Q&A - What is the difference between a Licence Agreement and an Assured Shorthold Tenancy?

Q: Our daughter is at university and is keen to do a house share next academic year. We have heard that rooms in a house can be let in different ways and that we should ensure she gets somewhere under a Licence Agreement, not an Assured Shorthold Tenancy. Please can you explain the difference? 

A: A Licence Agreement is a legal contract used for temporary or shared accommodation whereby a bedroom is rented but the kitchen, bathroom and maybe the living room are shared. The licence gives the licensee the right to stay in the room or property under specific circumstances. 

An AST (Assured Shorthold Tenancy) is used where a property is going to be let to a tenant or tenants for exclusive possession as their sole or main residence. It is usually granted for a six or 12 month continuous term, after which time the parties can agree a new tenancy for a further fixed term or else the original tenancy continues as a statutory periodic tenancy on exactly the same terms as before. 

Student accommodation is usually let on a Licence Agreement because it provides both landlord and tenant with more flexibility. The licence can be ended by the landlord serving a ‘Notice to Quit’, which usually gives the licensee four weeks’ notice to move out. If the licensee does not move out the landlord can apply to court to evict them.

The rights of a licensee are less than tenants with an AST and the amount of information required to evict a licensee is much less than for a tenant. A licence agreement is often more appealing to students as they are not usually bound to pay for accommodation over the long summer holidays. It would be advisable when the time comes to get a solicitor to look at the agreement before signing anything.

Article 13/01/2020