An interesting question on the help-line has raised this article. In fairness, it won’t be of much practicality to most of our members but all the same I think it raises interesting questions.
The member runs a hostel in Cornwall. It is primarily used by backpackers seeking a cheap overnight stay. Occasionally, contractors will seek accommodation for a longer period of time when there is work in the area.
The occupier in question (who was neither a backpacker nor contractor) sought a room from the hostel. It soon became apparent it was going to be for longer than a couple of nights. Housing benefit was claimed by the occupier and was paid to the owner of the hostel.
Housing benefit has ceased and wasn’t in any event covering the full cost which means serious arrears have accrued because of the nightly rate being charged (some £3,000 arrears currently).
The owner of the hostel for obvious reasons wishes the occupier to move on. The local authority have contacted the owner and said that the occupier is an assured shorthold tenant and so they must serve a section 8 notice and obtain a court order. The main reason they site for there being a tenancy is because “the owner has received government funds in the way of housing benefit”. This action, so say the local authority, has created a tenancy.
The question therefore is two-fold. (a) Can the receiving of housing benefit alone turn a lodger (or hotel guest) into a tenant and (b) what is the status of this occupier (tenant or lodger)?
If a landlord has an occupier who is not a tenant (perhaps a lodger), does the acceptance of housing benefit turn that occupation into a tenancy?
This part of the question it seems to me is easy to answer. No.
The Housing Benefit Regulations 2006 define what payments housing benefit will cover. Regulation 11(1) says that one of those payments is “rent”. Rent is defined in regulation 12(1) as being:
… the payments in respect of which housing beneﬁt is payable in the form of … allowance are the following periodical payments which a person is liable to make in respect of the dwelling which he occupies as his home–
(a) payments of, or by way of, rent;
(b) payments in respect of a licence or permission to occupy the dwelling;
(c) payments by way of mesne proﬁts or, in Scotland, violent proﬁts;
(d) payments in respect of, or in consequence of, use and occupation of the dwelling;
As can be seen, housing benefit is payable in respect of a “licence or permission to occupy” and also for payments “in consequence of .. occupation of the dwelling”. Therefore, no licence nor tenancy is needed for somebody to be entitled to housing benefit.
I would therefore submit with relative certainty that the mere acceptance of housing benefit and nothing else indicating a tenancy, does not on it’s own create a tenancy.
Tenancy or Lodger?
Whether a person is a lodger or whether the dwelling has been let as a tenancy will depend on the circumstances of each case [Somma v Hazelhurst  1 W.L.R. 1014]
There are many variations of occupancy ranging from the occupier of a detached property under a full repairing lease, who is without doubt a tenant, to the overnight occupier of a hotel bedroom who, is without doubt a lodger. The dividing line will not normally depend on a single factor but on a combination of factors. [Aslan v Murphy  3 All E.R. 130 , 133. Brillouet v Landless (1995) 28 H.L.R. 836 (hotel guest).]
The facts in Brillouet v Landless mentioned above were that the hotel was a perfectly ordinary hotel with no special features to distinguish it from thousands of other hotels up and down the country.
On September 20, 1995 Mr John Claud Brillouet, the appellant, arrived at the hotel accompanied by his young daughter, and asked for accommodation on a bed and breakfast basis, and the appellant agreed the rates which were proposed.
A few days later Mr Brillouet indicated to the hotel that he and his daughter would wish to stay for longer. They were offered accommodation in the annex. Instead of the twin-bedded room, there were separate rooms. The terms for accommodation in the annex were £100 per day inclusive of VAT and of breakfast. Mr Brillouet accepted that offer.
In the annex which Mr Brillouet occupied there are various hotel facilities. They involve, for example, Sky television, a telephone, chambermaid involvement in the sense that chambermaids visit the suite regularly to change linen and to clean.
Unhappily it soon became apparent that the hotel was not going to receive the £100 per day which had been agreed with Mr Brillouet, and arrears accrued. The local authority were involved to an extent, because Mr Brillouet was relying upon finance from the local authority to assist him in paying for his accommodation. The local authority though, was not prepared to pay £100 per day. Accordingly, in the early part of November, the hotel proprietor, Mr J.K. Landless, who is the respondent to the appeal, indicated to Mr Brillouet that he and his daughter would have to leave. That prompted on Mr Brillouet’s part an application to the Uxbridge Country Court for an injunction restraining Mr Landless from taking steps to evict Mr Brillouet and his daughter from the hotel accommodation. A short interim injunction was obtained with a return date.
The matter came before Mr Assistant Recorder Smithson on November 8, 1995. Before the assistant recorder Mr Brillouet submitted that he was in reality a protected tenant of the accommodation which he occupied in the hotel, and consequently entitled to the protection afforded both by the Housing Act 1988 and the Protection from Eviction Act 1977. In a short judgment the learned assistant recorder rejected the submissions made by the applicant for the injunction. He said: “The Protection from Eviction Act depends on premises having been let as a dwelling.”
He went on to hold that Mr Brillouet had never enjoyed the protection afforded by either statute because, he was never at any stage the tenant of a dwelling. Mr Brillouet appealed to the Court of Appeal.
The Court of Appeal
Russell L.J. gave the leading judgment:
“It is an essential prerequisite of any tenancy that the tenant should have, so it is said in some of the authorities, exclusive possession. In my judgment the facts of this case particularly when one bears in mind that Mr Brillouet upon his own assertion avails himself of at least some of the facilities (he goes to the restaurant occasionally for his breakfast) — come nowhere near demonstrating that he has or has had within this room exclusive occupation. At best in my judgment he could conceivably be a licensee. One then has to examine once more the terms of the statute to ascertain whether he is a licensee entitled to protection under the 1977 Act.
As the section to which I have alluded makes plain, only licensees who occupy as a dwelling premises which they do occupy are entitled to protection. If, as in my judgment the facts here clearly demonstrate, the occupant is no more and no less than a hotel guest properly so-called, then the accommodation is not let to the licensee as a dwelling.
… I go first to an authority which I find of assistance, … namely Marchant v. Charters  3 All E.R. 918. In that case the then Master of the Rolls, Lord Denning, had this to say … after reviewing a number of authorities in which the question arose of whether a particular individual was a tenant or a licensee, at p. 922 as follows:
Gathering the cases together, what does it come to? What is the test to see whether the occupier of one room in a house is a tenant or a licensee? It does not depend on whether he or she has exclusive possession or not. It does not depend on whether the room is furnished or not. It does not depend on whether the occupation is permanent or temporary. It does not depend on the label which the occupation is permanent or temporary. It does not depend on the label which the parties put on it. All these are factors which may influence the decision but none of them is conclusive. All the circumstances have to be worked out. Eventually the answer depends on the nature and quality of the occupancy. Was it intended that the occupier should have a stake in the room or did he have only permission for himself personally to occupy the room, whether under a contract or not, in which case he is a licensee?
I now go to an earlier authority, namely Appah v. Parnclife Investments Ltd  1 All E.R. 838. At p. 842 Davies L.J. said:
Now, using the learned judge’s phrase of ‘balance sheet’, how does it all add up? In the first place, the plaintiff, like Mr Schumann when he went there, was offered in the first instance a daily rate. It may be that it is possible to have a tenancy from day to day; but that is an animal which none of us has ever encountered before.
Finally, there is a recent authority to which our attention was directed. (1995) 27 H.L.R. 439, C.A. It is Mohamed v. Manek. In the course of giving his judgment Auld L.J. said:
“Nor did it accord with the ordinary use of language to describe temporary accommodation in a hotel or hostel as premises ‘occupied as a dwelling under a licence’.”
In my judgment, at the end of the day one has to stand back and look at all the circumstances of the case now before the court, in precisely the same way as in the authorities the court stood back and looked at the original facts of those cases. Here I can see nothing to indicate that Mr Brillouet accepted accommodation from Mr Landless under any illusion, but that he was booking into a hotel as a hotel guest at a daily rate for accommodation which included the provision of many services, including the facility to have breakfast and dinner within the hotel if he so wished. This was never a tenancy, for the reasons which I have endeavoured to explain; nor in my judgment was it ever a licence to occupy accommodation as a dwelling. To suggest the contrary is in my view an abuse of language. From beginning to end Mr Brillouet was and always has been, ever since September 20, 1995, a hotel guest. There is nothing in the 1988 Act nor the 1977 Act to afford him any protection. Accordingly in my view the learned assistant recorder, although his ex tempore judgment did not cover every point, was perfectly right to decline to give to Mr Brillouet the relief that he sought.”
This is the closest case that I’ve come across for the members question and certainly assists.
It is worthy of a very quick note that in another “hotel occupant” type case namely, Mehta v Royal Bank of Scotland Plc (2000) 32 H.L.R. 45, the occupier was awarded £100,000 damages for wrongful eviction!
In the instant case, the room was let to M as a furnished room in a hotel built as a house, with the provision of only minimal services. Both parties knew that a receiver had been appointed, that the hotel would, if possible, be sold as a going concern and importantly, that M “wanted possession on a long term basis.” It was clear that the parties had expressly provided that the arrangements were not to be the ordinary arrangements for a hotel room. In the light of all those considerations, and the fact that the courts hearing M’s previous claims had proceeded on the basis that M had no more than a licence, it had to be concluded that M had a contractual licence rather than a tenancy and that a notice period of four months was appropriate.
One must be careful therefore assuming an occupier is a lodger because if they are or become a licensee or tenant, then appropriate notices will need to be served and possession order obtained.