Management Services Agreements and opposed lease renewals – to occupy or not to occupy?
Jessica Dickinson, 14th May, 2026
Jessica Dickinson, Associate in our Property Litigation Team considers the recent Court decision in Star Pubs v Gunmakers Arms (Essex) LLP [2026].
What is a Management Services Agreement?
In the context of estate management, a Management Services Agreement (‘MSA’) is a contract made between a landlord and an external manager. An MSA is not a lease or a form of tenancy agreement. An MSA grants the manager - who is usually a company - a licence to occupy the property for the purposes of managing and operating the property and related business on behalf of the landlord.
The landlord retains overall occupation and control of the property. The manager does not pay rent but individuals operating the management company are usually permitted to live in the property. The manager’s role is limited to that of agent in a properly drafted MSA.
An example that we see often is breweries entering into MSAs in relation to pubs that operate under the brewery brand.
The Landlord & Tenant Act 1954 and Ground (g)
Business tenancies have protection of the Landlord & Tenant Act 1954 (‘LTA’). Tenants of protected business tenancies have an automatic right to a new lease unless the landlord can oppose on one or more of 7 statutory grounds in Section 30 of the LTA.
One of those grounds - ‘ground (g)’ - is that the landlord wishes to occupy the property itself for the purposes of running a business.
If the landlord can successfully satisfy the ground, the Court will not order a new tenancy for the tenant but will instead order that the tenant leaves.
Star Pubs Trading v Gunmakers Arms (Essex) LLP
A recent case in the County Court at Central London considered whether the intention of the landlord to enter into an MSA with a manager could amount to ‘owner occupation’ and thereby satisfy ground (g).
The landlord, Star Pubs Trading (‘Star’) served an opposed section 25 notice objecting to the tenant, Gunmakers Arms (Essex) LLP (‘Gunmakers’), having a new tenancy on the basis of ground (g). Star ultimately planned to run the pub under its managed services model which meant it entering into an MSA with a third party manager.
Gunmakers objected to this and asserted that ground (g) could not be satisfied when the landlord intended to enter into an MSA with a third party. Gunmakers argued that the presence of the MSA could not amount to Star being in occupation for business purposes; it would then be the manager who was in occupation.
The dispute appeared before the Court and the terms of the proposed MSA were scrutinised by HHJ Johns KC at Trial on 9 & 10 March 2026. Judgment was handed down on 2 April 2026.
Existing case law already establishes that whether ground (g) is satisfied depends on who is actually carrying on business from the property and who retains ultimate control over that business.
The terms of the MSA were clear that Star retained a significant degree of control over the business and the property. In summary:
- Gunmakers was granted permission to use the pub and related equipment; it was not permitted to run its own business and the business operations remained as belonging to Star
- Star was to be the party entering into all supply and business contracts
- Star was to retain control over all retail pricing
- Marketing activity was determined, approved and funded by Star
- Star was to hold the premises licence
- Star was to retain all revenue aside from overheads and expenses
In addition to the above, the MSA did not bear the characteristics of a tenancy. The manager was not being granted exclusive use of the property, nor was rent or any other sum paid in return for occupation.
After considering the above, the Court determined that Star would be retaining a degree of occupation and control sufficient to satisfy ground (g) and that the manager would simply be acting as Star’s agent. The Court refused to grant an order for a new tenancy.
Key takeaways
MSAs are becoming increasingly popular across various sectors due to the benefits and flexibility offered for landlords or business owners.
Whilst this case does not alter the parameters of what needs to be proven to satisfy ground (g), it does confirm that a robustly drafted MSA, which documents how the landlord retains overall operational control, will allow a landlord to run its business via a manager whilst remaining in occupation for business purposes.
It also provides helpful guidance as to what factors should be considered when determining whether an occupational agreement is a lease or a licence.
About the author: Jessica Dickinson
