Licences for occupation – is your short term licence agreement actually a formal tenancy?

7th February 2018 | Caroline Vernon | Commercial Property, Landlord, Leases

A recent ruling is likely to have significant consequences for guardian property companies (and other landlords) who use licence agreements to place occupiers into properties to protect against squatters and vandalism.  The case of Camelot Property Management Limited and Camelot... Read more

A recent ruling is likely to have significant consequences for guardian property companies (and other landlords) who use licence agreements to place occupiers into properties to protect against squatters and vandalism.  The case of Camelot Property Management Limited and Camelot Guardian Management Limited v Roynon [2017] highlights the importance of carrying through in practice what a document/ licence has set out to achieve.

The matter of whether a licence is really a licence or indeed a lease has long been debated and for some time now it has been widely accepted (following the decision in Street v Mountford [1985]) that the principles of exclusive possession, rent and length of term govern how a ‘licence’ will be regarded by the courts.

The recent Camelot case did not set to change these principles but has offered valuable insight as to what is required in order to prevent ‘exclusive possession’ from arising and turning a ‘licence’ into a lease or formal tenancy.

The ‘licence’ agreement with Mr Roynon for the occupation of two rooms in a former old people’s care home contained the following restrictions:

• No overnight guests
• No unsupervised guests
• No more than 2 guests at a time
• All guests to be escorted from the property at the end of each visit

The court held that the provisions of the agreement did not accurately reflect what happened in reality. Whilst the licence stated that no exclusive possession would be given, Mr Roynon had in fact been given keys to two rooms to which no other guardians had access and which no one entered without his permission.

Regular inspections of the rooms by Camelot were not held to be sufficient to counter his exclusive possession and Mr Roynon had therefore acquired an assured shorthold tenancy rather than a ‘licence to occupy’.

The case highlights the need to put into practice what a document/ licence has set out to achieve and where no exclusive possession is intended, landlord’s must make sure that the living arrangements are not contrary to the formal agreements put in place.

Anyone using guardians or short term occupiers to prevent buildings remaining empty should carefully balance the risks of allowing people into occupation with the rise of professional squatters and other unwanted occupiers who could look to take advantage of such situations.

Contact Caroline for more information.