Tenant or non-tenant occupier

There are four basic common law requirements for the creation of a tenancy, or lease. [1] The four requirements are that:

• there must be parties to the lease

• there must be a subject (a property being let)

• rent is to be paid (this could also include payment in kind, for example if the occupier receives the accommodation in lieu of wages)

• a duration is specified. (unless the tenancy is a PRT in which case there is no requirement for an ish to be specified [2]) 

There must be agreement between the contracting parties about all four matters for the contract to be classed as one of landlord and tenant, although the courts have been willing to 'fill in the gaps' to a limited degree. See the page on essential parts of a lease for more information about these four elements.

Occupancies that do not meet all of the above four requirements can be regarded as non-tenancies. These are sometimes referred to in Scots law as licences, although this wrongly creates the impression of a close similarity with licences in English law. Scots law on tenancies and non-tenancies is different from the law on this issue in England and Wales. The Inner House (the equivalent of the Court of Appeal in England and Wales) has noted that the temptation to rely on English case law in this area should be resisted. [3]

It is also arguable that no tenancy can be created without the tenant having taken possession of the property. This does not mean necessarily that they would need to have actually moved in but it must be possible for them to do so, so for example they would need to have been provided with keys. 

Where a person is allowed to stay in a friend's house for two months, for example, but no rent is payable, this arrangement cannot amount to a tenancy. Although there is agreement about the parties, subjects and duration, there is no agreement about rent. The status of this occupancy is not a tenancy.

However, where a person is allowed to stay in his brother's house for two months, for example, and agrees to pay £100 plus bills per month, this will generally amount to a tenancy. There is agreement about all four elements of lease, and the fact that the parties concerned are brothers does not matter.

Having the status of tenant has an important and direct effect on the protection one is afforded as an occupier and the nature of the landlord's responsibilities. This relates mainly to three areas:

• There are restrictions on recovery of possession by the landlord.

• There are limits on the rent that may lawfully be charged or when this may be increased.

• There are rights of repair.

The common law and statutory regulation have, over the years, created positive rights for tenants and imposed obligations on landlords, but has produced far fewer rights for non-tenants. In general, the rights and obligations in non-tenancy agreements come solely from the terms of the contract between the occupier and the provider of the accommodation. The details of such an agreement, in practice, may often be difficult to ascertain and/or prove.

See the section on non-tenant occupiers for more information about the rights of these occupiers.

Service occupancies look like leases but are not. They may satisfy the common law requirements for the creation of a lease, but are not accorded the same status as tenancies.

Where an employer gives a person a house, the contract may be either a lease or a service occupancy depending on the circumstances. Where it is expressly stated that the occupancy will terminate when the employment ends, the occupation will be treated as a service occupancy. In the absence of express provision, the nature of the occupancy must be decided on in the particular circumstances of each case.

Where the occupier has been granted occupancy of the accommodation for the better performance of their duties, they will be regarded as a service occupier. [4] This is more than the employer merely requiring that the employee live in a particular house before they can get the job. There must be a link between occupancy of the accommodation and the better performance of their employment duties. Any requirement to occupy the house cannot merely be an arbitrary regulation on the part of the employer. [5] For more information, please see the section on service occupancies.