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Licence vs Tenancy UK 2026

Licence to Occupy vs Tenancy — Street v Mountford, Exclusive Possession, Sham Licences and Lodger Agreements

Licence to occupy vs tenancy guide 2026: the distinction was definitively established in Street v Mountford [1985] AC 809 (House of Lords) — if an occupier has exclusive possession of separate premises for a term in return for rent, the occupier has a TENANCY, regardless of what the agreement is called. A licence gives permission to be present on premises but does NOT create exclusive possession or any interest in land. Key tests: (1) exclusive possession — can the occupier exclude all others (including the owner) from the premises? If yes, a tenancy exists. (2) Sham licences: courts look through artificial labels; actual exclusive possession creates a tenancy with full statutory protection. Genuine licences: lodger (shares with resident landlord who provides services and retains access); staff accommodation; holiday occupier; commercial desk/space. Residential licensees and the Protection from Eviction Act 1977: even a genuine residential licensee cannot be evicted without reasonable notice and a court order — changing the locks is a criminal offence. AST statutory protections (deposit; RRA 2025 grounds; How to Rent) do NOT apply to licences. Scotland: same principle; PRT protections apply only to PRT tenancies. NI: Protection from Eviction equivalent provisions.

12 min readUpdated 7 June 2026Last reviewed: 17 May 2026licence-to-occupytenancy-vs-licencestreet-v-mountfordsham-licence

Street v Mountford [1985]: the exclusive possession test and when a licence genuinely exists

The House of Lords in Street v Mountford [1985] AC 809 settled the test for distinguishing a tenancy from a licence. Lord Templeman held that if an occupier has exclusive possession of separate residential premises for a fixed or periodic term in return for payment, the occupier has a tenancy — regardless of the label attached to the agreement. The key question is: does the occupier have exclusive possession? If the occupier can exclude all other persons (including the owner) from the premises, exclusive possession exists and a tenancy arises.

  • Confirmed in Antoniades v Villiers [1990] AC 417: the House of Lords struck down sham licence arrangements in a shared house — occupiers had effective exclusive possession of the whole property together; the 'licence' labels were disregarded
  • The exclusive possession test in practice: the owner must genuinely be able to enter the property without the occupier's permission at any time for any purpose — not just for repairs on notice; a clause allowing the landlord to enter at will that is never exercised does not prevent exclusive possession
  • Examples of exclusive possession (tenancy, not licence): the occupier has their own front door key; the 'landlord access at will' clause has never been exercised; the arrangement looks, feels, and operates exactly like a tenancy
  • When a genuine licence exists: (a) Lodger: shares accommodation with a resident owner who provides genuine services (meals; cleaning; laundry; access to common rooms) and who genuinely retains the right of access to the room; the owner is present in the property as their own residence. (b) Staff accommodation: right to occupy conditional on employment; no exclusive possession independent of the employment. (c) Holiday occupier: genuinely temporary; occupier does not use the property as their only or main home. (d) Commercial licence: market stall; desk space in a serviced office; car parking space

Sham licences, residential occupier protection and Scotland/Wales

  • Sham licence: an arrangement labelled as a licence in the written agreement but which in substance gives the occupier exclusive possession of residential accommodation — courts look through the label
  • Common sham arrangements: (a) 'Licence' agreement with standard-form tenancy terms — regular periodic payments; quiet enjoyment; repair obligations; fixed or periodic term; the occupier has exclusive possession of the property; (b) 'Multiple licence' arrangements in shared houses where each 'licensee' has exclusive possession of their own room; (c) 'Licence' with no genuine services — agreement says landlord will provide meals/cleaning but in practice provides none
  • Practical consequence: if a court finds the arrangement to be a tenancy, the occupier has all statutory protections of a tenant — deposit protection requirements; HA 1988 / RRA 2025 (England) or RHWA 2016 (Wales) tenancy protections; the landlord cannot evict except by the statutory process
  • Residential licensee protection (Protection from Eviction Act 1977): even a genuine residential licensee cannot be evicted by self-help; the licensor must: (a) give reasonable notice of termination (typically equal to the payment period); (b) obtain a court possession order if the licensee refuses to leave; (c) changing locks; removing belongings; cutting off utilities is a criminal offence under PEA 1977 s.1 and gives rise to a civil claim for damages
  • PEA 1977 s.3: a residential licensee cannot be evicted except by court proceedings; s.1: unlawfully depriving a residential occupier of their occupation is a criminal offence
  • AST statutory protections that do NOT apply to licences: deposit protection (HA 2004 — only required for deposits taken under assured tenancies); How to Rent guide (only required for ASTs); RRA 2025 possession grounds and periodic tenancy regime; Right to Rent checks — however DO apply to licences of residential accommodation where the landlord is a private landlord
  • Scotland: the same Street v Mountford principle applies — exclusive possession for a term in return for payment creates a tenancy, not a licence; Scottish PRT protections under the Private Housing (Tenancies) (Scotland) Act 2016 apply only to PRT tenancies, not licences
  • NI: similar principles apply; Protection from Eviction equivalent provisions in the Private Tenancies (NI) Order 2006

Frequently asked questions

What is the difference between a tenancy and a licence to occupy?+

The key difference is exclusive possession: if an occupier has exclusive possession of separate residential premises (can exclude all others, including the owner) for a term in return for payment, they have a tenancy regardless of what the agreement is called. A licence gives only personal permission to be present on premises without exclusive possession. The distinction was definitively established in Street v Mountford [1985] AC 809 — courts look at the factual substance of the arrangement, not the label.

Can I use a licence agreement to avoid giving tenancy rights to an occupier?+

No — if the occupier in practice has exclusive possession of residential premises for a term in return for payment, the law treats the arrangement as a tenancy regardless of what the agreement says. This is a sham licence: courts look through the artificial label and treat the occupier as a tenant with full statutory protections. A genuine licence only exists where the owner genuinely retains access and control (as with a lodger sharing with a resident landlord providing real services) or in recognised commercial licence situations.

Can I evict a licensee without a court order?+

No — for residential accommodation, even a genuine licensee is protected by the Protection from Eviction Act 1977. You must give the licensee reasonable notice to leave and, if they refuse, obtain a court possession order before removing them. Changing the locks, removing belongings, or cutting off utilities to force a licensee out is a criminal offence under PEA 1977 s.1 and can result in criminal prosecution or a civil claim for damages.

Is a lodger a tenant or a licensee?+

A lodger is a genuine licensee if: they share accommodation with the resident owner (the owner lives in the same property as their own home); the owner provides genuine services (access to common rooms; meals; cleaning; laundry — or at minimum the unfettered right to access the lodger's room); and the lodger does not have exclusive possession of any separate dwelling. If the owner lives elsewhere or never enters the lodger's room, a court may find exclusive possession exists — making the arrangement a tenancy. Right to Rent checks are required for lodger arrangements as well as tenancies.

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