Selling a property let on a licence or holiday let
A licence is not a tenancy, and the difference matters to a buyer, a lender and a solicitor.
Not every occupier is a tenant. A lodger, a guest in a holiday let, a licensee under a short agreement and a tenant under an assured shorthold tenancy all have different rights, and the distinction determines what a buyer inherits and what a lender will accept.
Confusing the two causes problems in a sale, because a buyer's solicitor will establish the occupier's status and a lender will price the risk accordingly.
The difference that matters
A tenancy grants exclusive possession of the property for a term, and it carries statutory protections. A licence grants permission to occupy without exclusive possession, and it is far easier to bring to an end.
- A tenant has exclusive possession and statutory protection, and can only be removed by a court
- A lodger who shares the owner's living space is generally a licensee, not a tenant
- A holiday let guest occupies under a licence for a short period, without security of tenure
- A licence can generally be terminated on the notice the agreement provides, without a court order
- The distinction turns on exclusive possession and the substance of the arrangement, not on what the document is called
What a buyer inherits
A tenancy binds a buyer, so a property sold with a tenant continues to be let. A licence generally does not bind a buyer in the same way, though the occupier may have rights depending on the arrangement.
The buyer's lender will be interested in both. A tenancy affects the property's value as security and restricts the buyer pool to investors; a licence is less of an issue but a lender may still want the property vacant on completion.
Marketing it
The status of the occupier should be stated clearly and accurately in the listing. Calling a tenant a licensee, or describing a holiday let as vacant possession, is misrepresentation and will be discovered by the buyer's solicitor.
- State whether the property is vacant, tenanted, or occupied under a licence
- Provide the agreement, whatever its form
- Provide the income history for a holiday let, which is the basis of its value
- State whether vacant possession can be delivered, and by what date
- Provide evidence of compliance: gas safety, EICR, EPC, and any licence required
Common questions
- Can I sell a property with a lodger?
- Yes. A lodger who shares your living space is generally a licensee rather than a tenant, with fewer rights and no security of tenure, so the property can usually be sold with vacant possession once the arrangement ends. Establish the position with a solicitor, because the distinction depends on the substance of the arrangement.
- Do I have to tell buyers about a holiday let licence?
- Yes. The occupier's status must be disclosed accurately, and describing an occupied property as vacant possession is misrepresentation. Provide the letting agreement and the income history, which is the basis of the property's value as a holiday let, and state whether vacant possession can be delivered.