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Why clear lease and licence terms matter for UK businesses – A landmark Court of Appeal ruling
September 30, 2025
By Leanne Nixon
This ruling is significant for anyone involved in property agreements, particularly in the telecommunications sector, where the nature of an agreement can have serious implications for both operators and landowners.
Our commercial property expert, Leanne, breaks down the case, and highlights the key takeaways to help businesses, property owners, and telecom operators understand what this decision means in practice.
The Background: What was the case about?
The dispute centred around a telecoms site, occupied by the telecoms operator, On Tower, under an agreement that was entered into in the 1990s.
The agreement included a “minimum term” provision. This provision stated that the agreement was to last for a period of 10 years, after which either party could terminate the agreement on 12 months’ notice.
The key question for the Court of Appeal was whether this “minimum term” arrangement in the agreement meant the agreement amounted to a lease or a licence.
Licence vs. Lease: What’s the difference?
Understanding the difference is paramount in property law.
A lease gives someone the right to use a property exclusively for a fixed period of time, providing greater security and control.
A licence, on the other hand, allows a party to occupy a property but does not grant exclusive possession. Licences are commonly used for short-term of flexible arrangements. A license, therefore, would offer greater flexibility to landowners but less certainty for the operator.
What did the Court of Appeal decide?
The Court of Appeal looked at the agreement and how both companies had acted.
AP Wireless, the site owner, argued:
Therefore, whilst the Court of Appeal found that On Tower had significant control over the land, which usually points to exclusive possession and a lease, the minimum 10 years then rolling term meant the agreement lacked a fixed term, which is required to qualify as a lease.
The court therefore ruled that the arrangement was a licence, not a lease.
Why the decision matters
This decision provides valuable guidance for businesses and property owners entering into or managing property agreements, especially in telecoms.
It highlights how crucial it is to clearly define what kind of agreement you have and to be precise with the terms.
Implications for Telecom companies
Implications for property owners
For telecom companies, a lease might offer more security, whereas a licence might offer more flexibility for property owners.
The Court of Appeal’s decision is a reminder to be clear and precise when drafting agreements to avoid misunderstandings and unintended consequences.
If you are a telecoms operator, property owner, or business entering into a property agreement, it is sensible to seek specialist legal advice to ensure the terms protect your interests and comply with the law.
How we can help
Our expert commercial property team regularly advise businesses on the drafting, negotiation, and enforcement of lease and licence agreements. Whether you need to review an existing agreement, resolve a dispute, or structure new arrangements, our team can provide clear, practical advice tailored to your business needs.
Get in touch using our contact form, or via 02920 829 100 to see how we can help you and your business.
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