Sub-occupation contracts (Subletting)
The Renting Homes (Wales) Act 2016 contains provisions for subletting (sub-occupation contract).
A “sub-occupation contract” is an occupation contract-
- made with a landlord who is the contract-holder under an occupation contract, and
- which relates to all or part of the dwelling that contract relates.
“Sub-holder” means the contract-holder under the sub-occupation contract, and “head landlord” means the landlord under the head contract.
For example, a house owner grants an occupation contract to a person. The owner is the head landlord, and this is the head contract.
The person sub-lets the house on an occupation contract, which is a sub-occupation contract, and the new occupier is a sub-holder.
No legislated (fundamental or supplementary) terms authorise a contract-holder to issue a sub-occupation contract. But, the landlord may include a term allowing it, which can consist of the landlord’s consent being required.
There’s no requirement that a contract-holder occupy the dwelling for an occupation contract to exist. The tenancy must confer on the individual the right to occupy a dwelling as a home (s.7).
Failure to comply with conditions imposed by the head landlord
Suppose the head contract permits entering into a sub-occupation contract with consent, and the head landlord consents subject to conditions. In that case, the contract-holder must notify the potential sub-holder of those conditions before entering into a sub-occupation contract (s.61(2)).
Suppose the contract-holder does not notify the person of those conditions and enters into a sub-occupation contract. In that case, the contract-holder has committed a repudiatory breach of the sub-occupation contract. The sub-holder may give up possession anytime without notice, and if so, the sub-occupation contract ends (s.61(3)).
Written statement of contract
If the head landlord consents subject to conditions and a sub-occupation contract is entered into, the written statement rules apply to the sub-occupation contract, and the written statement must also set out the conditions imposed by the head landlord (s.61(4)(a)).
Suppose the written statement doesn’t contain those conditions. In that case, the sub-holder may apply to the court for compensation and declarations relating to the terms of the sub-occupation contract (s.61(4)(b)).
Head landlord may take over the sub-occupation contract
Suppose the head landlord consents to a sub-occupation contract subject to conditions, but those conditions are not complied with by the contract-holder. The head landlord may choose to treat the sub-occupation contract as a periodic standard contract, with the head landlord being the direct landlord. If selected, the periodic contract has the following characteristics-
- all the fundamental and supplementary provisions applicable to a periodic standard contract are incorporated without modification,
- any terms of the fixed-term contract which are incompatible with those fundamental or supplementary provisions have no effect, and
- otherwise, the terms of the periodic standard contract are the same as the terms of the fixed-term standard contract.
If the head landlord chooses to treat it as a periodic standard contract, they must notify the contract-holder and the sub-holder of that choice (s.61(7)). Prescribed form RHW6 must be used for this purpose.
The head landlord may only give RHW6 after the sub-occupation contract has been made and before the end of two months from when the head contract ends.
If the head landlord gives notice, the contract is treated as a periodic contract with the characteristics above.
End of the head contract
Where the occupation contract between the head landlord and contract-holder is-
- a periodic contract, and it ends (perhaps after notice by the landlord or contract-holder), or
- a fixed-term contract, and it ends otherwise than the end of the term (for example, after a possession order due to a breach is executed).
Assuming the sub-occupation contract is running at that time, the sub-occupation contract continues (as an occupation contract, not a sub-occupation contract), and the contract-holder’s rights and obligations as the landlord are transferred to the head landlord (s.62(2)).
The sub-holder (now the head landlord’s contract-holder) may ask the head landlord for a further written statement of the contract (s.62(4)).
Where RHW6 was given within two months of the head contract ending (landlord choosing to treat the sub-occupation contract as a periodic contract), the occupation date of the contract is to be treated-
- if RHW6 is given to the sub-holder before the end of the head contract, as the day when the head contract ends;
- if RHW6 is given to the sub-holder on or after the head contract ends, the day notice is given.
Possession claim against contract-holder where there is a sub-holder
If the head landlord gives their contract-holder a notice that they must give up possession, at the same time as giving notice, the head landlord must provide the sub-holder with a notice stating they intend to make a possession claim and the ground. Prescribed form RHW7 must be used for that purpose.
Extended possession order against sub-holder
In any proceedings against the contract-holder, the head landlord may also apply for a possession order against the sub-holder (known as an “extended possession order”) (s.65(2)). But the head landlord may only make an application if-
- the head landlord gave the prescribed form RHW7 as described above, and
- at the same time, the head landlord must have given the sub-holder further notice about the extended possession claim against them using prescribed form RHW8.
The court may consider it reasonable to dispense with those requirements.
The sub-holder is entitled to be a party to proceedings (s.65(4)).
The court may only consider the application for an extended possession order (against the sub-holder) if it has decided to make an order for possession against the contract-holder.
The court may only make an extended possession order against the sub-holder if, had the contract-holder made a possession claim against the sub-holder, the court would have made an order for possession against the sub-holder.
Exclusion of contract-holder after abandoning contracts
If a sub-holder believes that their landlord (the head landlord’s contract-holder) no longer considers them to be a party to the head contract and the sub-occupation contract, the sub-holder may act to end the head contract under section 66 of the Act.
The procedure involves the sub-holder giving a four-week warning notice to their landlord (contract-holder) and the head landlord. Afterwards, they can apply to the court.
If the court agrees, it can end the head contract (s.66(9)), resulting in the sub-holder becoming the contract-holder of the head landlord.
Within six months, the former contract-holder can apply to the court for a declaration that the head contract continues (s.67).