Letting Agents Sheffield

Tenancies and Licensees

Jun 7, 2024 | Best Practice, Legislation, Property Investment, Tips for Landlords

Whether you are a landlord or a tenant, your legal rights will depend on the occupation type you have.

There are two main types:

  1. Tenancies, and
  2. Licenses

A tenancy carries more rights and is a type of ownership of land or lease. It will continue after the death of the landlord or the tenant. A license is just a personal agreement between the parties and will end on the death of either.

Note though that in law most occupation will be under a tenancy unless services are provided. It is not unknown for landlords to get occupiers to sign ‘license agreement’ forms when in fact they have a tenant. This is illegal and landlords doing this can be prosecuted for giving ‘sham licenses’.

If the occupation is a tenancy, it will normally be an assured shorthold tenancy, which is regulated under the Housing Act 1988. However in some circumstances, for example if the tenant is living in self contained accommodation in the same building where the landlrod lives, or if the tenant is a limited company, the Housing Act will not apply and they will be unregulated ‘common law’ tenancies.

Tenancies which started before 15 January 1989 will be ‘protected tenancies’ under the Rent Act 1977 and tenants have greater rights. We will be looking at protected tenancies in a later email.

Wales

Note that in Wales the new Renting Homes (Wales) Act 2016 whch came into force on 1 December 2022, provides that so far as is possible tenancies and licenses are to be treated the same and will be ‘occupation contracts’.

However there are some exceptions set out in Schdule 2 of the act, which include lodgers and holiday lets.

Fixed term and periodic tenancies

Tenancies are normally granted for a ‘fixed term’ ie a specific period of time such as six months or a year. After that, if no replacement fixed term is signed, a new ‘periodic’ tenancy will arise. This will either be

  • A statutory periodic tenancy – for example under s5 of the Housing Act 1988, or
  • A contractual periodic tenancy – when the fixed term tenancy agreements specificlly provides for the tenancy to continue as a periodic if the tenant has not moved out by the time the fixed term ends. The advantage of this is that you can specify what the period will be (normally you will want monthly periods) and the rules regarding Council tax are more favourable to landlords.

Proposals for reform

The Renters Reform Bill which will apply just to England, is looking to do away with fixed terms so all tenancies will be periodic. This may be good in some respects but may cause problems for student lets.

However the bill has not made much progress and at the time of writing has only had its first reading. It is possible that it may not be made law before the general election – in which case the new incoming government will have to start again.

Tips and Practice points

  • Make sure you know what tenancy type you have as it will affect your legal rights, in particular as regards eviction and the rules for increasing rent
  • Never try to create a license in circmstances when normally the occupier would have a tenancy, without first obtaining legal advice from a solicitor. Its not impossible to do but must be done in correct way.

 

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The Horizon Group