Does your tenant have a tenancy or a license?
Law is never straightforward. Just to make things a little bit more complicated, in law, there is a difference between a license and a tenancy.
A tenancy:
This is where the person renting the property actually own the land or property for a slice of time. It is a different type of ownership from owning the freehold of the land, but it is nevertheless ownership.
This is why the landlord is not entitled to go into the rented property without the tenant’s permission. He no longer owns it (in a sense). He has given it away in exchange for the right to receive rent, retaining the right to recover the property once the tenancy has ended.
A license:
This is where the occupier is not a trespasser because he has permission to live in the property.
Creating a license:
Now reading this, you may think (if you are a landlord) “I think a license sounds much better, I will let all my properties on license in future”. The trouble is, it does not work like that.
It was decided in the House of Lords in 1985, in a case called Street v. Mountford that if the occupier:
- Has exclusive possession of the property
- Pays rent (which does not have to be a market rent),
- For a term (a specified period of time, which can be ‘periodic’ ie from week to week or from month to month)
then the occupier will normally have a tenancy, and the fact that they have signed a piece of paper with ‘license agreement’ written at the top, will be irrelevant.
The most important of these is the right to exclusive occupation. Not having this generally indicates that you have a license although this is not always the case. Here are some common situations and signs by which you can recognise that someone does not have a tenancy:
If the parties ‘did not intend to create legal relations’. This will often be implied in family type situations where you allow a member of your family to stay and do not sign any form of legal or tenancy agreement.
If the landlord provides ‘services’ For example, cleaning, and (maybe) meals. This is one reason why people do not normally acquire a tenancy of a hotel room. Provision of services also means that the occupier does not have ‘exclusive occupation’ as the landlord has the right to go in, for example, to deliver the clean sheets, or clean the room. I have written quite a lot about this on my Lodger Landlord web-site.
If the landlord has the right to move the occupier into another room. You need to be careful about this one though. If the agreement says that the landlord has this right, but in reality, it is clear that it is not something which is going to happen, a Judge in any court claim will probably say that it is a sham and that the occupier really has a tenancy.
Licenses will also be created in the following situations:
- When an employee is required to live in the property as part of his employment (eg live in nannies and housekeepers)
- Residential occupation of boats (because you can only have a tenancy of land and a boat cannot be land)
- Where you rent a room to a lodger in your own home, where you share living accommodation (find out more about this in my Lodger Landlord website)
- (Sometimes) where the occupier is living in the property as a beneficiary under a charity (such as an almshouse)
Landlords and Rent to Rent
Landlords often think that if they are renting out rooms in a property under a rent to rent agreement, the agreements with the occupiers of the room will automatically be licenses. Or they give the occupiers ‘license agreements’ thinking that this is the end of the matter.
However as you can see above, this is not the case and is a dangerous assumption. Also, even if the agreements ARE licenses (and sometimes they will be) this does not give landlords (as many think) the right to evict them, say, on two weeks notice without going through the courts. You can read more about this here.
Tomorrow I will be looking at the different types of tenancy
Working in rogue landlord world these sham licence agreements represent probably about 80% of the agreements you get shown by tenants and as you say Tessa, even if there is a licence in place it doesnt mean that they arent entitled to a possession order, the only people being excluded from that right being excluded occupiers set out in section 3A of the Protection from Eviction Act 1977 Lodgers, holiday let, temporary expedient to a former trespasser, let other than for money’s worth, accommodation under the Immigration and Asylum Act.
The holiday let agreement sham is becoming increasingly popular amongst rogue agents in London.
The family connection is also something people often fall foul of but in the case of Nunn v. Dalrymple a tenancy was in place even though the landlords were the parents. Short summary here http://e-lawresources.co.uk/Land/Nunn-v-Dalrymple.php
So if a landlord provides a meal, which according to Housing Benefit guidance ; “a meal includes preparation (eg where it is prepared somewhere else and then delivered) and also the provision of unprepared food (eg cereal, bread in its wrappings)”, even though the occupier remains in the same room while at the property, they will be a licensee and only subject to the Prevention of Eviction Act for Notice periods etc.
I probably should not have said meals. On its own it is not really a sign of a license (unless the landlord enters the room to provide it). However, if meals are provided, say in a separate cafe area, along with cleaning services etc then this will all go to show its a license.
I’m not sure where Housing Benefit comes into it.
HB came into it as my definition of a meal might be a breakfast, prepared by people employed by the landlord between set times – as you find in a guest house or hotel.
I find many landlords claim they are providing breakfast by leaving a loaf of bread and some jam in the kitchen or even loaf and some sausages in the freezer for the tenants to cook and the HB guidance seems to recognise this as a meal.
It is useful to read your opinion as it does seem that what all the HMO landlords are claiming as a B&B and licences are more than not, likely to be tenancies.
If the landlord is going into the tenants’ room to leave the food, then this would make it a license as the occupier would not have exclusive occupation. However if they are just leaving it in a communal kitchen, probably not.
No reason why you should not call it a B&B but the bed part would be in a room which was let to the occupier on a tenancy.
I have a question about the difference between a licence and shorthold assured tenancies. So if i rent a room in a house with access to a shared kitchen and bathroom (with 3 other people living in the house who are not the owner and are also renting) is it correct that my contract is a licence and not a shorthold assured tenancy? And so my landlord doesn’t have to keep my deposit in a protection scheme?
Thanks
If you all have separate agreements for your own room and shared use of the rest of the property and provided you landlord never goes into your room – then it will be an AST.
But if your landlord has access to your room (ie if you do not have ‘exclusive occupation’) for example to provide cleaning services, then it will be a license.
It is hard to be precise as it will depend very much on what actually happens. So if your agreement says your landlord has access to your room but actually he never goes in (as happened with the Street v. Mountford case) then it will probably be a tenancy.
However, you are more likely to have a tenancy rather than a license. Many landlords mistakenly think they have given licenses when in fact they are tenancies. There is a lot of confusion in this area.
So if there was a clause in the TA that arranged for a cleaner to come round to clean the house at the Landlord’s expense, would the agreement actually be a license if they cleaned the tenant’s rooms?