What is an Occupation Contract?

An occupation contract is the legal agreement between a landlord and a Contract Holder (the person renting the home). It sets out the rights and responsibilities of both parties. The Act aims to make these agreements clearer and more consistent, moving away from the complexities of previous tenancy laws.

Key Change: All previous 'tenancy agreements' and 'licences' for residential properties in Wales have been replaced by 'occupation contracts'.

Types of Occupation Contracts

The Act primarily defines two types of occupation contracts:

• Secure Contract: This is the default contract for 'community landlords' (e.g., local authorities and housing associations). It offers a high degree of security of tenure for the Contract Holder, similar to previous secure tenancies, and can only be ended on specific, limited grounds.
• Standard Contract: This is the default contract for 'private landlords'. It offers more flexibility than a secure contract but still provides greater security for Contract Holders than the old assured shorthold tenancies. Standard contracts can be:
  • Fixed-term: For a set period (e.g., 6 months, 1 year).
  • Periodic: Rolling from one rental period to the next (e.g., month-to-month, week-to-week) without a fixed end date.

The Written Statement

A crucial requirement of the Act is for landlords to provide a 'written statement' of the occupation contract to their Contract Holders. This document replaces the traditional tenancy agreement and must contain all the terms of the contract.

• Mandatory Provision: For new contracts, the written statement must be provided within 14 days of the 'occupation date' (the date the Contract Holder is entitled to occupy the dwelling). For contracts that converted from old agreements, landlords had a grace period to issue these.
• Format: The written statement can be provided in hard copy or, with the Contract Holder's agreement, electronically.

Terms of an Occupation Contract

• Key Matters: These are the fundamental details that must be included in every contract, such as the names of the parties (landlord and Contract Holder) and the address of the dwelling.
• Fundamental Terms: These cover the most important aspects of the contract, including the landlord's repairing obligations, rules around seeking possession, and succession rights. These terms are generally fixed by law and cannot be changed or omitted, ensuring a baseline of rights for all Contract Holders.
• Supplementary Terms: These deal with more practical, day-to-day matters relating to the occupation of the dwelling (e.g., how to pay rent, rules on property maintenance, notification requirements if the property is vacant for extended periods). These terms can be omitted or varied if both parties agree, provided the change benefits the Contract Holder.
• Additional Terms: These are any other terms specifically agreed between the landlord and Contract Holder (e.g., rules about keeping pets, specific garden responsibilities). Any additional terms must be fair and comply with consumer protection legislation.

Implications for Landlords

Understanding occupation contracts is vital for landlords because:

• Compliance is Key: Failure to provide a written statement or to include the correct fundamental terms can have serious consequences, including financial penalties and restrictions on a landlord's ability to regain possession of their property.
• Clearer Responsibilities: The structured nature of occupation contracts makes the rights and responsibilities of both landlords and Contract Holders much clearer, which can help prevent disputes.
• Increased Security for Contract Holders: The Act aims to provide Contract Holders with greater security of tenure and more transparent terms, fostering more stable rental relationships.

Landlords should familiarise themselves with the model written statements provided by the Welsh Government and seek legal advice if they are unsure about drafting or managing occupation contracts.