Sometimes you might come across a housing situation where it’s unclear whether your client has a rental agreement (also known as a lease) or a license to occupy a property. This distinction is important because the law treats licensees differently from renters, and licensees do not have the same legal protections.
As much as possible, your client should ensure their living agreement is set up properly and understand which rights apply to them. If your client has a dispute involving a license agreement, we recommend they seek legal help.
What is a rental agreement?
A rental agreement (also sometimes called a lease) is where a rental provider (also known as a landlord) agrees to let out a premises to someone, who becomes the renter.
A renter is covered by Victoria’s rental laws (Residential Tenancies Act 1997 (RTA)). A rental agreement can be written or verbal.
What is a license?
A license gives a person (the licensee) permission to enter or occupy premises. It does not provide the same rights as a renter. Licenses are not covered by Victoria’s rental laws.
The rights of licensees who occupy a premises can be legally complex. In some cases, a licensee may have rights under contract law. In other situations, they may also be protected by Australian Consumer Law.
The nature of licensee rights, how they can be enforced, and the circumstances in which a license can be revoked or terminated varies case-by-case.
What about rooming houses and sub-letting?
When assessing whether a client is a licensee, it is also important to consider rooming house and subletting arrangements, as these can overlap.
Rooming house agreements
A rooming house resident is someone who occupies a room in a rooming house run by a rooming house operator. Rooming house agreements are covered by laws under the RTA and are distinct from residential rental agreements and licenses.
Sub-renters
Sub‑letting occurs when a head renter (whose name is on the rental agreement) rents out the premises or part of the premises to another person, known as the sub‑renter.
The head renter must have the rental provider’s consent to sublet. The head-renter takes on the responsibilities of a landlord to the sub‑renter. If your client is a sub‑renter, they have rights under the RTA.
Does your client have a rental agreement or license?
There are a range of factors which need to be taken into account when determining whether someone is a renter or a licensee.
- Written rental agreement: If your client is named on a written rental agreement, they are more likely to be a renter.
- Exclusive possession: Exclusive possession is the main feature of a rental provider and renter relationship. It means the renter can exclude others from the property or from a specific room. This might be a lock on the door, or where the client can exclude all others (including the landlord and head renter) from the property or room, or if the room is self-contained in some way, for instance it has a private bathroom or kitchen.
- Owner lives at the property: If the owner lives at the property with the client, it is presumed that there is a license agreement. This presumption can be disproven, for example if your client lives with the owner in a rooming house or is in a sublease arrangement.
- Payment of rent: Paying rent for the exclusive possession of the premises points toward a rental agreement.
- Labels used in the agreement: Whether the agreement is called a rental agreement or a license is not determinative. A person can still be a renter if they are called a licensee in the agreement. The substance of the agreement is what matters.
- Intention of the parties: The key question is what legal rights and duties the parties intended to give to the occupant. Intention can be difficult to establish and depends on evidence such as the language used by the parties, their conduct, the surrounding circumstances, or the history of their relationship. Family, charitable, or social arrangements can suggest there was no intention to create a legally binding rental agreement.
Recent VCAT cases – rental agreement or license
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Brooks v Brown (2024) – No lease
Key facts
- A couple allowed the wife’s parents to live in a granny flat on their property.
- The wife’s parents lent them money to help purchase the property, formalised in a loan agreement.
- A residential rental agreement was also signed on conveyancer’s advice. Parents were named as tenants.
- Wife said both her and her parents intended the property to be a benefit for the whole family. Her parents moved in so they could support babysitting her children.
- Rent was $1 per year, inclusive of utilities, for the parents’ lifetime.
- Parents spent around $75,000 improving the granny flat.
- Wife argued her parents did not have a lease.
VCAT’s decision
- The $1 per year payment was not considered rent.
- Despite signing a lease, the parties did not intend to create a tenancy. They simply signed on suggestion of the conveyancer.
- The family context and childcare support showed no intention for lease. Property was purchased for parents’ benefit too.
- Significant contributions by parents to improvements were inconsistent with a tenancy.
- Parents did have exclusive possession of the granny flat. But this alone was not enough to establish a lease.
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Heaver v Heaver; McMurtry (2017) – No lease
Key facts
- Brother lived in his mother’s property. Property was later gifted to his sister.
- Brother gave mother $200 per week to help her with bills.
- The sister sought to evict him, claiming he was a renter.
VCAT’s decision
- It was a family arrangement between mother and son to live in the family home, not a tenancy.
- Payments were to help mother out, not rent.
- The brother had lived there for decades with his parents under similar arrangements and was never asked to pay rent.
- The property continued to be used by extended family as a family home.
Brooks v Brown (2024) – No lease
Key facts
- A couple allowed the wife’s parents to live in a granny flat on their property.
- The wife’s parents lent them money to help purchase the property, formalised in a loan agreement.
- A residential rental agreement was also signed on conveyancer’s advice. Parents were named as tenants.
- Wife said both her and her parents intended the property to be a benefit for the whole family. Her parents moved in so they could support babysitting her children.
- Rent was $1 per year, inclusive of utilities, for the parents’ lifetime.
- Parents spent around $75,000 improving the granny flat.
- Wife argued her parents did not have a lease.
VCAT’s decision
- The $1 per year payment was not considered rent.
- Despite signing a lease, the parties did not intend to create a tenancy. They simply signed on suggestion of the conveyancer.
- The family context and childcare support showed no intention for lease. Property was purchased for parents’ benefit too.
- Significant contributions by parents to improvements were inconsistent with a tenancy.
- Parents did have exclusive possession of the granny flat. But this alone was not enough to establish a lease.
Heaver v Heaver; McMurtry (2017) – No lease
Key facts
- Brother lived in his mother’s property. Property was later gifted to his sister.
- Brother gave mother $200 per week to help her with bills.
- The sister sought to evict him, claiming he was a renter.
VCAT’s decision
- It was a family arrangement between mother and son to live in the family home, not a tenancy.
- Payments were to help mother out, not rent.
- The brother had lived there for decades with his parents under similar arrangements and was never asked to pay rent.
- The property continued to be used by extended family as a family home.
Licensee disputes at VCAT
VCAT generally cannot hear disputes about licenses, as they fall outside Victoria’s rental laws. However, VCAT can still be involved in certain situations:
- VCAT can decide whether an arrangement is a rental agreement or a license.
- If your client is threatened with imminent illegal eviction, they can seek an urgent restraining order. VCAT can make interim (temporary) restraining orders for both renters and licensees. VCAT will later hold a full hearing where all the parties attend.
- If your client believes they are a sub-renter, they can apply to VCAT to confirm this.
- Sub‑renters can also seek restraining orders to prevent illegal eviction.
- If the agreement is verbal or partly in writing, a client can ask VCAT to order the rental provider to enter into a written rental agreement. This can help prevent future disputes about the nature of the agreement.
Where can my client get more help?
Legal services
Homeless Law is unable to assist with licenses. If your client needs legal help with license agreements, the following services might be able to provide advice and assistance:
- Victoria Legal Aid: Legal Help can give advice over the phone, or via an online chat service.
- Tenants Victoria: Tenants Victoria offers 30-min secondary consultations for workers. You can book a call through their website.
- Community Legal Centre (CLC): Your client’s local CLC might be able to provide some advice. Find your client’s local CLC.
See our referral page for legal support and other support options.
The content on the Workers’ Resource Hub is legal information for general guidance and not legal advice. The content on this webpage was last updated in May 2026. See full disclaimer and copyright notice.
