Can it be a licence agreement as opposed to an AST?

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    Can it be a licence agreement as opposed to an AST?

    Hello

    I want to start letting a house soon, to individual tenants (i.e. not a joint tenancy). As I will be a non-resident landlord, I was assuming I would have to let it out on individual ASTs. This presentation from Landlordzone's partner site - https://www.legalhelpers.co.uk/landl...on_booklet.pdf - however suggests at the bottom of page 6 that it would be possible to let it on licence agreements.

    The situation will be that the tenants will be renting their rooms individually, and they will be able to terminate their contracts on one month's notice with no minimum term. Could this be covered by a a series of licence agreements?

    The only reason why I ask is that there are various advantages from the landlord's point of view of using licences as opposed to AST (e.g. no need for the admin of tenancy deposit schemes, easier to obtain possession if the licensee doesn't pay the rent, no need for a six month minimum term, etc.). Please don't think I intend to be a dodgy landlord, but obviously if I do have a problem tenant it would be beneficial if they were on a licence as opposed to an AST.

    #2
    I'd wager a lot against 1p that it would be an AST regardless of what the paperwork said.. see

    You can state on the paperwork what you like - but there's a key case....

    Street v Mountford...
    http://en.wikipedia.org/wiki/Street_v_Mountford

    In the end it would be the judge that would decide: Me, I wouldn't want the risk of a criminal conviction for illegal eviction...
    I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

    Comment


      #3
      Originally posted by JamesHopeful View Post
      I want to start letting a house soon, to individual tenants (i.e. not a joint tenancy). As I will be a non-resident landlord, I was assuming I would have to let it out on individual ASTs. This presentation from Landlordzone's partner site - https://www.legalhelpers.co.uk/landl...on_booklet.pdf - however suggests at the bottom of page 6 that it would be possible to let it on licence agreements.

      The situation will be that the tenants will be renting their rooms individually, and they will be able to terminate their contracts on one month's notice with no minimum term. Could this be covered by a a series of licence agreements?
      If you are not resident, or if the rooms are not let as a hotel/B&B rooms (or as a genuine holiday let), or if you are not a body authorized to provide student accommodation, and if the occupiers occupy as their only or principal residence, then the occupiers *will* have assured shorthold tenancies.

      If you'd still like to pursue the licence idea, then please seek expert legal advice. If you get it wrong, you could end up being prosecuted for unlawful eviction, and/or face civil claims for damages for unlawful eviction and deposit non-compliance claims.

      There is no minimum term for an AST, but you cannot obtain a possession order under s.21 to take effect earlier than six months after the start of the tenancy.

      Comment


        #4
        theartfullodger,

        Thanks for the helpful reply. Until I read the "Legal Helpers" document which I linked to in my post above, that is exactly what I thought -- i.e. any de facto exclusive occupation of an area of a property when there's a non-resident landlord = AST, regardless of what the paperwork claims. However Legal Helpers must be getting their information from somewhere, so I'm curious....

        Comment


          #5
          westminster,

          Thank you for your helpful reply. Just out of interest, do you know - where does the student exception arise from?

          Comment


            #6
            Originally posted by JamesHopeful View Post
            Thank you for your helpful reply. Just out of interest, do you know - where does the student exception arise from?
            Paragraph 8 Schedule 1 Housing Act 1988.

            Comment


              #7
              Originally posted by westminster View Post
              If you'd still like to pursue the licence idea, then please seek expert legal advice. If you get it wrong, you could end up being prosecuted for unlawful eviction, and/or face civil claims for damages for unlawful eviction and deposit non-compliance claims.
              There might be a way around it, if, say, you provided 'serviced' rooms, i.e. no exclusive possession, and cleaning, sheet changing-type services, but, as I said, it'd be essential to get expert legal advice, as the consequences are serious if you get it wrong.

              Comment


                #8
                westminster,

                Thanks for all your help. This is clearer now. I will use ASTs (which I was expecting to do all along).

                Comment


                  #9
                  James, I want to do the same thing. The rooms will be available for people for whom the room will not be their main or principal home, e.g. contractors. I want the rooms to be let on a weekly basis 'no pay, no stay'. Contractors do not, generally speaking, want to be tied into a 6m AST as they will be legally liable for the rent for the whole 6m.

                  I entered my details on a couple of 'expert' legal websites, and got about 6 replies. Only one would draw up a contract for me but would charge £350, so it is possible to do.
                  It would kill me to pay £350 for a contract! But I suppose I'll have to pay it in the end.

                  Comment


                    #10
                    Berlingogirl,

                    I would be very interested if you would be kind enough to either post the link or send it to me directly as its something I am also considering.

                    Hope its ok to hijack for a 2nd question, but if I have my son living in the property, does this in anyway affect whether I issue ASTs, Licenses or Lodger agreements?

                    Comment


                      #11
                      Originally posted by Berlingogirl View Post
                      Contractors do not, generally speaking, want to be tied into a 6m AST as they will be legally liable for the rent for the whole 6m.
                      I repeat, there is no minimum term for an AST. You can make the contract periodic from the outset if you wish, e.g. a weekly periodic contract.

                      Comment


                        #12
                        Originally posted by Lara View Post

                        Hope its ok to hijack for a 2nd question, but if I have my son living in the property, does this in anyway affect whether I issue ASTs, Licenses or Lodger agreements?
                        Your son can be the (resident)landlord.
                        He would need to be living in the property before the lodgers.
                        Allow tenants to protect their own deposits. I want free money when they do it wrong

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                          #13
                          Thank you for that. Very helpful

                          Comment


                            #14
                            Good morning Lara,
                            Sorry for the delay in replying, I think it was landlordreferncing.co.uk and the agreement would cost £350 plus VAT.

                            Comment


                              #15
                              Originally posted by Berlingogirl View Post
                              Good morning Lara,
                              Sorry for the delay in replying, I think it was landlordreferncing.co.uk and the agreement would cost £350 plus VAT.
                              Thanks Berlingogirl.

                              Comment

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