Licence or lease: what are you signing for a serviced office?
Almost every serviced office and coworking space in Australia is taken on a licence, not a lease: a licence is permission to use a space on the operator's terms, while a lease gives you exclusive possession of defined premises and the protections that come with it.
A licence is why a serviced office can start next week on a one-month deposit, and also why the operator can usually move you to another suite in the building. A lease of a conventional office gives the tenant exclusive possession of defined premises for a fixed term, usually three to five years, often with options to renew, and in exchange asks for a bank guarantee, a fitout and a make good at the end. What decides which one you hold is not the name on the document but whether you were given exclusive possession. Serviced office agreements stay licences because the operator keeps control of the space: access for cleaning and services, shared reception and meeting rooms, and the right to relocate you.
- Licence
- A right to use a suite or desk on the operator's terms.
- Lease
- Exclusive possession of defined premises for a term.
- The test
- Exclusive possession, not the label on the document.
- Serviced offices
- Almost always a licence.
- Licence security
- Usually 1 to 2 months' fee as a deposit.
- Lease security
- Usually a bank guarantee of 3 to 6 months' rent.
The difference in one table
The two documents can look alike, and both set a monthly fee or rent, a term and a notice period. What sits behind them is different, and it shows in every row below.
| Licence (serviced office, coworking) | Lease (conventional office) | |
|---|---|---|
| What you get | A right to use a suite or desk | Exclusive possession of defined premises |
| Typical term | Month to month, or 3, 6 or 12 months | 3 to 5 years, often with options to renew |
| Security | Usually 1 to 2 months' fee as a deposit | Usually a bank guarantee of 3 to 6 months' rent |
| Fitout and make good | None; returned as found | Tenant fits out and usually makes good at the end |
| Can you be moved? | Often yes, under a relocation clause | No, unless the lease says so |
| Option to renew | Rarely; renewal is a new agreement at a new price | Common, at a set or reviewed rent |
| Can you transfer it? | Usually not | Assignment is normally allowed with the landlord's consent |
| Who pays outgoings | Included in the monthly fee | The tenant under a net lease, or built into a gross rent |
How Australian courts tell them apart
The label on the document does not decide it. Since the High Court's decision in Radaich v Smith (1959) 101 CLR 209, the question has been whether the occupier was given exclusive possession. An agreement called a licence that in substance hands over exclusive possession of defined premises can be treated as a lease, with everything that follows from that.
Serviced office agreements stay licences because the operator keeps control: it has access for cleaning and services, runs the shared reception and meeting rooms, and can relocate you to another suite. Those features are not just fine print. They are what keeps the arrangement flexible for both sides.
What to check before you sign a serviced office licence
- Relocation clause. Can the operator move you, to what standard of suite, and with how much notice?
- Notice period. Usually one to three months, in writing. Check whether it runs from the end of the term or from the day you give it.
- Price on renewal. A licence usually ends and restarts at the operator's current rate. Ask what the rate will be before you commit.
- Meeting room credits and extras. What is included each month, and what is charged on top. See meeting room costs.
- Deposit return. How long after you leave, and what can be deducted.
- Access hours and after hours charges.
- Who else can use your suite. A licence should still say the suite is for your team only, even though it is not a lease.
For typical terms and deposits, see serviced office minimum terms and deposits, and for what the monthly fee covers, what is included in a serviced office.
When you want a lease instead
If you need to fit the space out to your own design, want the right to stay for years at a known rent, or need to register your interest, a licence will not give you that. A conventional lease, or a sublease of part of another tenant's floor, will. See flex, sublease or direct lease, and for the cost side, serviced office or lease: which is cheaper.
Sources: Radaich v Smith [1959] HCA 45 (AustLII); business.gov.au: leasing a business premises. Last reviewed 8 November 2026.
Common questions
Is a serviced office a lease?
What is the main difference between a lease and a licence?
Can a licence be ended early?
Can a serviced office operator move me to another suite?
Does GST apply to a serviced office licence?
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General information only. This guide explains how office leasing usually works in Australia. It is not legal, financial or tax advice, it does not take account of your circumstances, and lease terms and legislation change. Get advice on your own lease before you sign it.
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