Find out more about the Easy Law Training face to face Workshops

>> Click here

Easy Law Training Workshops

Renting property on a license

Residential licenseI had a gentleman ring me up yesterday. He had lots of overseas tenants (he told me) but they caused a lot of problems and  he was getting fed up with it.

He would prefer to rent to them on licenses in future.  How could he do this?

It made me think that I have not done a license post for a while. so here goes.

Street v. Mountford

The main reason why licenses for residential occupiers are, in most cases, not an option, is the House of Lords case of Street v. Mountford in 1985.

Street v. Mountford made it clear that if the circumstances of a letting are that of a tenancy (ie payment of rent and exclusive occupation) then it will be a tenancy.  The fact that the tenant may have signed a piece of paper saying something else will not change anything.

All that will happen is that the landlord will probably use the wrong eviction procedure (thinking it is a license) and have his case  rejected by the Judge and thrown out.  And perhaps be ordered to pay the tenants legal costs.

‘Proper’ licenses

There are some situations where a license agreement will be created anyway.  A non exhaustive list is:

  • lettings of accommodation on boats (eg houseboats)
  • service accommodation (ie for staff members required to live there for their job – such as a caretaker)
  • lodgers renting a room in their landlords home
  • hotel or hostel accommodation where, either the room is shared by several people on individual agreements  and/or where the owner has regular access for cleaning
  • (sometimes) where the occupier is living at the property as the beneficiary of a charity rather than as a teannt

Artificial licenses

Sometimes landlords attempt to create a license by putting clauses in the agreement saying, for example, that the landlord has the right to move the occupier to another room, can require him to share with another person, needs access for regular cleaining, etc.

Whether these ‘work’ or not  will depend on what the situation actually is on the ground.

If in fact (as in the Street v. Mountford case) the occupier lives in the property without interference from landlord, or (for example) no cleaning is ever done, then the ‘license’ clauses will be of no effect, and the occupion will be a tenancy.

The benefits of a license – perceived and real

I suspect that landlords often want to have a license because they think it means that they can then just evict the occupiers themselves without having to go to court first.

However this is not so.  Under the Protection from Eviction Act 1977 virtually all residential occupiers have the right to stay in a property until a court order is made.  Whether they have a tenancy or not.

So if they just turf the occupier out, he will be able to claim compensation.

The only situation (or the only common situation) where a possession order from the courts is not needed, is where the occupier is a lodger living in the landlord’s own home.  I discuss this in my Lodger Landlord site.

The main advantage of a license agreement for a landlord is that the notice period is a bit shorter – not less than  four weeks rather than not less than two months/8 weeks.

However set against that is the disadvantage that you could lose your case if you have not set up the license properly.  In my view it is probably better just to accept that you have an AST and put up with it.

At least then you know where you stand and will be guaranteed possession should you need it, under the section 21 process.

Buffer

Important note. If you are reading an old post, remember that the law may have changed since it was written.




Landlord LawIf you want to evict your tenant but cannot afford the cost:


You need the Landlord Law DIY Eviction Guide


>> Click here to find out more




If you have a landlord and tenant related question please do not ask it here but use our
>> Blog Clinic.

Comments close after three months. Please >> click here to read our comments policy

Page 1 of 11

One Response to Renting property on a license




»

«

About the post author:

Tessa Shepperson

Tessa is a lawyer specialising in residential landlord and tenant law. She runs the Landlord Law website (now in its 12th year) and is a director of Easy Law Training Ltd and Your Law Store. Tessa also sits on the Property Redress Scheme Council. When not working she enjoys reading, cooking and messing around on the computer. You can also find her on Google



The Landlord Law Blog from Tessa Shepperson

Tessa is an English lawyer specialising in residential landlord and tenant law.


Legal Services

Legal services are provided via Tessa's online service Landlord Law. Some advice services are provided by Tessa, other legal services are provided by specialist housing firm Anthony Gold.


Disclaimer

The purpose of this blog is to provide information, comment and discussion. Although Tessa, or guest bloggers, may from time to time, give helpful comments to readers' questions, these can only be based on the information given by the reader in his or her comment, which may not contain all material facts. Any comments or suggestions provided by Tessa or any guest bloggers should not therefore be relied upon as a substitute for legal advice from a qualified lawyer regarding any actual legal issue or dispute.


Nothing on this website should be construed as legal advice or perceived as creating a solicitor-client relationship (apart from the Fast Track block clinic service - so far as the questioners only are concerned).


Guest bloggers

Please note that any opinion expressed by a guest blogger is his or hers alone, and does not necessarily reflect the views of Tessa Shepperson, or the other writers on this blog.


Other websites from Tessa

Lodger Landlord | Google+ | Your Law Store | Google | Landlord Law facebook page | How to Evict Your Tenant website | the Which Tenancy Agreement Guide | Landlords Tips | Tenants Tips | Working on the Web | Landlord Law Store