This article highlights the most common legal traps for landlords using concession agreements, explains where early legal advice can prevent serious consequences and shows why these arrangements should never be treated as low-risk or informal.

Concession Agreements in Commercial Property: The 7 Legal Traps That Cost Landlords (and How to Avoid Them)

Beth Reed January 22, 2026

Concession agreements in commercial property can expose landlords to serious legal and financial risk. This in-depth guide explains the key legal traps, including leases, security of tenure under the Landlord and Tenant Act 1954 and termination issues, and sets out how landlords can avoid costly mistakes through careful structuring and early legal advice.

Concession agreements are now a routine feature of commercial property arrangements in England and Wales. From retail and leisure to office and mixed-use developments, landlords increasingly rely on concessions to attract operators, enhance occupier experience or bring underused space into active use. When structured and managed correctly, they can be commercially effective and flexible. When they are not, they can expose landlords to significant legal and financial risk, often without warning.

We are able to advise on disputes where a concession arrangement, originally intended to be informal or short-term, has created unintended legal rights that are difficult and expensive to unwind. In some cases, the cost extends far beyond lost income, and results in expensive liabilities, enforcement difficulties or long-term damage to the value and saleability of the property.

This article highlights the most common legal traps for landlords using concession agreements, explains where early legal advice can prevent serious consequences and shows why these arrangements should never be treated as low-risk or informal.

Are Concession Agreements in Commercial Property Legally Risky?

Concession agreements often sit in an uncomfortable legal space. They are neither straightforward leases nor simple licences, and their commercial purpose does not always align with their legal effect.

A concession arrangement usually allows a third party to occupy part of a property to provide goods or services, often within a larger building or estate. Common examples include cafés in offices, kiosks in shopping centres or pop-up operators in vacant units. The documentation is frequently bespoke, prepared under time pressure or adapted from precedents that were never designed for the specific property or commercial model.

The fundamental issue is that English property law focuses on substance rather than labels. Calling an agreement a “concession” does not prevent it from being treated as a lease, nor does it restrict statutory protections from applying if certain legal thresholds are crossed.

In practice, many kiosk, advertising and retail concession arrangements have been held to create leases where the operator enjoys exclusive possession of a defined area, even though the commercial aim is the operation of a trading or advertising opportunity.

Trap 1: Accidentally Granting a Lease Instead of a Licence

How concession agreements are misclassified
One of the most common and costly mistakes landlords make is assuming that a concession agreement is automatically a licence. In law, the distinction depends on the rights actually granted, not the title used in the document.

A lease is likely to arise where the occupier has:

a) Exclusive possession
This means the operator has control of the space and can exclude others, including the landlord, except where the agreement clearly allows entry. Exclusive possession is the most heavily weighted factor and is often created unintentionally where the space is fenced off, lockable or treated as the operator’s own area.

b) Clearly defined premises
The area being occupied must be identifiable, but it does not need to be a full unit. A kiosk, counter space or part of a larger room can still qualify if the boundaries are sufficiently clear, whether shown on a plan or understood in practice.

c) A defined term
The occupation must be for a fixed period or a period that can be clearly identified. Even relatively short terms can satisfy this requirement if the start and end points are certain.

d) Payment of rent or other consideration
This does not have to be described as rent. Licence fees, turnover payments or other financial arrangements linked to occupation can all satisfy this element.

The presence of these features, in particular exclusive possession and a sufficiently certain term, will strongly indicate that the arrangement is a lease in law, even if the document is described as a licence or concession.

By contrast, a properly structured licence is a personal permission to use space for a specific purpose. It does not create an interest in land and allows the landlord to retain significantly greater control and flexibility.

Trap 2: Creating Security of Tenure Under the Landlord and Tenant Act 1954 by Mistake

Why the 1954 Act is critical for landlords
Security of tenure under the Landlord and Tenant Act 1954 gives business tenants the right to remain in occupation and request a new lease when the existing term ends. Many landlords assume that concession arrangements are incapable of attracting this protection, but this is a common misconception.

If a concession is legally a lease and the occupier is carrying on a business from the premises, the protection of the 1954 Act will usually apply automatically unless the tenancy falls within a statutory exclusion or the parties have followed a valid contracting-out procedure before the lease was entered into.

The 1954 Act will generally not protect tenancies granted for a fixed term of six months or less, provided that there is no right for the tenant to remain beyond that period. However, there is ongoing consultation on reform of this provision to increase the six-month threshold, but at the date of writing this has not come to force.

The financial and strategic impact of getting this wrong
Failure to validly contract out of the 1954 Act can delay vacant possession and increase costs during redevelopment or re-letting. In some cases, landlords are forced to pay compensation or agree to commercially unfavourable terms simply to regain control of the space.

Landlords often only discover this issue when the occupier refuses to vacate at the end of the term, by which point the commercial leverage has already shifted.

Trap 3: Unclear or Unenforceable Termination Rights

Why flexibility in concession agreements is often overstated
Concession agreements are frequently described as flexible arrangements that can be brought to an end easily. In reality, that flexibility only exists if the termination provisions are clearly drafted and legally enforceable.

Break clauses that are vague, inconsistent or dependent on unclear triggers are a frequent source of dispute. Courts interpret termination provisions strictly. If notice periods, service requirements or conditions are not followed precisely, an attempted termination may fail. Where an agreement is silent or unclear, landlords may find themselves relying on complex legal arguments rather than clear contractual rights.

The commercial consequences for landlords
Unclear or ineffective termination rights can delay asset management decisions, disrupt redevelopment plans and create reputational issues where an operator remains in occupation against the landlord’s intentions. These situations often escalate quickly and become far more expensive to resolve than if the agreement had been structured correctly from the outset.

Trap 4: Poorly Defined Premises and Occupation Rights

Why unclear boundaries lead to disputes
Concession areas are often described informally, particularly in shared or open-plan environments. Plans may be missing, outdated or inconsistent with the physical layout. Rights of access, storage, servicing or use of shared facilities are sometimes assumed rather than clearly documented.

This lack of precision creates fertile ground for dispute as buildings evolve or as other occupiers’ needs change. What worked at the outset may become problematic once layouts are reconfigured or additional operators are introduced.

Loss of landlord control
Unclear drafting can lead to arguments that the occupier has wider rights than intended, including resistance to relocation or changes to the layout. These issues frequently arise at the most inconvenient time, such as during refurbishment or disposal of the property.

Trap 5: Ambiguity Around Rent, Turnover and Service Charges

Why financial terms in concession agreements require care
Many concession arrangements involve non-standard payment structures, such as turnover-based fees or minimum guarantees. While commercially attractive, these models require careful legal drafting.

Uncertainty around calculation methods, audit rights, VAT treatment or service charge contributions can lead to disputes and leave landlords unable to recover costs they reasonably expected to be reimbursed.

It is also important to be clear whether a concession is documented through a side letter. A side letter is a separate written agreement that sits alongside an existing lease and temporarily varies its terms. While side letters can be useful, they can cause problems if they are unclear, inconsistent with the main documentation or misunderstood by lenders or buyers.

How small issues become large financial problems
What appears to be a minor drafting issue can compound over several years, particularly where multiple concessions operate within the same property. The cumulative financial impact can be significant and correcting these issues retrospectively is rarely straightforward.

Trap 6: Inadequate Repair, Compliance and Insurance Provisions

Why light-touch drafting creates risk
Because concessions are often perceived as lower risk, repair and compliance obligations are sometimes dealt with lightly. Agreements may be vague or silent on responsibility for statutory compliance, health and safety, fire safety, food safety or accessibility requirements.

This creates uncertainty about who bears responsibility if something goes wrong. In many cases, the landlord remains exposed as the property owner, regardless of what the occupier has agreed to do in practice.

Trap 7: Failure to Align Concession Agreements with the Wider Property Structure

Why concession agreements cannot be viewed in isolation
A concession agreement must work alongside any superior lease, funding arrangements, development agreements and the wider management of the property. Problems arise where rights are granted that conflict with obligations owed to a head landlord or lender, or where the concession restricts future changes that are important to the long-term use or value of the building.

In some cases, an arrangement intended to be informal is treated as a sub-letting in law. This can create additional risk if the main lease comes to an end, with potentially serious consequences for both parties.

The cost of misalignment for landlords
Resolving these issues later can involve complex negotiations or formal variations and may delay sales or refinancing. In transactional contexts, they can materially affect timing, value and buyer or lender confidence.

How Landlords Can Avoid These Legal Traps

Early legal structuring of concession arrangements
The most effective risk management step is to involve legal advisers at the structuring stage, not just when documents are being signed. Understanding the commercial objective allows the legal framework to be designed to support it.

Clear drafting with commercial realism
Concession agreements should be drafted with the same care as leases, even if they are shorter or intended to be flexible. This includes clear definitions, workable termination provisions and consistency with the wider property documentation.

Whether a particular concession is characterised as a lease, licence or something else is ultimately a fact‑specific question, so even well‑drafted precedents need to be adapted carefully to the physical layout, operational model and term structure of the arrangement.

Regular review of existing concession agreements
Landlords often accumulate concession arrangements over time, particularly within large or mixed-use estates. Periodic legal reviews can identify risk before it escalates into disputes or liabilities.

When Should Landlords Take Legal Advice on Concession Agreements?

You should consider taking advice if you are introducing a new concession operator into an existing building, particularly where space is shared or footfall is prevalent. Advice is also sensible if you are experiencing resistance when trying to terminate, relocate or vary an arrangement, or if you are planning redevelopment, refinancing or disposal of a property with concessions in place.

Each of these situations carries time pressure and potential financial exposure, making early legal advice especially valuable.

How JLN Can Help Landlords with Concession Agreements

JLN’s Commercial Property team advises landlords across England and Wales on concession agreements from initial structuring through to dispute resolution. We combine technical property law expertise with a strong understanding of how commercial assets are operated, funded and traded.

We can assist with drafting and reviewing concession agreements, auditing existing portfolios and resolving disputes where arrangements have gone wrong. Our advice is practical, commercially focused and tailored to your specific objectives.

If you are concerned that a concession agreement may be exposing you to risk, or if you are about to enter into a new arrangement and want clarity before committing, we would be pleased to help.

We usually offer a no-cost, no-obligation 20-minute introductory call as a starting point or, in some cases, if you would just like some initial advice and guidance, we will instead offer a one-hour fixed fee appointment (charged from £250 plus VAT depending on the complexity of the issues and seniority of the fee earner).

Please email wewillhelp@jonathanlea.net providing us with any relevant information or call us on 01444 708640. After this call, we can then email you a scope of work, fee estimate (or fixed fee quote if possible), and confirmation of any other points or information mentioned on the call.

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This article is intended for general information only, applies to the law at the time of publication, is not specific to the facts of your case and is not intended to be a replacement for legal advice. It is recommended that specific professional advice is sought before relying on any of the information given. © Jonathan Lea Limited.