Saracens Blog

Does the landlord and tenant act cover licences and licensees?

No the Landlord and Tenant act 1945 does not cover licences and licensees. The Landlord and Tenant act 1945 only covers tenancies. Licences do not bind third parties and do not have the security of tenure provisions in the Landlord and Tenant Act 1954. The main test under the Landlord and Tenant Act for a lease is that the tenant has exclusive possession of the property, for a certain fixed term, at a rent, however the rent element need not always be present. The way the parties label the arrangement is not conclusive – the court will look at the substance of the relationship which has been created and then decide whether it is a tenancy or a licence.

In Cameron Ltd v Rolls Royce PLC, the tenant had a lease which was not included in the Landlord and Tenant Act 1954. After the expiry of the lease, the tenant stayed in occupation while negotiations for a new lease were taking place. Finally an agreement was reached for a new, contracted out lease was entered into. The agreement stated that the tenant to use the property as a licensee during the time between the date of the agreement and the lease itself being granted. Occupation was to be on the same terms as the new lease and the tenant was to pay a licence fee similar to the rent paid under that lease.

The judge considered what the parties were aiming to accomplish when they agreed to the agreement. He concluded that they could not have the intention to grant a tenancy, and mainly not a one to which the Landlord and Tenant Act applies. The original lease had been contracted out, and the parties had also gone through a contracting out procedure in relation to the new lease.

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