‘
Adam Baker Law 2270 and 3270
Land Law 2018-2019
LEASEHOLD ESTATES AND LICENCES
Reading
Textbook
B. Bagusz and R. Sexton, Complete Land Law (5th ed. OUP, 2017), pp. 341–374
C. Bevan, Land Law (OUP, 2018), pp. 314–351
B McFarlane, N Hopkins and S Nield, Land Law: Text, Cases and Materials (4th
ed. OUP 2018), ch. 19
R Smith, Property Law (9th ed., Pearson, 2017), pp. 369–408
Supplementary
S. Bright ‘Street v Mountford Revisited’ in Bright (ed) ‘Landlord and Tenant Law:
Past, Present and Future’ (2006), pp. 19–39
D. Cowan, L. Fox O’Mahony and N Cobb, Great Debates in Property Law (2nd
ed. Palgrave, 2016), pp 64–81
S. Bright, ‘Uncertainty in Leases - Is It a Vice?’ (1993) 13 L.S. 38
P.F. Smith, ‘What is wrong with certainty in leases?’ [1993] Conv. 461
S. Bright, ‘The uncertainty of certainty in leases’ (2012) 128 L.Q.R. 337
M. Lower, ‘The Bruton tenancy’ [2010] Conv. 38
S. Bright, ‘Leases, exclusive possession and estates’ (2000) 116 L.Q.R. 7
Gray and Gray, Elements of Land Law (2009) 519–557
, ‘
1. GENERAL INTRODUCTION
1.1 Introduction
In topic 1, we noted that estate owners can grant both proprietary and personal
rights over the land. Both leasehold estates and licences are commonly created by
them. These are both entitlements by which the right-holder(s) may use the land in
question; but there are also significant differences between them.
i. A ‘leasehold estate’ is a proprietary right. Also known as a ‘term of years
absolute’ (s 1(1)(b) LPA 1925), it can be legal or equitable (ibid). The
leasehold estate is a privilege of exclusive control over land for a period of
pre-determined length. The estate is usually granted in return for the payment
of rent, and both parties to the grant will typically covenant to do/not do other
things for the duration of the leasehold term.
It is elementary that: (i) only a party with an estate in land (either freehold or
leasehold) can grant a leasehold estate; and (ii) that the duration of the
leasehold estate created must be less than the duration of the estate out of
which it is granted.
A licence, by contrast, is only a personal right (Ashburn Anstalt v Arnold
[1989] Ch. 1), being a permission to use land for some purpose. As we saw in
topic 1, a licence can be ‘contractual’ or ‘bare’.
It can be difficult to decide whether a privilege conferred by an estate owner is a
leasehold estate or a licence.1 One must ask whether the entitlement meets the
requirements for a leasehold estate. Failing that it must be a licence.
1.1.1 Some further terminology
1 In some cases it could in fact be some other property right (such as an easement), but this possibility will not
arise in the questions for this topic.
2
, ‘
The term ‘lease’ can be used in multiple senses. It can variously refer to a leasehold
estate, the contract between the parties to the grant of a leasehold estate, and even
to the physical document recording their agreement.
Some other terminology may also be noted from the outset:
- the grantor of a leasehold estate may be called the ‘landlord’, the ‘lessor’ or
the ‘reversioner’;
- the grantee may be called the ‘tenant’/’leaseholder’/‘lessee’; and
- the grant of a lease can be called a ‘lease’, a ‘letting’ or a ‘demise’.
1.2 Importance of this issue
There are a number of differences between a leasehold estate and a licence.
(a) Third party effect: A leasehold estate (a proprietary interest) can bind third
parties, but a licence (a personal interest) cannot.
(b) Statutory regulation: In the residential sector, Parliament has for around a century
regulated leases differently from licences. Tenancies have been subject to many
more statutory rules than licences; e.g. over how they can be ended; the rent that
can be agreed; and the obligations of the landlord (e.g. in terms of repair). Different
types of tenancy (e.g. residential, commercial) are governed by different legislation.
In the past the regulation of residential tenancies was much more to favourable
tenants than it is today, and this encouraged many landowners to try and create
licences rather than leases. Since the Housing Act 1988, however, the regulation has
been scaled back. Many landowners no longer view it as a sufficient incentive to
strive to avoid conferring a lease. But this is not always the case: see e.g. B. Reeve-
Lewis, ‘A new breed of rogue landlord’ (2018) 21 J.H.L. 17, 20.
The Law Commission (Renting Homes (Cm 6781 (2006)) has proposed that, in the
residential sphere, regulatory protection should depend not on the lease-licence
distinction, but on whether one is occupying the premises as one’s ‘home’ (though
one would still need to have a leasehold estate in order to have a right enforceable
against third parties). This recommendation has found its way into the Renting
Homes (Wales) Act 2016 (see topic 4), but has yet to be adopted in England.
3
Adam Baker Law 2270 and 3270
Land Law 2018-2019
LEASEHOLD ESTATES AND LICENCES
Reading
Textbook
B. Bagusz and R. Sexton, Complete Land Law (5th ed. OUP, 2017), pp. 341–374
C. Bevan, Land Law (OUP, 2018), pp. 314–351
B McFarlane, N Hopkins and S Nield, Land Law: Text, Cases and Materials (4th
ed. OUP 2018), ch. 19
R Smith, Property Law (9th ed., Pearson, 2017), pp. 369–408
Supplementary
S. Bright ‘Street v Mountford Revisited’ in Bright (ed) ‘Landlord and Tenant Law:
Past, Present and Future’ (2006), pp. 19–39
D. Cowan, L. Fox O’Mahony and N Cobb, Great Debates in Property Law (2nd
ed. Palgrave, 2016), pp 64–81
S. Bright, ‘Uncertainty in Leases - Is It a Vice?’ (1993) 13 L.S. 38
P.F. Smith, ‘What is wrong with certainty in leases?’ [1993] Conv. 461
S. Bright, ‘The uncertainty of certainty in leases’ (2012) 128 L.Q.R. 337
M. Lower, ‘The Bruton tenancy’ [2010] Conv. 38
S. Bright, ‘Leases, exclusive possession and estates’ (2000) 116 L.Q.R. 7
Gray and Gray, Elements of Land Law (2009) 519–557
, ‘
1. GENERAL INTRODUCTION
1.1 Introduction
In topic 1, we noted that estate owners can grant both proprietary and personal
rights over the land. Both leasehold estates and licences are commonly created by
them. These are both entitlements by which the right-holder(s) may use the land in
question; but there are also significant differences between them.
i. A ‘leasehold estate’ is a proprietary right. Also known as a ‘term of years
absolute’ (s 1(1)(b) LPA 1925), it can be legal or equitable (ibid). The
leasehold estate is a privilege of exclusive control over land for a period of
pre-determined length. The estate is usually granted in return for the payment
of rent, and both parties to the grant will typically covenant to do/not do other
things for the duration of the leasehold term.
It is elementary that: (i) only a party with an estate in land (either freehold or
leasehold) can grant a leasehold estate; and (ii) that the duration of the
leasehold estate created must be less than the duration of the estate out of
which it is granted.
A licence, by contrast, is only a personal right (Ashburn Anstalt v Arnold
[1989] Ch. 1), being a permission to use land for some purpose. As we saw in
topic 1, a licence can be ‘contractual’ or ‘bare’.
It can be difficult to decide whether a privilege conferred by an estate owner is a
leasehold estate or a licence.1 One must ask whether the entitlement meets the
requirements for a leasehold estate. Failing that it must be a licence.
1.1.1 Some further terminology
1 In some cases it could in fact be some other property right (such as an easement), but this possibility will not
arise in the questions for this topic.
2
, ‘
The term ‘lease’ can be used in multiple senses. It can variously refer to a leasehold
estate, the contract between the parties to the grant of a leasehold estate, and even
to the physical document recording their agreement.
Some other terminology may also be noted from the outset:
- the grantor of a leasehold estate may be called the ‘landlord’, the ‘lessor’ or
the ‘reversioner’;
- the grantee may be called the ‘tenant’/’leaseholder’/‘lessee’; and
- the grant of a lease can be called a ‘lease’, a ‘letting’ or a ‘demise’.
1.2 Importance of this issue
There are a number of differences between a leasehold estate and a licence.
(a) Third party effect: A leasehold estate (a proprietary interest) can bind third
parties, but a licence (a personal interest) cannot.
(b) Statutory regulation: In the residential sector, Parliament has for around a century
regulated leases differently from licences. Tenancies have been subject to many
more statutory rules than licences; e.g. over how they can be ended; the rent that
can be agreed; and the obligations of the landlord (e.g. in terms of repair). Different
types of tenancy (e.g. residential, commercial) are governed by different legislation.
In the past the regulation of residential tenancies was much more to favourable
tenants than it is today, and this encouraged many landowners to try and create
licences rather than leases. Since the Housing Act 1988, however, the regulation has
been scaled back. Many landowners no longer view it as a sufficient incentive to
strive to avoid conferring a lease. But this is not always the case: see e.g. B. Reeve-
Lewis, ‘A new breed of rogue landlord’ (2018) 21 J.H.L. 17, 20.
The Law Commission (Renting Homes (Cm 6781 (2006)) has proposed that, in the
residential sphere, regulatory protection should depend not on the lease-licence
distinction, but on whether one is occupying the premises as one’s ‘home’ (though
one would still need to have a leasehold estate in order to have a right enforceable
against third parties). This recommendation has found its way into the Renting
Homes (Wales) Act 2016 (see topic 4), but has yet to be adopted in England.
3
