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Leases and Licences

Leases and Licences

The purpose of this page is to help outline the difference between leases and licences. The leaflet is a general guide only and not an interpretation of the law. This leaflet is not conclusive and does not make reference to all relevant provisions legal or otherwise relating to leases and licences. The  Residential Tenancies Board, its servants or agents assume no responsibility for and give no guarantees, undertakings or warranties concerning the accuracy, completeness or up to date nature of the information provided in this leaflet and do not accept any liability whatsoever arising from any errors or omissions contained therein

Tenancies/Leases

The Residential Tenancies Act 2004 applies to every dwelling which is occupied on foot of a tenancy. A tenancy can take a number of different forms and may be oral, written or implied. A written tenancy is known as a lease.

Licences

A licence is not a tenancy and therefore (save for one exception) the Residential Tenancies Act 2004 does not apply to such an arrangement. A licence can be best described as a permission to enter onto and/or occupy a dwelling (without which a trespass would occur). Examples of a licence are a person staying in hotel, hostel or guesthouse or a person sharing a house with the owner.

For a detailed overview of licensees in private rented accommodation and the application of the Residential Tenancies Act 2004 to them, please see RTB leaflet on Licensees in Private Rented Accommodation.

How can you distinguish between a tenant and a licensee?

There is no hard and fast rule in relation to what arrangement constitutes a tenancy or a licence. This  will depend on the facts of each case. Where necessary the RTB will objectively assess every individual case to determine whether the arrangement amounts to a tenancy or a licence.

The following criteria are helpful in determining the nature of the arrangement between the owner and the occupier of a property but are not conclusive.

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Exclusive Possession

Where a tenancy is in existence, the tenant will have exclusive occupation of part or all of the dwelling leased by him or her. In certain circumstances a licensee may also have exclusive possession, however in most cases a licensee will not have exclusive possession of the dwelling and the owner will have a right of continuing access to the dwelling or part of the dwelling occupied by the licensee.

Assignment / Sub-lease

A licensee cannot usually assign his or her interest in a dwelling. A tenant however, subject to the landlord’s consent (which cannot be unreasonably withheld), can assign or sublet his or her tenancy to a third party.

Termination

A tenancy can only be terminated in accordance with the Residential Tenancies Act 2004 and the valid terms of any lease agreement. A licence however can be revoked or terminated by the person who grants it provided reasonable notice is given to the licensee. Where a contractual licence exists however, the licence can only be revoked in accordance with the terms of the contract.

Rent

Rent is an essential element in the creation of a tenancy. A licensee may or may not make payments in respect of their occupation of a dwelling. Payments however which are called something other than rent, will not operate to create a licence arrangement, when in reality the payments amount to rent.

Bedsits

The Residential Tenancies Act 2004 applies to self-contained residential units, which includes the form of accommodation more commonly known as a bedsit (Section 4 of the Residential Tenancies Act 2004). An individual who occupies bedsit accommodation is entitled to the full protections of the Residential Tenancies Act 2004 (unless it can be shown for other reasons that the circumstances are such that a licence exists.)

No contracting out of Part IV Tenancy

Parties cannot contract out of a tenant’s entitlement to a Part IV tenancy (Section 54 of the Residential Tenancies Act 2004). Any agreement between two parties, which purports to be a licence for the purposes of avoiding the application of the Part IV of the Residential Tenancies Act 2004, will not operate to deny an individual’s right to a Part IV tenancy.

Name of Contract

Referring to a written document on its face as either a lease or a licence does not (in the absence of other criteria) prove the nature of the relationship between the parties.

Please remember:

  • Simply entitling a letting agreement a Licence does not automatically mean it will be considered a Licence and not a Lease. Neither the RTB nor the Courts will just accept the title of a document but will look at the actual terms and substance of the agreement when assessing whether it has jurisdiction to deal with it.
  • A tenant should always examine the terms of a tenancy agreement prior to signing it and know exactly what type of agreement is involved and whether it is a lease or a licence. Remember, the RTB can only deal with “tenancies” and therefore does not have any jurisdiction to regulate genuine licence agreements.
  • The legislative definition of “tenancy” is quite broad however and if you are in any doubt as to the significance of any terms contained in your tenancy agreement, please consult your legal advisors.

DISCLAIMER

“Even though care has been taken in the preparation and publication of this guidance note the Residential Tenancies Board, its servants or agents assume no responsibility for and give no guarantees, undertakings or warranties concerning the accuracy, completeness or up to date nature of the information provided in this guidance note and do not accept any liability whatsoever arising from any errors or omissions contained therein".