Licence or AST... What's the difference?

I had a lovely lady come into our office yesterday, she wanted to rent her room.


We have only recently just started doing rooms again due to staffing. She was my first room enquiry since starting to do rooms again. How lucky was I? She was absolutely lovely! So happy to have met her, but I digress.


She said she didn't want a Tenancy Agreement, she wanted a Licence. A Lodger's Agreement. Naturally I was hesitant as this is not something I have ever done before. Our previous room rentals were always on ASTs [Assured Shorthold Tenancies].


After having a quick look on our legal document portal to check that there was an agreement there of this nature, I told her that this could be done. But the big question is, what is the difference?

The even bigger question is, are Licensor's governed by the same legislation as Landlord's?


Let's start at the beginning.


Licensee Fees. Under an AST, Tenants have the protection of the Tenant Fees Act 2019, but do Licensee's?

According to the Tenant Fees Act government guidance, it states that "the ban applies to all assured shorthold tenancies, tenancies of student accommodation and licences to occupy housing in the private rented sector in England...In this guidance 'tenant' includes licensees."


Deposits. This particular soon to be Licensor believed that she did not have to register the deposit if she had a License.

Sad to say, any money taken as a deposit whether for a Tenant or Licensee must be registered with a government backed scheme. This is also covered under the Tenant Fees Act 2019.

You can use one of the following:

  • Deposit Protection Scheme

  • My Deposit

  • Tenancy Deposit Scheme

These are the only three schemes that are suitable for use.


Documents to be provided to the Tenant. The governments guide for Tenants on Electrical Safety states that the regulations that dictate Landlord's must provide EICR's to Tenants, "do not cover tenants who live with their landlord (lodgers)".

One less cost to worry about, however for your own safety we recommend you do this.


There is no concrete evidence about Gas Safety Checks, however the Citizen's Advice Bureau have stated that as a Licensor you need to ensure that your Gas Safety is done every year, however the Carbon Monoxide Detector/Smoke Alarm tests do not need to be done for lodger's. The guidance is that you can still request this as a Lodger.


The government guidelines on EPC's is that if the property is Let on an assured, regulated [long-term agreement between a tenant and a private landlord - before Jan 1989] and/or domestic agricultural tenancy then you need an EPC. As a License is none of the above, you do not need to provide an EPC when letting under a License Agreement.


Eviction. How protected are you with a Licence as Licensee or Licensor?

As a Licensor, as long as you share your home with the Licensee and certain rooms. You only need to give them 'reasonable notice to quit'. The Courts consider 'reasonable' to be the period in which rent is paid. So if they pay monthly, a months' notice. If they pay weekly, a week's notice.

As a Licensee, this is not very secure. You can be asked to leave at any time. This is only a good idea if you need temporary accommodation or you need the flexibility to leave at any point. Please be aware that once the Licensor has served notice and that period has ended, they can change the locks, even with your items still inside.


So a Licensee cannot be charged fees. Their deposit has to be registered. You do not need an EICR, you do need to provide a Gas Safety Certificate, but no CO2/Smoke Alarms. You do not need to provide an EPC. The eviction process is fairly straight forward unlike an AST.


If you have any further queries about letting your room, please contact Renée at Drummonds at renee@drummondsproperty.com or on 0208 138 1990.

If you would like to rent out your room, please contact us on 0208 138 1990 or use the website to schedule a Market Appraisal. Let's get your room rented with high quality professional Lodger's.






 

0208 138 1990

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