Land Law of Hanterbury Council - Essay Example

In 1995, Hanterbury Council granted a licence to the Bridley Housing Association with respect to a house, divided into two flats, that the council owned in Bridley-on-Sea. The agreement between the Council and the Housing Association was that the property would be used to house homeless people in short-life housing. P and his girlfriend Q moved into the one-bedroomed top floor flat in 1997. At the time the couple expected to live in the property for six months or so before moving to better council accommodation, but they are still living in the flat. P and Q were each given a ‘Short term licence’ and each pays the same monthly ‘licence fee’ to Bridley Housing Association. The property which was habitable in 1997 has deteriorated over the years. It has become very damp, because the gutters are very dilapidated and when it rains water runs down the outside walls of the property rather than down the pipes and into the drains. The sash window frames are rotting and mould is growing in the bathroom where it is impossible to open the window at all. Cracks are appearing in the ceiling and P thinks there could be some loose slates on the roof. He has rung Bridley Housing Association’s offices on a number of occasions this year to tell them about the damp, but no-one from the Association has visited the property or carried out any repairs. Answer the following question. 1. Advise P and Q, who would like the property to be repaired. They are considering whether to stop paying their licence fees until Bridley Housing Association do something about the property. Introduction In order to be able to advise P and Q it is necessary to examine the law in relation to short term licences. This will involve a discussion on the difference between a lease and a licence, and the different rights given to leaseholders over licence holders. From this it should then be possible to advise P and Q of their rights to insist on the repairs being carried out. Distinction between lease or licence In the UK leases can be distinguished from licences in relation to the occupation of the property. With a lease the occupier will enjoy exclusive occupation and the amount paid for the property will not include any services. Landlords cannot terminate leases at short notice. By comparison those who have a licence do not have exclusive occupation and the landlord can allow other persons to move into the property. Where the agreement is deemed to be a lease the lessee would have full ownership rights over the property.1 If the occupier does not have exclusive ownership, than the courts will deem that a licence has been created. In Shell-Mex & B P Ltd v Manchester Garages Ltd [1971]2 the court distinguished between a lease and a licence by examining where the control lay. In this case the court stated that if the landlord remains in control than only a licence has been created and the licensee would have to rely on proprietary estoppel to stop the licence from being extinguished3. Licences If the court determines that only a licence has been created, the licensees will not have the same amount of protection with regard to the tenancy. Licences can be revoked at short notice even when the licensee is not in breach of the contract4. Licences allow the licensee to occupy the property without exclusive possession. In Street v Mountford [1985]5 Lord Templeman observed that a lease has been created where the tenant has the right to ‘call the land his own’. Windeyer J made the comment in Radiach v Smith [1959]6 that ‘exclusive possession provides the touchstone of a lease’. Those tenants who have a lease are better protected by the law, and are entitled to assign their lease or sue third parties for trespass onto their property7. They are also entitled to protection under the Rent Act 1977, whilst licensees are afforded no such protection. Gray (1993) states, that ‘exclusive possession is the essential criterion in distinguishing a lease form a licence and has been so since medieval times8’. In Thomas v Sorrell (1674)9 Vaughan CJ observed that "A dispensation or licence properly passeth no interest, nor alters or transfers property in any thing, but only makes an action lawful which without it had been unlawful." This affirms the notion that a licence does not entitle the licensee to the same rights as a lessee but merely allows them to remain in the property at the will of the landlord. It was also noted by Lord Templeman in Street v Mountford that exclusive possession will not always lead to the inference of a lease rather than a licence, stating that there must be proof of the intention of the parties to enter into a legal contractual relationship in order for a lease to be presumed. As the property is designed for short term purposes only, it is likely that the court will determine that only a licence has been created. Licence or lease One of the problems posed by the above, is that the local authority are the actual owners of the house, and have granted a licence to the housing association to let the property as short life housing. In Camden LBC v Shortlife Community Housing Ltd [1993]10 the courts were asked to decide whether the tenants, who were renting the flats had a lease or a licence to rent them. Although each of the tenants had exclusive possession of the flats, the court held that they could only have a licence agreement between themselves and the housing association as the ultimate ownership of the flats belonged to the local authority. The court stated that since the authority had only give the association a licence to rent out the flats, they were entitled to cancel the licence at will, leaving the tenants homeless, as they would have no rights to claim security of tenure. By contrast in Family Housing Association v Jones11, the court held that exclusive possession was a sufficient basis on which to conclude that a lease had been created. The court applied the decision in Street and held that the occupation should be regarded as a lease. Although it was observed by Slade LJ in the Family Housing Association case that inferring a lease would make it difficult for housing associations to supply temporary accommodation for homeless people, the decision was still upheld in Bruton v London & Quadrant Housing Trust12 which led to a call for a reassessment of the rules regarding estoppel as the housing associations where being placed in untenable positions whereby they were having to grant tenancies to people that had been housed in temporary accommodation. In this case the court stated that the plaintiff did not need to rely on the principle of estoppel as the granting of the exclusive possession was sufficient to give rise to the inference of the creation of a lease. Repairs When determining liability for the repairs the court will base its decision on whether there was any inclusion within the licence agreement in relation to property repairs. It is common in such agreements for the landlord or association to include responsibilities of each party. In Delgable Ltd v Perinpanathan [2005]13 the court held that both parties should be liable for the repairs, as the respondent had a sublease for the upper floors and the part of the property that required repair was the roof. The court stated that as owner of the property the plaintiff had a duty to repair, but as the respondent had exclusive possession of the upper floors it was reasonable to expect him to make a contribution towards the cost of the repair. This was based on the fact that within the agreement the plaintiff had included a clause requiring the defendant to pay a fair proportion of the expenses from time to time. Conclusion From the above it would appear that P and Q would be regarded as having a licence only. As the property is owned by the local authority, they ought to be liable for the repairs unless they have included a clause making the housing association liable. By the same token, the housing association would have been able to include a clause in the licence agreement making the tenants liable for the repairs. Where no such agreement has been made the owner of the property will usually be held liable. P and Q should not withhold payment of the rent, as this would entitle the association to terminate the licence, thereby making them homeless. As they only hold a licence, there is no security of tenure, and they could not claim a protected tenancy, as the association only holds a licence on the property. 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