Lesson 2 – Types of Occupation Contracts

Learning Objectives

By the end of this lesson, learners will be able to:

• Understand the different types of occupation contracts used in Wales.
• Distinguish between standard and secure occupation contracts.
• Explain the differences between fixed-term and periodic contracts.
• Understand how converted contracts were created under the Renting Homes (Wales) Act 2016.
• Recognise how different contract types affect possession rights and procedures.

Introduction

The Renting Homes (Wales) Act 2016 simplified Welsh housing law by replacing many tenancy and licence arrangements with occupation contracts. Understanding the various contract types is essential because the rules governing possession, notice periods, and contract-holder rights vary depending on the type of occupation contract in place.

For landlords seeking possession of a property, identifying the correct contract type is one of the most important first steps. Different occupation contracts provide different levels of security for contract-holders and different routes to possession for landlords.

This lesson examines the main types of occupation contracts used in Wales and explains how they operate in practice.

Standard Occupation Contracts

A standard occupation contract is the most common form of residential occupation contract used by private landlords in Wales.

Most private rented properties are occupied under standard occupation contracts.

These contracts are designed to provide flexibility for landlords while still offering important protections to contract-holders.

Where Standard Contracts Are Commonly Used

Examples include:

• Private rented houses.
• Flats and apartments.
• Houses in Multiple Occupation (HMOs).
• Student accommodation.
• Employee accommodation in some circumstances.

Features of Standard Occupation Contracts

Standard occupation contracts generally:

• Allow occupation of a dwelling in return for rent.
• Include fundamental, supplementary, and additional terms.
• Can be fixed-term or periodic.
• Allow possession through prescribed legal procedures.

Landlords must provide a written statement setting out the terms of the contract within the statutory time limits.

Possession Rights Under Standard Contracts

Landlords may seek possession using:

• No-fault possession procedures where applicable.
• Serious rent arrears grounds.
• Breach of contract grounds.
• Anti-social behaviour grounds.
• Other statutory grounds available under Welsh legislation.

The specific procedure depends upon the circumstances and type of contract.

Secure Occupation Contracts

Secure occupation contracts are primarily used by local authorities and some social housing providers.

These contracts provide significantly greater security of occupation than standard occupation contracts.

The purpose of secure contracts is to provide long-term housing stability for contract-holders.

Who Uses Secure Contracts?

Secure contracts are commonly granted by:

• Local authorities.
• Council housing providers.
• Certain public-sector landlords.

Features of Secure Contracts

Secure occupation contracts generally:

• Offer long-term security.
• Continue indefinitely unless legally terminated.
• Provide strong protection against eviction.
• Require landlords to establish specific legal grounds before possession can be obtained.

Possession Under Secure Contracts

A landlord cannot normally recover possession simply because they wish to regain the property.

Possession usually requires:

• Serious rent arrears.
• Breach of contract.
• Anti-social behaviour.
• Estate management grounds.
• Other statutory grounds.

The court will often consider whether granting possession is reasonable.

This provides greater protection for contract-holders than is available under many standard contracts.

Fixed-Term Contracts

A fixed-term occupation contract runs for a specific period agreed between the parties.

The duration is established at the beginning of the contract.

Common fixed terms include:

• Six months.
• Twelve months.
• Twenty-four months.
• Longer periods by agreement.

Key Characteristics

A fixed-term contract:

• Has a defined start date.
• Has a defined end date.
• Continues for the agreed period unless terminated earlier through lawful means.
• Provides certainty for both parties.

Advantages for Landlords

Fixed-term contracts may:

• Provide predictable rental income.
• Reduce tenant turnover.
• Create stability.
• Allow long-term planning.

Advantages for Contract-Holders

Fixed-term contracts provide:

• Security during the fixed term.
• Predictable housing arrangements.
• Protection from certain possession procedures during the fixed term.

Ending a Fixed-Term Contract

A fixed-term contract may end through:

• Expiry of the term.
• Mutual agreement.
• Surrender.
• Court order.
• Certain statutory possession procedures.

Landlords must always follow the correct legal process when seeking possession.

Periodic Contracts

A periodic occupation contract continues indefinitely until properly terminated.

Unlike a fixed-term contract, there is no predetermined end date.

Types of Periodic Contracts

Periodic contracts may be:

• Weekly.
• Fortnightly.
• Monthly.
• Quarterly.

Monthly periodic contracts are the most common.

How Periodic Contracts Arise

A periodic contract may arise:

• From the outset.
• Following the expiry of a fixed-term contract.
• Through contract conversion under Welsh legislation.

Advantages for Landlords

Periodic contracts may provide:

• Greater flexibility.
• Easier management of changing circumstances.
• Simpler renewal arrangements.

Advantages for Contract-Holders

Periodic contracts provide:

• Flexibility to move when required.
• Ongoing occupation without fixed renewal dates.
• Continuity of occupation.

Possession Considerations

Landlords must still comply with statutory notice requirements before seeking possession.

A periodic contract does not permit immediate recovery of possession.

The appropriate legal process must always be followed.

Converted Contracts

When the Renting Homes (Wales) Act 2016 came fully into force on 1 December 2022, many existing tenancy agreements and licences automatically converted into occupation contracts.

These became known as converted contracts.

Why Converted Contracts Were Created

The conversion process was introduced to:

• Simplify housing law.
• Avoid requiring entirely new agreements.
• Ensure continuity of occupation.
• Protect existing rights.

Examples of Converted Contracts

The following arrangements are commonly converted:

• Assured shorthold tenancies.
• Assured tenancies.
• Secure tenancies.
• Introductory tenancies.
• Certain licences.

Preserving Existing Rights

The conversion process is generally preserved:

• Existing occupation rights.
• Existing landlord rights.
• Existing rent obligations.
• Existing contractual responsibilities.

However, some provisions were changed to comply with the new Welsh legal framework.

Written Statements for Converted Contracts

Landlords were required to provide written statements reflecting the converted occupation contract.

Failure to provide the required documentation could lead to penalties and may affect possession proceedings.

Possession Considerations for Converted Contracts

Landlords dealing with converted contracts should:

• Identify the original tenancy type.
• Understand how it converted.
• Review the written statement.
• Confirm compliance with Welsh legislation.
• Obtain legal advice where necessary.

Understanding whether a contract is converted can be important when determining the correct possession procedure.

Comparing Occupation Contract Types

The type of occupation contract significantly affects the possession process.

Standard Contracts

• Common in the private rented sector.
• Greater flexibility for landlords.
• Possession procedures vary depending on circumstances.

Secure Contracts

• Primarily used in social housing.
• Greater security for contract-holders.
• More limited possession rights for landlords.

Fixed-Term Contracts

• Operate for a defined period.
• Provide certainty and stability.
• Special possession considerations during the fixed term.

Periodic Contracts

• Continue indefinitely.
• Offer flexibility.
• Require statutory notice for possession.

Converted Contracts

• Originated from previous tenancy arrangements.
• Subject to Welsh occupation contract rules.
• May involve additional compliance considerations.

Practical Example

A landlord lets a property to a contract-holder under a twelve-month standard occupation contract.

At the end of the twelve months:

• The contract-holder remains in occupation.
• Rent continues to be paid monthly.
• No new agreement is signed.

In many cases, the contract may become a periodic standard occupation contract.

The landlord must then follow the rules applicable to periodic occupation contracts if possession is later required.

Understanding how the contract operates is essential before serving any possession notice.

Lesson Summary

Occupation contracts form the foundation of residential letting arrangements in Wales. Standard occupation contracts are the most common in the private rented sector, while secure occupation contracts provide greater protection for social housing occupiers. Contracts may be fixed-term or periodic, and many older tenancy agreements became converted contracts when the Renting Homes (Wales) Act 2016 came into force.

Correctly identifying the type of occupation contract is essential because it determines the rights of both parties and the procedures that must be followed when seeking possession.

In the next lesson, learners will examine the legal grounds for possession and explore the circumstances in which landlords can lawfully recover possession of their properties.