Sub-let and a licensee, the difference

odds_on

Rather than go off topic in the thread Tenant has asked permission to sublet, here, I try to set out here the difference between a sub-let and a licensee.

The term sub-letting is regularly used incorrectly by both landlords (who should know the difference) and tenants. Misuse of the term sub-let can therefore cause much confusion.

It is very important to understand the difference between a sub-let (a sub-tenancy) and a person who rents out a room in their home.

Sub-letting.
Whether a tenancy is a fixed term or a Part 4, if a landlord refuses a request by a tenant for an assignment or a sub-let and that request is refused, the tenant has the right to vacate the property with 28 days notice and retain his deposit except for damages in excess of normal wear and tear; that is, the landlord cannot retain any part of the deposit for breaking the lease agreement. Landlords do not have such an 'opt-out' option of a fixed term lease agreement. The closest a landlord can get is to have a well worded clause in the lease agreement which provides for a valid Notice of Termination should any of the grounds for termination of a Part 4 tenancy apply.

Where a tenant sub-lets a property, the tenant retains his tenancy with the landlord of the property but he vacates the property becoming the 'head-tenant' with a 'head-tenancy'. Therefore, the head-tenant becomes, in turn, a landlord to his tenant, the sub-tenant who has a sub-tenancy. The head-tenant must comply with all the obligations and responsibilities of a landlord.

For the landlord who is the owner of the property, there can be difficulties with Notices of Termination - do they apply to the head-tenant only or both heasd-tenant and sub-tenant. If only to the head-tenant, what are the rights of the sub-tenant who he has not vetted himself?

A tenant may not sub-let part of a property and remain in the other part. A tenancy provides for exclusive use of a property by the tenant, thus there cannot be two tenancies of a property where the landlord or head-tenant remains in part of the rented property as neither he not the sub-tenant would have exclusive use.

A licensee.
Any home owner may rent a room in his home. This applies whether the home owner is the property owner or a tenant. However, in the case of a tenant, most lease agreements have a clause where renting out a room requires that the tenant has the permission (preferably in writing) of the landlord. The home owner (either the property owner or tenant) then becomes a 'live-in' landlord. The occupant of the rented room is a licensee (also known as a lodger). Hotels, guest houses and B&Bs also have licensee agreements with their guests.

A licensee has very few rights in law. He is allowed to stay in the home 'under licence', that is, as long as the home owner is happy with and agrees to having the licensee live in his home. It is understood that any notice period should be reasonable. This is usually considered by how the rent is paid; monthly rent should have one month's notice; rent paid weekly then one week's notice.

However, if the live-in landlord has serious difficulties with the licensee, especially as to his own safety or that of his property, the landlord could ask the licensee to leave with immediate effect.

As licensees do not have a tenancy there is no registration with the PRTB and the PRTB will not adjudicate in any disputes between a live-in landlord and a licensee.

Please try to get the terminology correct.
Thank you.

El_Dangeroso

Very informative post, thank you. I learn something new every time I visit this forum.

Just to clarify, unless explicitly stated in a lease, the tenant has the right to take on a licencee without notifying or obtaining permission from the landlord?

Marcusm

Just to clarify one point, it is not the case that a licence cannot be for a fixed term or require a significant notice period. I am familiar with licences of 20 years and greater duration. It is correct that in residential circumstances where a written licence agreement is not in place that a licensee is unlikely to succeed in arguing for a notice period greater than that covered by the usual rental period but that does not mean that the licensee cannot benefit from a longer notice period should it be committed to writing and those occupying rooms as licensee would be well advised to seek to commit their residential status to writing, perhaps more so than tenants who have statutory protection in the absence of an agreement.

odds_on

El_Dangeroso wrote: »

Very informative post, thank you. I learn something new every time I visit this forum.

Just to clarify, unless explicitly stated in a lease, the tenant has the right to take on a licencee without notifying or obtaining permission from the landlord?

The RTA 2004 explicity states under tenant obligations:
(k) not assign or sub-let the tenancy without the written consent of the landlord (which consent the landlord may, in his or her discretion, withhold),

Most leases are basically a copy of the RTA tenant's and some of the landlord obligations. Others include clauses which the landlord particularly wants (pets, smoking, break clauses etc) and certainly I have seen agreements which have add a clause prohibiting renting out for gain which would include renting out a room.

Furthermore, a tenant is obligated to
(n) notify in writing the landlord of the identity of each person (other than a multiple tenant) who, for the time being, resides ordinarily in the dwelling.

To be on the safe side, before renting out a room to a licensee, it would be best to check with the landlord for his approval.

Unfortunately, the above obligations of a tenant do not tell the whole story. For example:
(k) not assign or sub-let the tenancy without the written consent of the landlord (which consent the landlord may, in his or her discretion, withhold),

The Act needs to be read further, because, if a landlord refuses the tenant an assignment or sub-let, the tenant may vacate with 28 days notice and retain his deposit. The landlord then has the expense of a void period, possibly some re-decoration, finding a new tenant and a new PRTB registration fee.

odds_on

Marcusm wrote: »

Just to clarify one point, it is not the case that a licence cannot be for a fixed term or require a significant notice period. I am familiar with licences of 20 years and greater duration. It is correct that in residential circumstances where a written licence agreement is not in place that a licensee is unlikely to succeed in arguing for a notice period greater than that covered by the usual rental period but that does not mean that the licensee cannot benefit from a longer notice period should it be committed to writing and those occupying rooms as licensee would be well advised to seek to commit their residential status to writing, perhaps more so than tenants who have statutory protection in the absence of an agreement.

I have, myself been a licensee in the same property for some 21 months.
Renting a room is usually done on an informal basis and there is seldom a written agreement - I have never had one, as a licensee. However, some live-in landlords just have a set of "house rules" which cover most things.

There is no law preventing a longer notice period than the usual 1 month. However, a landlord wishing his licensee to vacate will probably have his valid reason and 1 month will be the most he is willing to give.
A licensee who is vacating will have his reasons and again, 1 month will in many cases be too long as he will already have sorted out his next accommodation.

There are some landlords who do not believe that a fixed term agreement is worth the paper it is written so do not use them. Their choice and a verbal agreement is perfectly legal. The difference being that in a written agreement, the tenant knows his obligations as they are there in black and white (though, how many tenants actually read the whole agreement before signing?)