Rent Free VS Fit Out

Option (i) Rent-free period
This means that during the term of the lease, you have 2 months of rent free period, i.e. you have a lease term of, for example, 12 months, and you don't have to pay rent for month #1 and #2, but legally, you're still a tenant and you enjoy all the protection provided to you by the lease agreement entered into between you as tenant and the landlord and by the laws in relation to landlord/tenant protection (e.g. he cannot terminate your lease without cause and must do it in accordance with the lease agreement and the laws). Of course, by the same token, you will also have to perform all other obligations of a tenant other than paying rent during those 2 months (subject to the terms of the lease agreement), for example, you have to pay management fees, air-conditioning fees, government rates etc.. And you are allowed to use the premises in any way you want to, and you're not restricted to use that period for renovation only. You can commence business immediately if you want to.

Option (ii) Fitting out period

Before commencement of the lease, you're allowed to occupy/use the leased premises as a licensee for a specific purpose, in your case, you will be doing renovation work. As a licensee, you don't have much rights so to speak, and since you're not a tenant, whatever terms and conditions and requirements the licensor (or your landlord-to-be) requires you to comply with whilst using the premises, you must comply, and the licensor may revoke your licence to use the premises without proper cause and does not have to pay any compensation, because being a licensee, you're only allowed to use the premises on permission by the licensor, and if s/he/it decides not to give you that permission anytime during those two months' period, strictly speaking, you can't enforce your entitlement to the 2 months (so to speak, if you have an agreement in relation to his granting of a licence to you for using the premises for renovation work, you may sue him on the agreement, but you are unlikely to get any meaningful compensation other than specific performance). However, you may or may not be required to pay management fees, government rates etc., depending on what terms you have agreed with your landlord-to-be on giving his permission to you to use those premises.

Please also note that, no matter you choose option (i) or (ii), you remain an occupier of the premises during renovation or otherwise and you will be subject to occupier's liability when you're using those premises.

2007-03-12 18:41:20 補充：
In short, for option (i), you're a tenant during the rent-free period legally entitled to use those premises and for option (ii), you're a licensee without much rights who can use/occupy the premises for renovation only. In practice, there is not much a difference if everything goes fine.