Do people living in HMOs have licenses or tenancies?

signing a tenancy agreementThis is a question to the blog clinic from Lisa (not her real name), who is a tenant in England.

I rent in an HMO with a normal set-up (the landlord lives elsewhere). I have occupied the same lockable room for nearly five years. I am not an excluded licensee, or a property guardian or any other type of unusual renter.

Given the above, is it legit for the landlord to use a licence to occupy rather than a tenancy agreement? I get different answers from different sources (Shelter, Community Law center, solicitor firms).

Some say what happens in practice is what matters, whilst others say the contract and its details determine my status.

My LL uses a licence to occupy that includes a clause saying the licensee is there to provide security. He is a private LL who runs things himself (badly)! If what he is doing is totally legal, I wonder why any LL bothers with a tenancy agreement at all?

Answer

In England (although not in Wales), there is a big difference between a tenancy and a license:

  • A tenancy is a legal interest in land.  The tenant has a number of automatic rights which cannot be excluded.
  • On the other hand, a license is a contractual arrangement whereby the licensee has permission to occupy the property, which prevents him from being a trespasser.

Many landlords assume that if they get the occupier to sign a ‘license agreement’, then the occupier cannot have a tenancy.  However, this is a big mistake. This was decided in an important legal case in 1988 called Street v. Mountford.

The case of Street v. Mountford

In this case, Mrs Mountford had signed a form of agreement which stated at the end

I understand and accept that a licence in the above form does not and is not intended to give me a tenancy under the Rent Acts

At that time, the Rent Act was the governing legislation and it was hard for landlords to evict due to the high security of tenure given to tenants.

When Mr Street wanted to evict Mrs Mountford a few years later, he used the procedure appropriate for licensees.  However, Mrs Mountford defended, claiming that she had a tenancy.  The case went all the way up to the House of Lords, where it was held that she had a tenancy.

The case is authority for the rules that

  • The occupation type depends upon the actual situation and what happens rather than what is written on the document the occupier signs, and
  • If the occupier pays rent and, most importantly, has ‘exclusive occupation’, then in most cases (not all but most), it will be a tenancy.

Landlords and license agreements

Many landlords are told, often in ‘how to get rich in property’ type training, that they must give ‘licenses’ as it will then be easy for them to evict occupiers, and they will have fewer rights.

This is not correct, though.  By default, most occupiers will have a tenancy.  If the landlord wrongly gets the tenant to sign a license agreement, this is known as a ‘sham license’ and is a criminal offence for which the landlord can be prosecuted and fined.

Note also that even if the occupier does have a residential license, this will not entitle the landlord to evict them without court proceedings.  This will be a criminal offence.

There is a different court procedure for licenses, but landlords still have to get a court order.  There are a few exceptions to this, the main ones being lodgers who share living accommodation with their landlords and genuine holiday lets.

Your situation

It sounds to me as if you have a tenancy and not a license.  This may be good news for you, though, as if your landlord tries to evict you using the license procedure, you will have a defence.

If, on the other hand he tries to evict you without getting a court order first, you should go straight to solicitors.

  • You will have a claim against him for an injunction allowing you back in and for compensation
  • You will also have the right to claim a ‘rent repayment order’ in the First Tier Tribunal for up to 12 months’ worth of rent.

It looks as if your landlord is trying to assert in the agreement that you are a property guardian.  But even if you are, this does not necessarily mean that you do not have a tenancy.  From what you say though, this assertion is untrue anyway.

The situation in Wales

Note that in Wales, since the new legislation came into force in December 2022, there is no significant difference between a tenancy and a license.

Both will be ‘occupation contracts’ and have the same rights.

Note that there is more help and guidance for tenants on the Renters Guide website.

The post Do people living in HMOs have licenses or tenancies? appeared first on The Landlord Law Blog.

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