant each guest a lease over their bedroom.

It provides a right to occupy the room for a particular period while retaining overall control of the property and providing services around the occupation.

Flexible workspace operates in a similar way.

The operator needs to retain control so that it can manage its inventory.

That means being able to:

• allocate space;

• change availability;

• maintain and inspect offices;

• provide services;

• control access;

• manage communal areas;

• relocate customers where contractually permitted;

• reconfigure space; and

• ultimately recover the space when the agreement ends.

The more the arrangement resembles a conventional landlord granting exclusive possession of a defined property, the greater the legal risk that the arrangement could be characterised as a tenancy.

But a licence is not a magic shield

This point deserves emphasis.

Flex operators should not think of a licence as a way of avoiding the 1954 Act simply by changing the name of the contract.

The legal reality matters.

The courts have long recognised that the substance of an arrangement can determine whether it is a tenancy or a licence, regardless of the label placed on the document.

This means that the contract, the physical operation of the centre and the actual rights given to the customer all need to work together.

For example, if an operator describes an agreement as a licence but then gives the customer completely exclusive possession of a defined office for a fixed term, prevents itself from entering or relocating the customer and otherwise behaves exactly like a landlord, the label alone may not protect it.

What does this mean for managed offices?

The distinction becomes particularly interesting with managed offices.

A managed-office customer may occupy an entire floor or even an entire building.

The arrangement can therefore look much more like conventional leasing.

However, the operator can still structure the relationship around the provision of a managed workspace service rather than simply granting an interest in property.

The more space, exclusivity and control the customer receives, the more carefully the legal structure needs to be considered.

This is particularly important where the customer wants:

• its own entrance;

• exclusive use of an entire floor;

• dedicated facilities;

• a long commitment;

• significant control over the space; or

• the ability to prevent the operator accessing the premises.

At that point, the legal distinction between a genuine licence and a lease becomes much more important.

The bigger issue for the flex industry

The 1954 Act highlights something fundamental about flexible workspace.

Flex is not simply traditional commercial property with shorter leases.

The business model depends on the operator retaining control of the space and selling occupation as part of a wider service proposition.

That is why the documentation matters so much.

The operator needs to balance two competing objectives:

Give the customer enough certainty and privacy to make the workspace attractive

while simultaneously

retaining enough control to operate the building as flexible workspace.

Get the balance right and the operator can create a highly flexible product.

Get it wrong and the operator may unintentionally give customers rights that are inconsistent with its business model.

What should occupiers understand?

The issue is not necessarily something for operators alone.

Businesses taking flex space should understand what they are actually buying.

A licence normally means that the customer does not have the same property rights as a conventional tenant.

That can be a major benefit.

The customer may get:

• shorter commitments;

• less upfront cost;

• furniture included;

• internet and utilities;

• reception;

• cleaning;

• meeting rooms;

• shared amenities;

• easier expansion and contraction; and

• less responsibility for the underlying property.

But there is a trade-off.

The customer generally has less control over the property than it would under a conventional lease.

That is precisely what makes a flexible workspace flexible.

A changing legal landscape

The 1954 Act is currently attracting renewed attention.

The Law Commission is reviewing the operation of business tenancy security of tenure and has been consulting on whether the existing framework remains appropriate for the modern commercial property market. In June 2026 it published its second consultation paper, with the consultation due to close on 16 September 2026.

The Law Commission has previously indicated that the existing contracting-out model should provisionally be retained, while also recognising that the commercial property market has changed considerably since the legislation was last significantly updated.

For the flex sector, that review is particularly relevant.

The market has evolved dramatically since 1954.

Today we have:

• coworking;

• hot-desking;

• serviced offices;

• managed offices;

• hybrid workspace;

• enterprise flex;

• meeting-room memberships;

• virtual offices; and

• increasingly sophisticated workspace-as-a-service models.

The law was not written with these products in mind.

The takeaway for flex operators

The Landlord and Tenant Act 1954 is ultimately about security of tenure for business tenants.

For flex operators, that makes the distinction between a lease and a licence commercially critical.

A conventional lease can give an occupier significant rights over property and, where the 1954 Act applies, potentially a right to seek a new tenancy.

A genuine licence is designed to give permission to use space without creating the same property interest.

That flexibility is central to the flex business model.

But the critical word is genuine.

A document called a "licence" does not automatically make it one.

The agreement needs to reflect the actual commercial arrangement, and the operator needs to operate the centre consistently with that arrangement.

For flex operators, therefore, the 1954 Act is not simply an obscure piece of property legislation.

It goes to the heart of the business model:

Who controls the space?

Who has possession?

What rights does the customer actually have?

Can the operator move, reconfigure or recover the space?

And ultimately:

Is the customer buying an interest in property — or a flexible workspace service?

That distinction is one of the key legal foundations separating flexible workspace from conventional commercial leasing.

This article is intended as an industry explanation rather than legal advice. The legal character of any particular occupation arrangement depends on its terms and how it operates in practice. Operators and occupiers should obtain specialist property-law advice when structuring or reviewing agreements.