FLK2 · Land Law

Leases — essential characteristics & types

SQE1 revision notes — the key rules, leading cases and common traps for this topic, in plain English and current to 2026.

LL.07 — Leases: Essential Characteristics & Types

A lease (term of years absolute) is a legal estate in land (LPA 1925 s.1(1)(b)); a licence is only a personal permission, binding no third party.

The essential characteristics (Street v Mountford [1985])

The two hallmarks that are strictly essential for a lease are exclusive possession and a certain term; Street described the usual indicia as exclusive possession for a term at a rent:

Exclusive possession — the right to exclude all others, including the landlord.
A certain (fixed/ascertainable) term — start date and maximum duration known at the outset (Lace v Chantler; Prudential Assurance v London Residuary Body [1992]).
Rent — usual but not legally essential. "Term of years absolute" takes effect "whether or not at a rent" (LPA 1925 s.205(1)(xxvii)), so a lease can exist rent-free (Ashburn Anstalt v Arnold). Don't over-state rent as a requirement.

Key principle: substance over form. A document labelled "licence" is still a lease if it grants exclusive possession for a certain term — "the manufacture of a five-pronged implement for manual digging results in a fork even if labelled a spade" (Street v Mountford). Conversely, true lodgers/service occupiers with no exclusive possession are licensees.

Negating exclusive possession

Genuine retained services (landlord provides cleaning, keeps a key for service) → licence.
Sham/pretence clauses to dodge a tenancy are ignored (Antoniades v Villiers [1990] — bogus "sharing" clause). Contrast AG Securities v Vaughan (genuine independent occupiers = licences).
Exclusive possession is not conclusive where there's no intention to create legal relations (family/charity/service-occupancy/no-rent arrangements) — Facchini v Bryson [1952].

Types of lease

Fixed-term — certain duration (e.g. 99 years).
Periodic tenancy — runs period-to-period; implied from possession + regular rent payments; certainty satisfied because either party can end it by notice.
Tenancy at will / at sufferance — precarious; will determinable at any time, sufferance arises where a tenant holds over without consent.
Reversionary, concurrent, and non-proprietary "tenancy" (Bruton v London & Quadrant [2000] — a lease binding only between the parties, no estate).

Common traps

Exclusive possession ≠ exclusive occupation (lodger occupies but doesn't possess).
Formalities: a legal lease >3 years needs a deed (LPA 1925 s.52); the parol exception (s.54(2)) allows a legal lease ≤3 years taking effect in possession at the best rent reasonably obtainable without a fine, with no deed. A specifically-enforceable contract for a lease creates an equitable lease (Walsh v Lonsdale) — but only if it satisfies LP(MP)A 1989 s.2 (signed writing, all terms).
Registration: legal leases >7 years are registrable dispositions; leases ≤7 years usually bind as overriding interests.

Try a real SQE1 question

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Three friends — Anya, Ben and Carl — buy a house together as legal and equitable joint tenants. Relations between them sour. Anya writes a letter to Ben and Carl stating: 'I am hereby severing my joint tenancy in the house with immediate effect and I wish to hold my share separately from now on.' She signs and dates it and posts it by ordinary first-class post to the house, where all three live. The letter is delivered and Ben reads it. Carl, who is away, never sees it because Anya later retrieves the letter and destroys it before Carl returns. Which of the following best describes the effect of Anya's letter?

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