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This article answers the common questions surrounding licenses and suitable agreements.

Q: What is a licence?

A: A licence is merely permission to occupy property. It is probably better to define what a licence is by referring to when is occupation of premises considered to be a tenancy. The House of Lords decision in Street v Mountford [1985] stated that if:

  • a person had exclusive possession of land / property;
  • at a rent;
  • for a term;

then it would be a tenancy.

A licence on the other hand, does not create an estate in land and a licencee does not gain a legal interest in the property.

A licence is therefore rarely the best type of occupancy agreement to grant where the landlord is a registered provider because there is little, if any, security attached to such an agreement.

Q: When would it be suitable to grant a licence agreement?

A: The granting of a licence agreement would be appropriate where people are sharing accommodation on a temporary basis. For example:

  • as a lodger in someone’s home;
  • hostel type accommodation; and
  • short-term holiday accommodation/hotels.

Q: Do licensees have any legislative protection?

A: This very much depends upon whether the type of licence granted is protected by the Protection from Eviction Act 1977 (PEA 1977). So, where a person does not have exclusive possession of the accommodation they occupy, even if it is self-contained accommodation (i.e. with a toilet, bathroom, cooking facilities) then it will be a protected licence for the purposes of the PEA1977. In such cases, in order to recover possession, a landlord will need to serve a Notice to Quit. The Notice to Quit must be in the “prescribed” form.

This means that:

  • it has to be in writing;
  • contain such information as may be prescribed; and
  • give not less than 4 weeks before the date on which it is to take effect.

Prescribed means prescribed by regulations made by the Secretary of State by statutory instrument, and a statutory instrument containing any such regulations shall be subject to annulment in pursuance of a resolution of either House of Parliament).

If a licensee fails to vacate the property at the end of the 28 day notice period then a landlord will need to issue possession proceedings in the County Court to obtain a possession order.

On the other hand, an excluded licence is one where a licensee does not have the protection of the PEA 1977. Such licences will exist where a person:

  • shares accommodation with their landlord, e.g. a lodger;
  • lives in the same building as their landlord and shares the accommodation with a member of their landlord’s family;
  • lives in a Local Authority or Housing Association run hostel;
  • does not pay rent;
  • is accommodated in temporary accommodation by a local authority whilst the authority carries out its homelessness enquiries.

Option 3, above, will most commonly apply to RPs. The term hostel is defined by section 622 of the Housing Act 1985 which states as follows:
hostel means a building in which is provided, for persons generally or for a class or classes of persons -

  • residential accommodation otherwise than in separate and self-contained sets of premises, and
  • either board or facilities for the preparation of food adequate to the needs of those persons, or both.

A licensee who does not have the protection of the PEA 1977 can be excluded from any accommodation they occupy without a court order. A licence agreement will normally state that a licensee may be asked to leave their accommodation upon ”reasonable” notice being given which is commonly 28 days. However, there is usually provision for a shorter period of notice to be given, or for a licensee to be asked to leave immediately in the event of a serious breach of the licence agreement.

Q: I have served my licensee with reasonable notice and they have refused to leave what should I do?

A: Whilst in such circumstances it is possible to forcibly remove the occupier (with the assistance of the police ideally), it is highly advisable to take legal advice in the first instance before taking this step. If you make a mistake and evict someone who you think is an excluded licensee and it turns out they do have the protection of the PEA 1977, you may find yourself the subject of an unlawful eviction claim, whether this be civil (i.e. a claim for damages) or criminal (i.e. a prosecution) or both.

Furthermore, some agreements claim to be licence agreements whilst what really exists is a tenancy and if this is the case, once more, particular caution should be exercised.