Occupation Contracts: Where are we now?

Occupation Contracts: Where are we now?

It’s a little over four months since the implementation of Renting Homes (Wales) Act on 1 December 2022. After a number of last-minute amendments to the Act following the delayed implementation date in July 2022, many landlords and legal advisors are still trying to navigate the new legal landscape when letting property in Wales.

Prior to its implementation, the Welsh Government announced that Renting Homes (Wales) would make renting (and letting) property in Wales easier. Landlords were assured that the introduction of occupation contracts in place of tenancies and licences would result in a simpler renting system.

Firstly, Renting Homes (Wales) places emphasis on the respective rights and responsibilities of both the landlord and contract-holder being clearly set out within the body of the occupation contract. The benefit: the parties only need to review the terms of the occupation contract rather than trawl through decades of housing legislation and case law to understand their obligations. The drawback: occupation contracts that span 50-60 pages.

Secondly, occupation contracts may only contain 4 categories of terms: key matters, fundamental terms, supplementary terms and additional terms. Key matters largely record the details of the contract; the identity of the parties, the occupation date, the rental period and the amount of rent payable. Fundamental terms cover the most important aspects of the contract such as the deposit, repairs, and the possession procedures. They are automatically included in occupation contracts and cannot be significantly altered. Supplementary terms are also automatically included in occupation contracts and cover issues such as the inventory, changing utilities and contract-holder’s obligations at the end of the contract. There is greater scope to alter these terms, but this requires the contract-holders agreement. Lastly, additional terms can be included in an occupation contract provided they are agreed between the parties and are fair within the meaning of the Consumer Rights Act 2015.

Many had hoped that the combination of these two concepts would result in more consistency, and less variation, in occupation contracts.

Where are we now?

In the short time since the implementation of the Act, we’ve seen a greater variety in the structure, layout and content of occupation contracts, than in tenancy agreements. Additionally, occupation contracts are far lengthier than their tenancy agreement counterparts. We’ve seen the following variation:

separate fixed term and periodic contracts vs an initial fixed term contract in which the proposed periodic terms are set out within an annex,
contracts which contain the fundamental and supplemental terms with the additional terms set out within an annex,
contracts based on the Welsh Government’s model contracts vs contracts which are very similar to a typical tenancy agreement,
This does seem to be at odds with the simplicity that was promised.

As time goes on, we anticipate and hope that the style and content of standard occupation contracts will become more consistent. As with any topic relating to Renting Homes (Wales), we’ll have to watch this space.

Landlords are reminded that the current deadline to provide contract-holders with written statements of converted contract is 31 May 2023.

As published in NRLA news 28/04/23