A Licence to Occupy is a legal document granting a person or entity (the licensee) a personal, non-exclusive, and revocable right to use specified premises or a part of a building for a defined purpose. Unlike a lease, a licence to occupy does not grant the licensee exclusive possession of the premises. The licensor retains ownership, possession, and control at all times, and may use the licensed area concurrently with the licensee or grant the same right to other parties.

In Australian property law, the distinction between a licence and a lease is fundamental. A lease creates an interest in land — it gives the tenant a right to occupy that is enforceable against the world, including the landlord and subsequent owners. A licence, by contrast, creates only a contractual right — a personal permission to use property that is enforceable between the parties but does not bind third parties and does not run with the land.

Because a licence to occupy does not create a tenancy, it falls outside the scope of the Retail Leases Acts of each Australian state and territory (such as the Retail Leases Act 1994 (NSW), the Retail Leases Act 2003 (VIC), and the Retail Shop Leases Act 1994 (QLD)). It also falls outside the Residential Tenancies Acts, which regulate residential rental arrangements. This means licensors and licensees have much greater freedom to negotiate the terms of the arrangement, and licensees do not benefit from the statutory protections that apply to tenants.

Common uses for a licence to occupy in Australia include: sharing office or meeting room space with another business on a non-exclusive basis; granting a trader temporary use of a market stall or pop-up space; allowing a contractor or service provider short-term access to a site; event venue hire; co-working arrangements; and allowing a related party to use business premises without creating a formal lease.

The licence fee is generally subject to GST if the licensor is registered for GST under the A New Tax System (Goods and Services Tax) Act 1999 (Cth).

A Licence to Occupy is the appropriate document to use whenever you want to give another person or business the right to use your premises on a non-exclusive basis without creating a lease or tenancy. It is particularly useful where flexibility and revocability are important — for example, where the arrangement is short-term, informal, or where you may need to reclaim the space quickly.

You should use a Licence to Occupy in the following situations: when you own or occupy business premises and wish to allow another person or organisation to share the space for a specific purpose, while retaining the right to use it yourself; when you are granting temporary or periodic access to premises for a contractor, artist, trader, or service provider; when you are operating a co-working or shared office space and want to document the arrangements with each user; when you want to grant event-based or time-limited access to a venue, hall, or outdoor area; and when you wish to avoid creating a formal tenancy that would be subject to the complex requirements and protections of the Retail Leases Acts or Residential Tenancies Acts.

A Licence to Occupy is also commonly used by landlords whose primary tenants wish to allow a related business or subtenant to use part of the leased premises. In this case, the arrangement must be documented as a licence rather than a sublease to avoid triggering any subletting restrictions in the head lease.

It is important to note that Australian courts will look at the substance of an arrangement, not just its label. If an agreement described as a 'licence' in fact grants exclusive possession, the court may treat it as a lease for all legal purposes, including the application of Retail Leases Acts or Residential Tenancies Acts protections. For this reason, the licence agreement should expressly acknowledge the non-exclusive nature of the arrangement and the licensor's right of concurrent use.

A well-drafted Australian Licence to Occupy should clearly establish the non-exclusive, revocable nature of the arrangement and address all key commercial terms.

The nature of the licence section is the most critical part of the document. It must clearly state that the arrangement creates a licence only — not a lease, tenancy, or any other interest in land. The document should expressly acknowledge that the licensee does not receive exclusive possession of any area, that the licensor retains possession and control, and that the licensor may use the area concurrently with the licensee. These provisions are important if the arrangement is ever reviewed by a court or tribunal.

The description of the licensed area should be precise, identifying the specific rooms, floor space, or areas covered by the licence. Where the licence covers only part of a building, the document should state clearly what is included and what is not, including any shared facilities such as bathrooms, kitchens, or car parks.

The permitted use clause defines what the licensee may do in the licensed area. This should be specific enough to prevent the licensee from using the space for unintended purposes, but broad enough to cover all of the licensee's legitimate activities. Using the space for any other purpose without the licensor's consent should be a ground for immediate termination.

The licence fee and GST provisions must state the periodic fee payable, the payment frequency, and whether GST is applicable. If the licensor is registered for GST, the fee stated is exclusive of GST and the licensee must pay an additional 10% on top of the stated amount. Valid tax invoices must be provided.

The termination and notice provisions should clearly state the notice period required to bring the licence to an end and the circumstances in which the licensor may terminate immediately (for example, on breach or misuse). The document should also address the licensee's obligations on vacating the licensed area — specifically, to remove all property and leave the area in a clean and tidy condition.