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Understanding Excluded Licence Agreements in Wales: A Guide for Landlords and Tenants
If you are a landlord or tenant in Wales, you may have heard of excluded licence agreements (ELAs) as a way to create a flexible and informal arrangement for renting a property. However, ELAs are not the same as assured shorthold tenancies (ASTs), which are the most common type of tenancy in England and Wales. ELAs have their own rules and limitations, and may not provide the same protections or obligations as ASTs. In this article, we will explain what ELAs are, what they cover, and what you need to know before entering into one.
What is an excluded licence agreement?
An excluded licence agreement is a type of contract between a landlord and a tenant, where the tenant has the right to occupy a room or part of a property, but does not have exclusive possession of it. This means that the landlord can enter and use the area without the tenant`s permission or notice, as long as it is reasonable and necessary. ELAs are often used for shared houses or flats, where the tenants share common areas such as kitchens, bathrooms, or living rooms, but have their own private bedrooms. ELAs can be created verbally or in writing, but it is advisable to have a written agreement to avoid misunderstandings.
What does an excluded licence agreement cover?
An excluded licence agreement should specify the following terms:
– The address and description of the property, including any restrictions or conditions on its use or access.
– The duration of the licence, which can be fixed or periodic, and how it can be renewed or terminated.
– The rent or fees payable by the tenant, including any deposit or advance rent, and how they can be refunded or forfeited.
– The services and utilities provided by the landlord, and how they are shared or billed among the tenants.
– The rights and responsibilities of the landlord and the tenant, including any obligations to repair, maintain, or clean the property, and any restrictions on behaviour or noise.
– The procedures for resolving disputes or complaints between the parties, which can be informal or formal, depending on the nature and severity of the issue.
What are the advantages and disadvantages of an excluded licence agreement?
ELAs can offer some benefits for both landlords and tenants, such as:
– Flexibility: ELAs can be easier to create and terminate than ASTs, as they do not require formal notices or court orders. This can be useful for short-term or temporary arrangements, where the parties may not want to commit to a long-term lease.
– Cost: ELAs may be cheaper to set up and maintain than ASTs, as they do not involve as much paperwork or legal fees. This can be attractive for landlords who want to avoid the hassle or expense of complying with the strict requirements of ASTs.
– Social interaction: ELAs can foster a sense of community and cooperation among tenants who share common areas or interests. This can be appealing for tenants who prefer a more sociable or supportive living environment.
However, ELAs also have some drawbacks and risks, such as:
– Uncertainty: ELAs do not offer as much legal certainty or protection as ASTs, as they are not regulated by the same laws or standards. This can leave both landlords and tenants vulnerable to disputes or breaches of contract, especially if the terms are not clear or fair.
– Insecurity: ELAs do not provide the same security of tenure as ASTs, as the landlord can terminate the agreement at any time, sometimes without notice or reason. This can be stressful or disruptive for tenants who rely on the property as their main or only home.
– Liability: ELAs may expose landlords and tenants to liability for damages, injuries, or debts that arise from the use or occupation of the property. This can be costly or inconvenient for both parties, especially if insurance or compensation is not available or sufficient.
In conclusion, excluded licence agreements can be a useful option for some landlords and tenants in Wales who want a more flexible and informal arrangement than assured shorthold tenancies. However, ELAs should be approached with caution and awareness of their limitations and risks. If you are considering an ELA, it is advisable to seek legal advice and ensure that the terms are fair and clear for both parties.