What is the difference between a tenancy and a licence to occupy?

Whether the occupier has exclusive possession — the right to exclude everyone, including the owner — which is what makes an arrangement a tenancy, regardless of what the document calls it.

The test. A tenancy exists where there is:

Exclusive possession of a defined space.

For a fixed or periodic term.

At a rent (in most cases).

Exclusive possession is the decisive element. If you can lock the door and exclude the owner, you probably have a tenancy.

Why the label does not decide it. This is the central principle, established in Street v Mountford: the court looks at the substance of the arrangement, not the label the parties applied. Calling an agreement a licence does not make it one, and terms inserted to defeat exclusive possession — a right for the owner to move the occupier between rooms, or to introduce others — are disregarded where they are shams that do not reflect reality.

The often-quoted formulation is that calling a spade a fork does not make it one.

Why it matters enormously. A tenant has statutory protections a licensee does not:

Protection from eviction — a tenant generally cannot be evicted without a court order, and eviction without one may be a criminal offence.

Deposit protection requirements.

Repairing obligations implied into the tenancy.

Notice requirements, and the ability to challenge possession.

A licensee has only the terms of their agreement and limited statutory protection — notice may be short, and removal is considerably easier.

Genuine licences do exist:

Lodgers, living in the landlord's own home and sharing accommodation with them. The owner's residence is what makes it a licence, and lodgers are excluded occupiers with minimal protection — reasonable notice, and no court order required.

Hotel and hostel accommodation.

Service occupancy, where accommodation is provided for the better performance of a job.

Temporary arrangements where genuine services are provided.

Why it is abused. Some landlords use "licence" agreements to avoid tenant protections. If you have your own room with a lock and the owner does not live there, an agreement calling itself a licence is unlikely to be one — and a tribunal or court will look at the reality.

General information, not legal advice.