A licence is where someone is allowed to occupy property but does not have a tenancy. The ‘licence’ or permission of the owner prevents the occupier from being a trespasser. Some of the protective legislation for occupiers does not apply to licences.
The three main tests for a tenancy are:
exclusive possession a fixed or periodic term the payment of rent.
If these three factors are present, there will be a tenancy.
If the occupier does not have exclusive possession, i.e. they share, say, facilities with an occupying owner, then they will only be a licensee. The essential difference between a tenant and a licensee will be having exclusive possession. A person who has exclusive possession of residential premises for a definite period is a tenant unless there are exceptional circumstances. The rules around how much of the property they have to have exclusive occupation of differ between Housing Act 1988 tenancies and non-Housing Act 1988 tenancies.
Other circumstances where a tenancy will not occur are ‘serviced’ accommodation where the landlord needs to have frequent access for cleaning and meals are provided, such as in a hotel, and where the occupier shares living accommodation with the landlord (here the occupier is normally referred to as a lodger).