SQE Leasing and tenancy question: shop in Mong Kok to Ken Lau

EAA SQELeasing and tenancy

Mr Lam lets a storeroom behind his shop in Mong Kok to Ken Lau for 18 months at HK$4,000 a month. The signed document is headed "Licence Agreement", but Ken holds the only key and Mr Lam may enter only with Ken's permission. How is the arrangement most likely to be treated in law?

A As a tenancy, because Ken has exclusive possession for a fixed term at a rent, whatever the document is called
B As a licence, because the parties chose that label in a signed written document and the court must give effect to it
C As a licence, because a storeroom forming part of a shop cannot be let separately from the shop itself
D As a tenancy at will, because the arrangement runs for less than two years and was not made by deed

Show the answer and explanation

Answer: A. As a tenancy, because Ken has exclusive possession for a fixed term at a rent, whatever the document is called

Answer: A tenancy, because Ken has exclusive possession for a term at a rent. The substance of the arrangement, not its label, decides whether it is a tenancy or a licence. Why not the others: - Licence because of the label: a person described as a licensee who in fact has exclusive possession is treated as a tenant. - Storeroom cannot be let separately: part of a building can be let; nothing stops a storeroom being the subject of a tenancy. - Tenancy at will: a tenancy at will arises by operation of law (typically on holding over); this is a contractual fixed term of 18 months, and no deed is needed for a term of 3 years or less. Rule: A person in possession for a term certain, paying rent, with exclusive possession, is a tenant even if the document calls him a licensee. A licence gives only a personal, non-exclusive right to occupy and creates no interest in land. Source: EAA, A Study Guide to Estate Agency Law and Practice, Part 7, paras 1-3 and 20; as at Oct 2026

Common mistake

Treating the heading of the document as decisive instead of asking whether the occupier has exclusive possession.

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An original question written to the published SQE syllabus. Figures in the explanation carry their effective dates; check them against the current law before relying on them. Independent exam practice. Not affiliated with or endorsed by the Estate Agents Authority (EAA) or the examination administrator.