License Agreement

A license agreement provides a person to use or occupy property without acquiring the rights of a tenant. Because of this, granting a license rather than a tenancy may seem appealing to landlords, however, simply labelling an agreement as a license does not make it a license.

In Street v Mountford [1], the House of Lords held that it was the reality of an arrangement rather than the label attached to an agreement that determined if a letting was a tenancy or a licence. They identified the hallmarks of a tenancy as:

  • the grant of exclusive possession of premises
  • for a period of time
  • at a rent.

A license agreement can be terminated by the serving of a notice to quit which in most cases must provide no less than 28 days notice [2]. However, where there is a breach of the agreement by the licensee, the agreement may provide for less than 28 days notice to be given.

A license agreement in relation to residential premises provides the licensee with protection from eviction [3], this means that before the licensee can be lawfully evicted the licensor must obtain a possession order. However, a license agreement is not to be confused with an excluded license agreement. Under an excluded license agreement the licensee has no protection from eviction.

A license will usually be an excluded license if:

  • it is granted by a local authority to a homeless applicant for temporary accommodation
  • the premises is a hostel
  • the landlord/licensor shares any of the accommodation with the licensee
  • it granted solely for holiday purposes
  • it is granted for other than moneys worth
  • there is no intention to create legal relations

Licenses Granted to Homeless Applicants

Many landlords and letting agents provide accommodation to the local authorities for the purpose of proving temporary accommodation to homeless applicants. In many cases, the local authority may discharge their duties to the homeless applicant leaving the landlord or agent with the obligation to evict the occupant.

The courts have held that homeless applicants will not be subject to protection under the Protection from Eviction Act 1977 when granted a licence to occupy accommodation under the following sections of the Housing Act 1996 [4]:

  • section 188 (accommodation pending inquiries), or
  • section 190 (duties to an applicant who has been found intentionally homeless).

Occupiers who are placed in interim accommodation while the authority is carrying out inquires into their homelessness application will be an excluded occupier [5].

If after having provided an applicant with temporary accommodation, the local authority accepts that it owes the main housing duty to the applicant and tells the applicant to continue to occupy the temporary accommodation for an indefinite period of time pending identification of suitable long-term accommodation, the applicant will be an occupier with basic protection under the Protection from Eviction Act 1977 [6]. This means the landlord will require a possession order to lawfully evict the occupant.

Other License Agreements

License agreements in relation to land and commercial premises will usually provide the licensor with a right to forfeit the license agreement where there is a breach of the agreement by the licensee and a right to terminate the agreement generally without the need for a possession order. However, this is dependable upon the premises not including any residential property.

The grounds to terminate a license agreement are either where the licensee has breached the agreement or where the licensor simply wishes to terminate the agreement.

 

[1] Street v Mountford (1985) 17 HLR 402, HL

[2] s.5 of the Protection from Eviction Act 1977

[3] s.1 of the Protection from Eviction Act 1977

[4] R (on the application of ZH and CN) v Newham LBC and Lewisham LBC and Secretary of State for Communities and Local Government [2014] UKSC 62; Desnousse v (1) Newham LBC (2) Paddington Churches HA (3) Veni Properties Ltd [2006] EWCA Civ 547; Mohamed v Manek and Kensington and Chelsea RLBC (1995) 27 HLR 439, CA; Huda v Redbridge LBC [2016] EWCA Civ 709.

[5] R (on the application of ZH and CN) v Newham LBC and Lewisham LBC and Secretary of State for Communities and Local Government (Interested Party) [2014] UKSC 62; Mohamed v Manek and Kensington and Chelsea RLBC (1995) 27 HLR 439.

[6] Dacorum Borough Council v Bucknall [2017] EWHC 2094 (QB).

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