A recent ruling in a case brought about against Camelot Property Management Limited had major repercussions for guardian property companies in the UK. The practice of using licence agreements – aka licences for occupation – to place occupiers in properties can no longer be carried out without due care and attention, ideally under the supervision of a trained legal team.
A licence agreement gives the recipient the formal authorisation of the landlord to do something on their premises. In the case of a licence for occupation, this is a formal permit for the licensee to reside in the property.
A common example of a licence for occupation being when a spare room is let to a lodger. The benefit of a licence for occupation for the landlord being the speed and simplicity with which the agreement can be terminated.
This differs from a tenancy agreement, which grants the recipient exclusive possession of the property for an allocated period of time. In addition, tenancy agreements grant the recipient many important rights, including the exclusion of contracts being terminated at short-notice, without valid justification.
A rough summary of the case mentioned above, Bristol County Court reached the verdict that while an individual residing in a property was doing so by way of a licence for occupation, he was considered a shorthold tenant from a legal perspective.
The fact that the court ruled in favour of the tenant sent shockwaves throughout the buy-to-let community in the UK. Thousands of landlords have since been forced to question the validity of the occupation licences they have provided for tenants of their properties. Not to mention, the rights of their tenants, which may go far beyond the confines of the agreements they entered into.
The decision was welcomed by tenant advocacy groups, though lamented by landlords. In any case, it set a precedent for further action to be taken, if and when occupation licence holders feel their rights not being upheld or recognised.
This is why it is essential for landlords to ensure they have the appropriate agreements in place, both for their own benefit and for that of their tenants.
Granting occupation of a specific area of a property is becoming an increasingly grey area, therefore should not be considered without expert legal advice
At Aristone Solicitors, we offer a complete range of high-quality legal services for landlords and tenants. Whether you’ve a dispute to raise with your tenants or you’re an occupant with a grievance to discuss, we’d be happy to hear from you.
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