Interest or permission to occupy?
At first glance, it may seem that a Lodger (legally known as a Licensee) and Tenant are the same: a person renting a property from a Landlord. However, in reality they are quite different and their obligations and rights differ, as do the agreements they enter into. A Lodger will enter into a Licence Agreement and a Tenant will enter into a Tenancy Agreement - typically an Assured Shorthold Tenancy (AST) Agreement. You can view a tutorial of Legislate’s ASTs online.
The Tenancy Agreement grants the Tenant with a legal interest in land for a specific period of time, the Tenant will have control over the property for the duration of time specified in the Tenancy Agreement. Whereas a Licence grants permission for a person to occupy the property but does not confer a legal interest, in the absence of the Licence Agreement this person would be a trespasser.
For a person to be considered a Tenant and for the letting to be considered a Tenancy there are key elements that must be present. It is clear from the case of Street v Mountford that the essence of the Agreement determines whether a letting is a Tenancy (and not a Licence) rather than the label of the Agreement.
What makes a lodger different from a tenant?
A Tenant has the right to exclude others (including the Landlord) from entering the premises without permission. The premises can be an entire property or just a single room in the property.
A Lodger does not have exclusive possession and is considered an excluded occupier. An excluded occupier is someone who shares the property with the homeowner (the Landlord). If the Agreement allows unrestricted access to the room or property, this would be a Licence Agreement.
In addition, in a Tenancy the letting is for a specific room/property and the Tenant cannot be moved to a different room/property. In a Licence Agreement, the Lodger can be required to move to a different room within the property.
Agreed Period of Time
This can be for a fixed period of time or periodic based on the rental period (i.e. week to week or month to month).
A Lodger can be given ‘reasonable notice’ to leave the property and as mentioned above, the Landlord can require the lodger to move to another room within the property. The Landlord must give at least 2 months’ notice in order to repossess the property if you are a Tenant.
Although this is not an essential ingredient for a Tenancy Agreement, it is very common as most Landlords will require the Tenant to provide a form of payment in return.
What are the main features of a Lodger Licence Agreement?
The main features of a lodger licence agreement are:
- The Landlord may enter the room without permission;
- The Lodger cannot keep the Landlord out;
- The Landlord may request the Lodger to move to a different room in the property;
- The Landlord does not need to protect the deposit with a tenancy deposit scheme;
- The Landlord has fewer legal obligations, although the Landlord must make the property safe for occupation, the regulations are less stringent for a Lodger in comparison to a Tenant; and
- The Landlord only needs to give ‘reasonable notice’ for the Lodger to leave.
What are the main features of a Tenancy Agreement?
The main features of a tenancy agreement are:
- The Tenant will have exclusive possession of the property;
- The Tenant will require notice for inspections or visits by the Landlord;
- The Landlord must abide by safety regulations prescribed by law;
- The Landlord must protect the deposit with a tenancy deposit scheme; and
- The Landlord must give at least 2 months’ notice to repossess the property;
Whilst it might be tempting to label an Agreement a Licence due to the reduced obligations, it is important to understand that the agreement must have the features of a Licence or risk being treated by the courts as a Tenancy. Equally, a landlord must understand the consents they need to give before renting their property via a tenancy agreement.
Legislate enables Landlords to create licence and assured shorthold tenancy agreements which are fair, robust and tailored to their situations. To find out how, sign up, watch our demo and tutorials or alternatively book a call with us
The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.