The significance of the licence vs tenancy distinction is enormous for landlords. A tenant under an assured shorthold tenancy (in England) or an occupation contract (in Wales) has statutory protections that a licensee does not: deposit protection requirements; the How to Rent guide; the Renters' Rights Act 2025 possession grounds (no possession without a valid ground from 1 May 2026 in England); the minimum notice periods; and the right to challenge unfair rent increases. A genuine licensee has none of these statutory protections (though they do have limited eviction protection under the Protection from Eviction Act 1977).
Many landlords have historically attempted to use 'licence agreements' to avoid the statutory tenancy protections — particularly to avoid the difficulty of evicting a tenant who refuses to leave at the end of the agreed period. Courts consistently refuse to enforce these arrangements as licences where the factual reality is that the occupier has exclusive possession. The test is objective: what did the parties actually agree about the right of occupation? If the owner effectively excluded themselves from the premises and the occupier had the run of the property, a tenancy exists regardless of the label on the agreement.
The Street v Mountford test, genuine licences, sham licences and residential occupier protection
The legal principles distinguishing a licence from a tenancy — and the protections that apply in each case:
- Street v Mountford [1985]: the three-part test and exclusive possession: The House of Lords in Street v Mountford [1985] AC 809 (Lord Templeman giving the leading judgment) established that the distinction between a tenancy and a licence depends on one key question: does the occupier have exclusive possession of the premises? If the answer is yes — if the occupier can exclude all other persons (including the owner/landlord) from the premises — AND the occupation is for a term (fixed or periodic) AND in return for payment, then the occupier has a tenancy, not a licence. The name given to the agreement is irrelevant. This was confirmed in Antoniades v Villiers [1990] AC 417 where the House of Lords struck down artificial licence arrangements in a shared house — the occupiers had effective exclusive possession of the entire property together and the 'licence' labels were shams. 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 to provide services or inspect is not sufficient if the owner never actually exercises it; courts look at the factual substance of the arrangement, not just the paper terms. Examples where exclusive possession exists (tenancy, not licence): the occupier has their own front door key; the occupier controls access to the premises; the 'landlord access at will' clause has never been exercised; the arrangement is described as a 'licence' but looks, feels, and operates exactly like a tenancy. When a genuine licence exists: (a) Lodger: a person who 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: employer-provided accommodation where the right to occupy is a term of the employment contract and the occupier's right to remain is dependent on the employment continuing — the occupier has no exclusive possession independent of the employment. (c) Holiday occupier: a genuinely temporary arrangement for holiday purposes — the occupier does not use the property as their only or main home. (d) Commercial licence: a market stall; desk space in a serviced office; a car parking space; a shared co-working space — these do not involve residential exclusive possession.
- Sham licences, residential occupier protection and Scotland/Wales: Sham licences: a sham licence is an arrangement dressed up as a licence in the written agreement but which in substance gives the occupier exclusive possession of residential accommodation. The courts look through the label. Common sham arrangements: (a) Shared house 'multiple licence' arrangements: each 'licensee' has a separate 'licence' for their own room plus shared use of kitchen and bathroom; the courts have sometimes found these to be separate tenancies of each room if each occupier has exclusive possession of their own room. (b) 'Licence' agreement with standard-form tenancy terms: if the written 'licence' agreement imposes all the obligations of a tenancy (repairs; quiet enjoyment; regular periodic payments equivalent to rent; fixed or periodic term) and the occupier has exclusive possession of the property, the courts will treat it as a tenancy. (c) 'Licence' with no genuine services: if the agreement says the landlord will provide meals/cleaning but in practice provides none, the 'service' element that might support a genuine lodger licence does not exist. Practical consequence of a sham licence: if a court finds the arrangement to be a tenancy, the occupier has all the statutory protections of a tenant — deposit protection requirements; the Housing Act 1988 / Renters' Rights Act 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 licensee of residential accommodation cannot be evicted by self-help. A licensor who wants to end a residential licence must: (a) give reasonable notice of termination — typically a period equal to the payment period (e.g., 1 month's notice if payments are monthly); (b) if the licensee refuses to leave after notice, obtain a court order for possession before removing them; (c) failure to follow this process — changing locks; removing belongings; cutting off utilities to force departure — is a criminal offence under the Protection from Eviction Act 1977 and can result in a criminal prosecution or a civil claim for damages. The Protection from Eviction Act 1977 s.3 provides that a residential licensee cannot be evicted except by court proceedings; s.1 makes it a criminal offence to unlawfully deprive a residential occupier of their occupation. AST statutory protections that do NOT apply to licences: deposit protection (Housing Act 2004 — only required for deposits taken under ASTs/assured tenancies; not for licence deposits, though good practice to use a scheme); How to Rent guide (only required for ASTs); the RRA 2025 possession grounds and periodic tenancy regime (apply only to assured periodic tenancies); Right to Rent checks (required for all tenancies and licences of residential accommodation where the landlord is the private landlord — so Right to Rent checks DO apply to lodger/licence arrangements). Scotland: the same Street v Mountford principle applies in Scotland — exclusive possession for a term in return for payment creates a tenancy, not a licence; a genuine lodger sharing with a resident owner may have a licence. Scottish PRT (Private Residential Tenancy) protections under the Private Housing (Tenancies) (Scotland) Act 2016 apply only to PRT tenancies — not to licences. NI: similar principles apply; the Protection from Eviction equivalent is found 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 on the agreement.
Can I use a licence agreement to avoid giving tenancy rights to an occupier?+
No — if the occupier in practice has exclusive possession of the 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 (typically equal to the payment period) and, if they refuse to leave after notice, 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 the Protection from Eviction Act 1977 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.
- Lodger agreements — renting a room to a lodger as a resident landlord →
- Assured shorthold tenancy — the AST and the full statutory framework →
- Illegal eviction — Protection from Eviction Act 1977 and criminal liability →
- Resident landlord exemption — when the landlord lives in the same building →
- Right to Rent — checks required for tenancies and lodger arrangements →
- Company let — letting to a company (not an AST) →