When Is A Lease Not A Lease?

There is no doubt that the telecommunications industry has provided plenty of work for lawyers in recent years with a seemingly never-ending series of tribunal and court cases. Occasionally, one comes along which has implications far beyond the narrow confines of the Electronic Communications Code. One such case is the recent decision of the Court of Appeal in AP Wireless II (UK) Limited v On Tower (UK) Limited [2025] EWCA Civ 971.

Lease or licence?

The dispute centred on whether the agreement in question was a lease or a licence. The site provider argued that it was a lease, and therefore renewable under Part II of the Landlord and Tenant Act 1954. The telecommunications operator, on the other hand, contended that it was a licence, and so renewable under the Electronic Communications Code with a consequently lower rent.

Understanding "a term of years certain"

It is long-established law that, to be valid, a lease or tenancy must be for "a term of years certain". That expression is not just confined to fixed terms, but also encompasses periodic tenancies where the term consists of a succession of fixed periods, be that annual, monthly, weekly or even (at least theoretically) daily.

In the AP Wireless II case, the term of the agreement was somewhat unusually expressed in that it stated:

"This Agreement shall come into effect on the date shown above and shall continue for no less than the Minumum Term [which was defined as 10 years from 11 March 1997]. It may be terminated by either party giving to the other not less than 12 months' notice in writing to expire at any time on or after the expiry of the Minimum Term".

Court of Appeal's decision

Sir Geoffrey Vos, Master of the Rolls giving the leading judgment, held that the term as expressed in the Agreement did not create "a term certain". Therefore, despite all the other pre-requisites for a lease being present, including the operator having exclusive possession of the premises and paying rent, the agreement was not a valid lease but merely a contractual licence.

A departure from precedent?

With all due respect to the Master of the Rolls, it is difficult to see how this case differs from some of the earlier cases, including Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386. In that case, the agreement in question also lacked a term certain, but was still held to constitute a valid lease because it was inferred from the tenant having exclusive possession and paying a rent that the parties intended to create a yearly periodic tenancy.

Why this matters for drafting Occupation Agreements

So why does it matter? Surely this is a case which turns on its own rather peculiar facts?

As lawyers, we are frequently asked to draft documents that allow someone to occupy a client's property without creating a lease and therefore attract the security of tenure which applies to that particular type of letting.

Generally, having regard to the decision in Street v Mountford [1985] AC 809, the advice until now has been:

"If you allow Mr Bloggs exclusive possession of your property in exchange for him making regular payments, that will be held by the courts to be a tenancy no matter how you try to dress it up.

"Therefore, subject to a few limited exceptions, Mr Bloggs would have the protection of the Housing Act 1988 (if the premises are a dwelling) or Part II of the Landlord and Tenant Act 1954 (if he occupies them for the purposes of his business)".

Implications of the AP Wireless II decision

In light of the AP Wireless II case, however, a new question arises: if the term of Mr Bloggs' occupation is expressed similarly to the agreement in this case, could he be a mere licensee, without the benefit of any security of tenure, despite him having exclusive possession and paying rent?

With the additional security of tenure that is about to be bestowed upon residential tenants under the Renters Rights Bill, this might be an attractive prospect to some landlords. However, whether a court faced with a landlord seeking to evict their tenant on such grounds would come to the same conclusion as Sir Geoffrey Vos, I rather doubt.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.