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What is a licence?

This content applies to England

Definition and key elements of a licence.

Definition

A licence is personal permission for someone to occupy accommodation. It does not give the licensee a legal interest in (or control of) the land. Without the licence the occupier would be a trespasser.

A licence can be fixed term or periodic.

A joint licence is a licence that is held by more than one person.

Bare licences and contractual licences

A bare licence is where someone has been given simple permission to live in accommodation. For example, a friend invited to look after a flat while somebody is on holiday or a young person living with their parents is likely to be a bare licensee.

A contractual licence is where a licence arises out of a contract under which the licensee has to perform a service or pay money in return for accommodation but where the conditions for creating a tenancy are not met. The contract can be verbal or written. It is very important to look at exactly what was said or written in the agreement.

When a licence is likely to arise

The main instances where there will be a licence rather than a tenancy are where:

  • there is no intention to enter into a legal relationship
  • there is no right to exclusive occupation
  • the arrangement is a service occupancy (in tied accommodation).

No intention to create tenancy

Even where exclusive possession is granted, the letting may still be a licence if there is no genuine intention to enter into a legal relationship of landlord and tenant.

Examples of situations where there is no intention to enter into legal relations can be:

  • accommodation provided as an act of generosity, charity, or friendship. This includes people living in almshouses[1]
  • a family arrangement. The courts presume that agreements between family members are not intended to be legally binding, however, each case must be judged on its facts[2]
  • occupation during negotiations subject to contract, for example where a person moves into a property after a contract for sale, but before completion, s/he is an equitable owner and the relationship is probably neither a licence nor a tenancy[3].

Service occupiers

Where an occupier's landlord is also her/his employer a special type of occupancy arises. This will be either a service occupancy or service tenancy (see Tied accommodation for more information). A service occupier is a licensee.

A person will be a service occupier if:

  • s/he is required to occupy the accommodation under her/his contract of employment for the better performance of the employee's duties, or
  • the occupation is necessary for the better performance of the employment duties.

No right to exclusive possession

The main situations where there will be no exclusive possession are accommodation:

  • where the landlord retains general control over the whole of the premises (this is the situation of most lodgers)
  • shared with another person who is not a joint tenant
  • where the landlord retains a genuine right to move the occupier from room to room.

Hostels
Hostel accommodation is often let under a (genuine) licence agreement because of the special rules that can apply. These rules can interfere with occupiers' freedom to such an extent that they do not have exclusive possession of any part of her/his accommodation.

For example, the House of Lords decided that no occupier of a hostel for homeless persons had exclusive possession of a room on the basis of the:[4]

  • restrictions placed on the occupiers' use of the rooms
  • fact that they were not entitled to any particular room and might be required to move rooms or share a room, and
  • fact that the grant of exclusive possession would be inconsistent with the social purpose for which the accommodation was provided.

Hotels
Most hotel guests are licensees. The rules imposed on the guests are normally inconsistent with the creation of a tenancy, for example entering the guests' rooms daily for cleaning and restrictions placed on the guests' use of the rooms.

However, the fact that an establishment calls itself a hotel is not conclusive and the precise arrangements must be examined, particularly in relation to long-term guests who receive few or no services.[5]

Attendance/services
Where a landlord agrees to provide attendances or services that require unrestricted access to the occupier's premises then there will be no exclusive possession. The occupier will be a licensee, not a tenant.

Attendances or services might include daily room cleaning, changing of bed linen and the provision of meals. Even if the services offered are not actually provided, it is still important to look at the nature of the obligation.[6]

An agreement to provide board (food) does not necessarily deprive an occupant of exclusive possession, unless the food needs to be brought to the room in such a way that the tenant loses exclusive possession.

See Regulated (protected) tenancies and Restricted contracts for information on how board and attendances affect an occupier's rights under the Rent Act 1977.

Licences arising out of an estoppel

In some cases a contractual licence could arise out of an estoppel, ie where one party has relied on the promises of another to their detriment (and there may not be a written agreement). An estoppel licence arises, for example, where a cohabitee is led to believe that s/he will be able to stay in a new home for a long time and where, based on that, s/he gives up her/his former tenancy or home, or spends money on the new home. In such a situation it would be unfair for the person to be evicted on a short period of notice (as would occur if they were simply a bare licensee). In such a case, the courts may give the occupier a lengthy notice period. The courts will be flexible and seek to do justice according to the circumstances in each individual case.[7]

Shared occupancy arrangements

Sharing arrangements can cause difficulties in establishing the status of the occupiers. For more information see What is a tenancy?

Statutory protection

Licences are not covered by any of the principal legislation protecting tenants outside the public sector except for the Protection from Eviction Act 1977.

Some public sector licences are covered by the Housing Act 1985, see Secure tenancies and Public sector licences.

[1] Booker v Palmer [1942] 2 All ER 674, CA; Sharpe v McArthur (1987) 19 HLR 364, CA; Gray v Taylor [1998] 1 WLR 1093.

[2] Nunn v Dalrymple (1989) 21 HLR 569, CA; Ward v Warnke (1990) 22 HLR 496; Facchini v Bryson [1952] 1 TLR 1386, CA.

[3] Street v Mountford (1985) 17 HLR 402, HL; but see also  Bretherton v Paton (1986) 18 HLR 257, CA.

[4] City of Westminster v Clarke (1992) 24 HLR 360, HL; Rogerson v Wigan MBC [2004] EWHC 1677, QB; (2005) HLR 10.

[5] Uratemp Ventures Ltd v (1) Collins (2) Carrell [2001] 3 WLR 806, HL.

[6] Huwyler v Ruddy (1996) 28 HLR 551.

[7] Inwards v Baker [1965] 2 WLR 212, CA; Baker v Baker (1993) 25 HLR 408, CA; Matharu v Matharu (1994) 26 HLR 648, CA.

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