Does anyone else use licence agreements?

Reply to the comment left by "Natasha Chambers" at "16/01/2014 - 15:44":

Hi Natasha

Most regular landlords, and legal advisors, will warn you against using licence agreements, and perhaps with good reason as the courts will generally presume that it is a tenancy, unless you can prove otherwise, and as such you could put yourself at considerable risk in legal terms. If having read my postings, and the further information below, you wish to explore this further then I suggest you contact me directly to discuss it further.

Even if you use licence agreements you will still be subject to the Protection from Eviction Act, unless you are a registered charity or registered social landlord, however, you would be able to do a weekly licence agreement rather than a 6 month assured shorthold tenancy, and this means that you could serve a 28 day Notice to Quit at any time (even the day after letting the room, if you wished to pre-empt any problems and minimise delays). Serving a s21 Notice at the start of a tenancy is common practice for assured shorthold tenancies, so serving a Notice to Quit at the start of a licence agreement is simply applying the same principle.

To create a licence rather than a tenancy, the paperwork and the services provided have to match. The business has to genuinely provide the services, and the residents have to agree to receive those services. There is no definitive list of services that have to be provided in order to oust the presumption of a tenancy, but the more services (of a certain type) that are provided then the stronger the argument that it is a licence not a tenancy. The main point is that the occupant does not have "exclusive possession" of a room, i.e. you retain a legal right to enter the room, but simply writing this "right" into an occupancy agreement is not enough, you must actually exercise this right, (but without infringing the privacy of the room occupant), - if you get this wrong you could get into some legal difficulties.

In terms of what services could be provided, think about what a hotel/guest house/B&B/travelodge etc provides, think about what the asylum seeker housing providers do to avoid creating tenancies (I can advise on this), think about other situations where it is accepted that a licence has been created. Put all that together and you come up with a list of possible criteria/services/situations which together would oust the tenancy presumption. Like I said, there is no definitive list of services, and these have to be part of the overall agreement, but examples include cleaning of rooms, provision of linen, checking fire alarms, checking the welfare of residents, assorted support services, access for maintenance, furniture rental (and right to check landlord furniture), disposal of rubbish (provide a rubbish bin in the room), right to move the resident to another room, etc, etc.

If you structure your business so as to put these measures into place, and ensure that the paperwork (occupancy agreements, etc) correspond and are legally robust, then the chances of a successful legal challenge are minimised. Having licence agreements definitely has many advantages in terms of managing the occupants' behaviour (including non-payment of rent), and it usually prevents legal action becoming necessary.

Hi Robert, I have vulnerable LHA tenants in my HMO, and have been looking into the provision of services (breakfast and cleaning) in order to reclassify the accommodation as B&B, with improved management as my goal. I would be very grateful for the opportunity to discuss this further with you, if you should be able to spare the time. Nobody else provides this kind of service in my area - so I would be trailblazing..!
Thank you in advance
Barbara

Hi Barbara

I also looked into the possibility of making my HMO properties into B&Bs, but after some research I dismissed the idea as the costs of complying with the bureaucracy involved would have been massive and at the LHA rates the figures just did not stack up. However, for different properties, this may be a more viable option, and certainly has some important advantages, (e.g. may not be subject to the Protection from Eviction Act 1977).

Although my licence agreements are, I believe, valid as licence agreements rather than tenancy agreements, I am still subject to the provisions of the Protection from Eviction Act and have to go to court and get possession orders etc if I need to evict anyone. These delays make it more difficult to manage problems in the properties, and of course increase the costs, though of course as you will see from some of my other posts on this website there are many things that can be done to offset or limit those costs and maximise the income during the person's occupancy.

You are welcome to e-mail me robert.mellors@hotmail.co.uk, or message me via Facebook (or Linked In), and we can then arrange to discuss this further.

Just a quick update..........

In court yesterday doing an eviction from one of the HMO rooms, and for the first time the judge actually considered the issue of whether the occupancy agreement was a licence or a tenancy (and thus the correct notice requirements). The judge accepted that it was a licence agreement and as such a 28 day Notice to Quit was sufficient.

Of course this is not a binding judgment, but it does add weight to my argument that my "licence" agreements are indeed valid licence agreements (not tenancies).

Reply to the comment left by "Robert Mellors" at "07/01/2015 - 15:38":

Interesting. Thanks for the update, Robert.

Reply to the comment left by "Robert Mellors" at "06/01/2014 - 10:03":

Dear Mr Mellors, from what I've read it seems you have in-depth knowledge surrounding HMO's and if possible may i contact you for advice

Reply to the comment left by "Robert Ely" at "05/02/2015 - 22:44":

Hi Robert

If it is something that could benefit other landlords and is suitable for this forum, then you could put it on here.

If it is a more private matter that you don't wish to put on the website for others to see, then you may contact me direct. I'm not allowed to put my contact details on here, but you could probably find me via some social network sites like Linked In or Facebook, or you could just contact the administrator of this website, Mark Alexander, and he can pass on my contact details to you.

Reply to the comment left by "Robert Mellors" at "07/01/2015 - 15:38":

Hi Robert,

I have read the whole conversation from the beginning of this subject and I am so appreciated the knowledge and experience that you shared with us! We recently had just successfully evicted the tenants but it took us nearly 5 months! Thus, I am exploring the possibility of using licensed agreement rather than a AST.

Your shared experiences and knowledge is very valuable to us and certainly we have learnt a lot from what you have shared. We are currently already providing cleaning service, fire alarm monthly check, quarterly room inspection, etc. so I guess by review what kind of services we are providing and may be adding some more, we could turn into licensed agreement.

Once again, many thanks for your kind share! Appreciated ! Wish you all the best and finger crossed to our HMOs too 🙂

Regards,
Liang