• In Street v Mountford [1985] the House of Lords (HL) held that a tenancy agreement exists where, in the realities of the agreement, there are the elements of a tenancy. The HL stated that it was immaterial if the agreement between the tenant and the landlord states that it is for a ‘licence’.

Facts of the case:

  • S granted M the right to occupy two rooms in a property, subject to termination by 14 days notice.
  • The agreement was titled a ‘licence agreement’ and contained a declaration signed by M to the effect that she understood the agreement did not give her a tenancy protected under the Rent Acts.
  • M and her husband then moved into the two rooms of which they had exclusive possession.
  • Five months after they moved in S sought an order in the county court declaring whether occupancy under the agreement was a licence or a protected tenancy.

Issues in Street v Mountford [1985]

  • The county court held that the agreement was a tenancy, notwithstanding the language used in the agreement. The Court of Appeal held that it was a licence.
  • The issue for the HL was whether the agreement was a tenancy or a licence.

HL held:

  • The House of Lords held that a tenancy arises if a residential accommodation had been granted, for a term, where there was exclusive possession and where the grantor did not provide attendance or services. The agreement between S and M satisfied this test for a tenancy, and thus the HL held that there was a tenancy between them.
  • The overarching question therefore with respect to whether there is a tenancy is whether there is ‘exclusive possession’ for a ‘term certain’.
  • The House of Lords also held that the term ‘licence’ in the agreement between the grantee and the grantor was immaterial to whether it was a licence or not, as a true constriction of the agreement meant that it was a tenancy.
  • Lord Templeman also identified situations where a landlord labels the tenancy as a licence or contains the unrealistic term that the landlord retains the right to move people in and out in attempt to circumvent the Rent Acts as a “sham tenancy” [825].

Lord Templeman:

  • [825] “But in my opinion in order to ascertain the nature and quality of the occupancy and to see whether the occupier has or has not a stake in the room or only permission for himself personally to occupy, the court must decide whether upon its true construction the agreement confers on the occupier exclusive possession. If exclusive possession at a rent for a term does not constitute a tenancy then the distinction between a contractual tenancy and a contractual licence of land becomes wholly unidentifiable.”
  • (On exclusive possession) “The landlord also insisted that the room should not in form be let to either H or S or to both H and S but that each should sign an agreement to share the room in common with such other persons as the landlord might from time to time nominate. The sham nature of this obligation would have been only slightly more obvious if H and S had been married or if the room had been furnished with a double bed instead of two single beds. If the landlord had served notice on H to leave and had required S to share the room with a strange man, the notice would only have been a disguised notice to quit on both H and S. The room was let and taken as residential accommodation with exclusive possession in order that H.”