Leases Essential Characteristics - GDL Land Law

Distinction: Lease vs Licence

- Important distinction: affects rights of parties.

• landlords prefer licence: avoid tenant’s security of tenure try to present grant as licence.

• business arrangements: Rent Act 1977 still applies to tenancies.

• repair covenants in residential tenancies: if contained in lease Landlord and Tenant Act 1985.

Test for a Lease: Street v Mountford [1985; HoL].

- Street v Mountford [1985; HoL]: substance not label.

• substance over label: if agreement satisfies requirements for tenancy, tenancy created.

  • [Ld Templeman]: a fork is a fork even if called a spade.

  • previous formal approach overruled (Somma v Hazelhurst [1978; CoA]).

• requirements for lease: if not present, arrangement can only be a licence.

  • 1. certainty of term (fixed or periodic).

  • 2. exclusive possession.

  • rent not essential: s205(xxvii) LPA 1925; Ashburn Anstalt v Arnold [1989].

1. Certainty of Term

- Certainty of term: tenancy for certain, definable duration – fixed or periodic.

• Lace v Chantler; Prudential Assurance v London Residuary Body.

  - BUT: Berrisford v Mexfield Housing Cooperative Ltd [2011; SC]: uncertain term treated as lease for life.

• facts: M. let property to B. on monthly tenancy; termination clauses: 1 month notice for tenant, but only on uncertain conditions for landlord normally void for certainty, but HoL: ancient law that uncertain term = lease for life + s149(6) LPA 1925: lease for life = 90 years.

• certainty requirement criticised: impractical – does not allow for uncertain termination clauses.

2. Exclusive Possession

- Exclusive possession: right to exclude others, inc. landlord.

• reality of agreement inc. background: label can be ignored.

  • Street v Mountford: agreement called ‘licence’, inc. landlord’s right to enter; tenant (M) tried to register fair rent under Rents Act 1977 (requires tenancy) HoL: lease in substance (exclusive possession; emphasised by express reservation of limited right to enter).

  • Westminster CC v Clarke [1992]: room in hostel for addicts held under ‘licence to occupy’; WCC reserved right to change room, require him to share HoL: licence not lease – council needed to retain possession to make arrangements + supervise.

  • Bruton v London and Quadrant Housing Trust [2000]: LQHT providing short-term housing for homeless; B. occupied room on ‘licence’; B. claimed LQHT in breach of implied repairing obligations (s11 L&TA 1985 – only app. to leases) HoL: lease not licence (despite fact that LQHT only held on licence) – exclusive possession: only limited rights to enter.

• agreement sometimes sham by landlord: suggest that property occupied under licence not lease.

- Clauses to defeat exclusive possession: if genuine licence; if sham/pretence may still be lease.

• retention of key/right of access: if emergency/by arrangement only, exclusive possession may still exist.

  • Aslan v Murphy [1990]: A. granted M. limited ‘licence’ to occupy room: exc. 1030-1200hrs every day, landlord retained key + right of entry, right to share; M. claimed agreement a sham HoL: lease – restrictions unrealistic pretences (not part of ‘true bargain’).

    • [Ld Donaldson]: retention of key ‘not magic’ in itself – underlying reason important.

• reserving right to share / introduce others

  • A G Securities v Vaughan [1990]: 4 rooms in shared flat; separate agreements (different monthly payments + timing) HoL: landlord’s right to introduce 3^rd parties genuine licence.

  • Antoniades v Villiers [1990]: couple occupied small room together; signed identical agreements HoL: right of landlord to ‘share’/introduce 3^rd parties = pretence exclusive possession.

• provision of services: if for benefit of individual tenant in use/enjoyment of property lodger, not tenant.

  • Marchant v Charters [1977]: C. occupied bedsit in shared house, landlady (M) cleaned daily + changed linen weekly [Ld Denning]: services too substantial for tenancy licence.

    • [Ld Denning]: dep. on nature + quality of occupancy taking into account all circs.

  • Huwyler v Ruddy [1996]: provision in agreement for attendance (only 20 min per week, but required unrestricted access) CoA: attendance light but still contractual right licence.

Exceptions to Street v Mountford: no lease despite certainty of term + exclusive possession.

• Street v Mountford: [Ld Templeman]: consider surrounding circumstances – no ICLR or exclusive possession referable to legal relationship other than tenancy – e.g. contract for sale of land, occupation by employee.

- No intention to create legal relations.

• Faccini v Bryson [1952]: [Ld Denning]: family arrangement, generosity might negative intention to create lease.

• Heslop v Burns [1974]: landlord provided rent-free cottage to couple as act of generosity; no agreement on terms licence: impossible to infer...