The Street v Mountford Test
Lord Templeman in Street v Mountford [1985] AC 809 held that if an occupier has exclusive possession of premises for a term at a rent, a tenancy arises regardless of the label the parties give the agreement. Three questions: (1) Does the occupier have exclusive possession? (2) Is there a definite term? (3) Is rent paid (not strictly essential after Ashburn Anstalt v Arnold [1989] but near-universal in practice).
- Exclusive possession: right to exclude all others including the landlord
- Definite term or periodic arrangement (weekly, monthly, quarterly, yearly)
- Label irrelevant: 'licence' or 'lodger agreement' does not determine the legal effect
Sham Licences
In AG Securities v Vaughan [1990] and Antoniades v Villiers [1990] the House of Lords held that sham clauses purporting to allow the landlord to introduce other occupiers � never exercised in practice � do not prevent a tenancy from arising. Back-to-back agreements entered simultaneously as part of a single transaction to grant exclusive possession of a property create a joint tenancy.
Genuine Licences � Lodgers and Holiday Lets
A genuine lodger � where the landlord is resident and provides substantial services � lacks exclusive possession and is a licensee. Holiday lets are exempt from the Housing Act 1988 s.1(1)(b) where the purpose is genuinely to confer a right of occupation for a holiday. Service occupancies (employee occupying for better performance of duties) also fall outside HA protection.
Commercial Occupation � LTA 1954
The Landlord and Tenant Act 1954 grants security of tenure to business tenants. A licence to occupy commercial premises does not attract LTA 1954 protection � but courts apply Street v Mountford principles. Contracting out of LTA 1954 requires a landlord's warning notice and tenant's declaration before the tenancy is granted.
Consequences of Misclassification
Where a court finds a tenancy behind a licence label, the Housing Act 1988 applies, deposit protection is mandatory, and possession requires a court order. Unlawful eviction of a residential occupier who is in fact a tenant is a criminal offence under the Protection from Eviction Act 1977 (up to 2 years' imprisonment) and gives rise to civil claims under HA 1988 ss.27-28.