Licensees in Private Rented Accommodation
Licensees in Private Rented Accommodation
The purpose of this leaflet is to help outline for landlords and tenants and other occupants of rental accommodation the distinction between tenants and licensees. The leaflet is a general guide only and not an interpretation of the law, and does not necessarily make reference to all relevant provisions.
A licensee is a person who occupies accommodation under license. Licensees can arise in all sorts of accommodation but most commonly in the following four areas;
- persons staying in hotels, guesthouses, hostels, etc.,
- persons sharing a house/apartment with its owner e.g. under the ‘rent a room’ scheme or ‘in digs’,
- persons occupying accommodation in which the owner is not resident under a formal license arrangement with the owner where the occupants are not entitled to its exclusive use and the owner has continuing access to the accommodation and/or can move around or change the occupants, and
- persons staying in rented accommodation at the invitation of the tenant.
The provisions of the Residential Tenancies Act 2004 do not apply to the first three categories. Although most of the Act does not apply to the fourth category also, some provisions are relevant where the licensee is residing with the tenant and this leaflet is aimed at persons in that category.
A licensee residing in a private rented dwelling is living there at the invitation of the tenant as the arrangement enabling a licensee to live in rented accommodation is made with the tenant and not with the landlord. The tenant may already be well established in the dwelling and may take in a licensee because another tenant or licensee has moved out, or the tenant can no longer afford the rent. Alternatively, the tenant may be just entering into a tenancy with the landlord whereby the landlord has indicated that the tenant may admit a certain number of persons to share the dwelling with the tenant. Essentially therefore, in the private rented sector someone is a licensee if living with the person with whom he/she made the letting arrangement. In these circumstances the Residential Tenancies Act will apply to the tenant’s occupation of the tenancy and will thus have certain impacts for the licensee. While there may be any combination of multiple occupants in such cases, e.g. 3 tenants and 2 licensees; for the 2004 Act to be relevant where there is a licensee, there must always be at least one tenant.
Licensing arrangements in private rented dwellings are often confused with sub-lettings and assignments.The difference is that when a tenant assigns or sublets their rental accommodation, they no longer live in it whereas a licensee shares the accommodation with the tenant.
Licensees in private rented accommodation are not tenants as there has been no tenancy entered into by them with the landlord. While the tenant is under a statutory obligation to inform the landlord of the identity of any person resident in (rather than just visiting) the dwelling, the landlord will not be in a position to accept or veto the individual concerned in the way that he/she could with a prospective tenant.
Licensees are not bound by the tenancy obligations that apply to tenants and equally do not have the rights that apply to tenants. Therefore although the tenant may take in a licensee to contribute towards the rent, the tenant remains liable to the landlord for the full rent amount and if the licensee does not meet their payment obligations it is the tenant’s problem and not the landlord’s, as the tenant’s obligation to pay the agreed rent to the landlord remains. Tenants are responsible for all of the acts and omissions of their licensees. Therefore, if an act of a licensee breaches an obligation applying to the tenancy, whether under law or under a written tenancy agreement, the tenant will be in breach of the obligation thus potentially entitling the landlord to terminate the agreement and the tenancy in accordance with the relevant legislative provisions. Examples of breaches would include; a licensee engaging in anti-social behaviour; a licensee redecorating without the landlord’s written consent – these are prohibited by law; a licensee hanging out washing on an apartment balcony or leaving an exterior door unlocked – these may be in contravention of the tenant’s letting agreement or management company rules. A tenant taking in a licensee will therefore clearly need to establish all the obligations that the tenant will require to apply to the licensee.
Any money that a licensee pays to the tenant as a deposit is a personal payment to the tenant and is not a deposit with the meaning of the Residential Tenancies Act 2004, as that meaning is confined to deposits paid by tenants to landlords.
The Residential Tenancies Board (RTB), which was established under Part 8 of the Residential Tenancies Act, deals with tenancy disputes in accordance with Part 6 of the Act. A licensee may refer to the RTB for resolution a complaint that a landlord has unreasonably refused to accede to his or her request to become a tenant of a Part 4 tenancy of a dwelling in which he or she is residing.
The RTB does not have jurisdiction to deal with any other disputes involving licensees. This is because licensees have no direct relationship with landlords and the RTB does not deal with disputes between occupants, whether those occupants are tenants only or a mixture of tenants and licensees. This means that although the RTB deals with disputes about the non-refund by landlords of deposits paid by tenants, it has no authority to deal with disputes between tenants or between tenants and licensees about monies paid to a tenant as a form of ‘deposit’.
The dispute resolution process operated by the RTB consists of two stages – the first is either mediation or adjudication (depending on what the parties choose) and if that does not resolve the matter, the second stage is a Tenancy Tribunal hearing. The ultimate determination of the dispute is by way of a Determination Order of the RTB and this is binding on the parties concerned.
A licensee who wishes to refer a complaint to the RTB that his/her request to become a tenant has been unreasonably refused by the landlord should contact the Board directly in the first instance and discuss the matter. The RTB will provide an Application Form, which should be completed and returned to the Board along with the appropriate application fee. (Contact the RTB for current fee levels). The RTB staff will help anyone who may have difficulty completing the Application Form. Information provided to the RTB in respect of a dispute will be copied to both parties. Please see the RTB’s separate leaflet dealing with its dispute resolution service.
Finally, an occupant of rented accommodation who considers that his/her arrangement with the owner is in fact a tenancy although the owner has designated it as a licence, could refer a dispute to the RTB about an issue relating to the occupation by incorporating in the referral , the grounds for his/her belief that the occupation is under the tenancy. The RTB will then consider whether or not it has jurisdiction to deal with the matter based on its opinion as to whether or not a tenancy exists.
Relevant Provisions of the Residential Tenancies Act 2004
Part 4 of the Residential Tenancies Act 2004 contains the security of tenure measure for tenants based on 4-year cycles whereby tenancies that have lasted more than 6 months become ‘Part 4 tenancies’ and may only be terminated by the landlord during the following 31/2 years where one or more of the 6 grounds listed in the Table to section 34 of the Act arises. At the end of the 4-year period, the tenancy is deemed terminated and a new tenancy comes into being where the dwelling continues to be let to the same tenant(s). This new tenancy is known a ‘further Part 4 tenancy’ and, if not terminated by the landlord within the following 6 months, may only be terminated during the remainder of the successive four years where one of the grounds in the Table to section 34 arises.
Chapter 6 of Part 4 contains the rules governing the operation of Part 4 in cases of multiple occupants. In some instances the multiple occupants will all be tenants but in other instances they will be a mixture of tenants and licensees. A tenancy becomes a Part 4 tenancy on the earliest date at which one of the tenants has been in occupation for 6 months. During the existence of a Part 4 tenancy any lawful licensee of the tenant/s may request the landlord to be allowed to become a tenant of the tenancy. The landlord may not unreasonably refuse such a request and must give his/her acceptance in writing. All the rights, restrictions and obligations of a tenant will then apply to the former licensee except that the protection of the Part 4 tenancy will not apply until the former licensee has completed 6 months of continuous occupation counting time spent as a licensee and as a tenant.
Angela Ashe and Barbara Bush enter into a tenancy on 18th August 2005. The house has a third bedroom and they are having difficulty affording the rent – the landlord did not indicate a limit of two occupants. They take in Cathy Castle as their licensee on 20th October 2005. Angela moves out on 13th December 2005 and Barbara takes in Dina Dove as her licensee on 17th December 2005. Barbara acquires a Part 4 tenancy on 18th February 200 All tenant obligations have been complied with. Cathy requests the landlord to become tenant on 1st March 2006 and Dina makes a similar request two weeks later. Withholding of consent would be unreasonable so the landlord gives consent to both in writing. Cathy while now a tenant of a Part 4 tenancy does not acquire the protection of it until 20th April 2006 and Dina does not acquire the protection until 17th June 200 Therefore if Barbara terminates her tenancy before 20th April 2006 (the date on which Cathy qualifies for the benefit of the Part 4 tenancy), the Part 4 tenancy will expire and a new tenancy will commence assuming the landlord does not immediately terminate Cathy and Dina’s tenancy. Even so, for the next 6 months their tenancy may be terminated by the landlord without having to cite one of the grounds in the Table to section 34, as that new tenancy has not yet become a Part 4 tenancy. If Barbara does not leave until after 20th April 2006, the original Part 4 tenancy can continue to exist until 17th August 2009 because Cathy will have qualified for its protection before Barbara left.
This example shows that if a licensee wants the security of a Part 4 tenancy to be personally applicable to him/her rather than be relying on one or more tenants to continue in occupation, then he/she should make the request to the landlord to become a tenant. However, as well as acquiring the rights of a tenant, the licensee also assumes the statutory obligations of a tenant applying to the tenancy and any additional obligations applying under a tenancy agreement.
In normal circumstances where the only tenant of a Part 4 tenancy dies, then the Part 4 tenancy will terminate. However, if at the time of the death the dwelling was occupied by a spouse, a co-habitee (as husband and wife for at least 6 months), an adult offspring or a parent of the tenant, then if one or more of those persons elects in writing to become tenant, the Part 4 tenancy continues to exist. This provision does not apply where the licensees residing with the tenant are friends, acquaintances or more distant relatives.
- 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.
"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".