Differences between a Licence and a Tenancy:

By granting a licence to occupy property, the owner of the property can allow another person (the licensee) to use the property without the owner relinquishing control of it. Whereas a tenancy provides the tenant with a legally binding right to occupy the demised premises, a licence is merely a personal permission which makes the licensee’s use of the premises lawful and prevents it from constituting trespass.

Unlike a tenant, a licensee is not given exclusive possession of the property so does not have the right to exclude the owner from it. The owner is therefore able to use the property in conjunction with the licensee. The owner retains control of the property, and may also be able to recover possession more quickly than if he had granted a tenancy.

Types of Licence:

A licence may be granted without the payment of any consideration so long as there is no intention to create binding legal relations, as where children live with their parents or a friend stays overnight. This is a bare licence, and may be merely oral. A licence does not need to be in writing as it is not an estate in land (s. 1 Law of Property Act 1925). Alternatively, a formal arrangement allowing occupation of the property may be agreed and a contract produced; this is called a contractual licence.

Use of Licences:

Pursuant to the Housing Act 1988 (ss. 1 and 20) most tenancies are assured shorthold tenancies (ASTs), which provide the tenant with a degree of security of tenure. Certain situations are, however, excluded from the Housing Act 1988 and therefore an AST cannot be used. In such situations a common law tenancy or a licence may be used instead. A licence is appropriate in many of these situations, as the circumstances of the occupation mean that not all of the elements required for a tenancy to exist are present or desirable. These excluded situations include:

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