License or Tenancy Agreement?

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    License or Tenancy Agreement?

    Hi there,

    Just stumbled across this forum which is a great idea!

    I'm just embarking on my HMO investment adventure and have a couple of conflicting bits of advice and wondered what others were doing and the pros and cons etc.

    Do I give my tenants an Assured Shothold Tenancy for 6 months OR do I let them have a licence for staying there.

    I've heard of some HMO's using licences (to allow quicker access to property and also means tenants don't generte any kind of interest in the property too) but the stuff I've found on the web so far regarding a licence only seems to apply if the landlord is living at the property too, which I won't be.

    Any ideas? Past experiences? Advice?

    Would be much appreciated.

    Cheers

    Dave

    #2
    Whether an agreement is a lease or a licence does not principally depend upon what you call it, but on whether the occupier has exclusive possesion.

    So, taking two extremes, if your HMO comprises self contained flats each let to different people then they will be tenants. If, on the other hand, your HMO comprises a dormitory with all of the occupiers sharing the facilities and each with thier own agreement with you they will be licensees.

    The key question is do any of them have exclusive possesion of parts of the premises, however there are (as ever) grey areas.
    NOTE: Steven Palmer BSc (Hons) MRICS MBEng is an official LandlordZONE Topic Expert and a Director of Davisons Palmer Lim Any advice given by Steven in this Forum is of a general nature only and should not be acted upon without first obtaining advice specific to your problem/situation from a professional.

    Comment


      #3
      Originally posted by swishproperty
      Do I give my tenants an Assured Shothold Tenancy for 6 months OR do I let them have a licence for staying there. Dave
      They will be tenants whatever agreement you come to, and they will have a tenancy agreement whether you give them one in writing or not.

      (to allow quicker access to property and also means tenants don't generte any kind of interest in the property too)
      An Assured Shorthold Tenancy does not generate any long term interest for the tenants.

      Comment


        #4
        They will be tenants whatever agreement you come to, and they will have a tenancy agreement whether you give them one in writing or not.
        Not always so. I have clients with HMO's with licensees rather than tenants and on at least one occasion this has been tested in court and my client has been succesful. To be fair this is hostel type accomodation where all the facilities are shared with other tenants and there is a resident warden, the client being a housing association. Nonetheless, as I said in my earlier post whether a residential occupier is a licensee or a tenant will turn on the issue of exclusive possesion.
        NOTE: Steven Palmer BSc (Hons) MRICS MBEng is an official LandlordZONE Topic Expert and a Director of Davisons Palmer Lim Any advice given by Steven in this Forum is of a general nature only and should not be acted upon without first obtaining advice specific to your problem/situation from a professional.

        Comment

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