Written Statement of Occupation Contract

Written statements are arguably one of the most critical aspects of the Renting Homes (Wales) Act 2016 ("the Act"). 

Where a tenancy is an occupation contract, a landlord must give a written statement of the contract to the contract-holder(s), including tenancies that are converted.

All tenants are referred to as "contract-holders" with an occupation contract.

The term "occupation date" is used throughout the rules and this guidance, and it means the day on which the contract-holder is entitled to begin occupying the dwelling (s.245). The occupation date was previously referred to as the tenancy's start date or commencement date.

Timescales to supply a written statement

Converted contract (including substitutes)

You must give a written statement for a converted contract by 31 May 2023.

If there has been a substitute contract agreed with at least one contract holder who was in occupation on 1 December 2022 (a converted substitute), the following time-frames apply:

  • substitute given before 1 June 2023 - statement must be given by 13 June 2023
  • substitute given from 1 June 2023 - statement must be given within 14 days of it's occupation date

The legislation does not provide what happens if the contract ends before the statement is given. For example, suppose a converted contract ended before six months to supply the written statement. In that case, you are well advised to provide it even though the contract has ended (see penalties later for failing to provide it). 

New occupation contract (to new occupiers)

For a new occupation contract granted on or after the start of the Act,

The landlord under an occupation contract must give the contract-holder a written statement of the contract before the end of the period of 14 days starting with the occupation date (section 31(1)).

The wording doesn't use the term "within" 14 days of the occupation date and indicates that the words "before the end of the period of 14 days starting with the occupation date" are a formula to find the latest possible date.

For a contract with an occupation date of 1 January, the landlord must give the statement before 14 January.

This wording makes it acceptable to give the written statement before the occupation date, which must be the intention because contracts are often signed and delivered before their occupation date. Student lettings can be completed up to a year before the occupation date.

If a landlord fails to provide the written statement within 14 days (or six months for conversion), notice can't be given until six months starting with the day the landlord issued the written statement (Part 1, Schedule 9A).

See later for timescales of providing a written statement when specific events occur (such as a variation to the contract).

When terms of an occupation contract apply from

No term of an occupation contract is enforceable against the contract-holder before the earlier of (s.42):

  • the landlord giving the contract-holder a written statement of the contract, and
  • the occupation date.

Contents of a written statement

The contents of a written statement are complex and differ whether they are a fixed term or a periodic contract. Further, there are different terms if the contract is converted or new. Combined, they are referred to as occupation contracts, and all types must set out the following:

  • the names of the parties to the contract
  • the terms of the contract addressing key matters
  • the fundamental terms
  • the supplementary terms
  • any additional terms
  • explanatory information
  • if a fundamental or supplementary term (see in a moment) has been omitted or changed, the term must show the original term and the changes made.

Key matters

The key matters about a standard occupation contract are all the following (s.26 and 27)-

  • the dwelling
  • the occupation date
  • the amount of rent or other consideration
  • the rental periods
  • whether the contract is periodic or made for a fixed term
  • if it is made for a fixed term, the term for which it is made
  • for periods during which the contract-holder is not entitled to occupy the dwelling as a home, those periods

Fundamental terms

Fundamental terms are best described as a cut and paste of sections of the Renting Homes (Wales) Act 2016 into the contract.

Editorial changes are acceptable as long as the changes to the term do not change the substance in any way (s.33).

Specific fundamental terms must be inserted without modification (except editorial changes). Other fundamental terms can be modified or removed, but this must be agreed upon with the contract-holder, and the approved changes must improve the position of the contract-holder (s.20).

If a fundamental term has been modified or removed, the statement must show the original text before modification/removal and the changes shown.

For example (and we use this example because it's short wording), under the tenancy deposit rules under the Act, section 43 says-

43 Form of security

(1) The landlord under an occupation contract may not require security to be given in any form other than-

(a) money, or

(b) a guarantee.

(2) This section is a fundamental provision which is incorporated as a term of all occupation contracts.

In the written statement, the following would have to be inserted, having the same effect as the legislation and may look like this:

Form of security (F+)

(#) The landlord may not require security (which includes a deposit) to be given in any form other than-

a) money, or

b) a guarantee.

Source: model written statement for fixed-term standard contract

(F+) next to the heading indicates it's a fundamental term that can be modified or removed as long as the contract-holder position is improved. If the header had (F), that would indicate a fundamental term that cannot be modified or removed.

Using the same term as an example, below is how it would look if the guarantee option is removed (thus improving the contract-holder's position):

Form of security (F+)

(#) The landlord may not require security (which includes a deposit) to be given in any form other than-

a) money, or

b) a guarantee.

This example shows the starting clause per the legislation, and then the agreed modifications are displayed with a strikethrough. As this improves the position of the contract-holder, it would be an acceptable modification in our view.

If words were added to the term by modification, those new words should be in CAPITALS.

IMPORTANT: Please remember that not all clauses can be modified this way! Specific fundamental terms have to remain without modification or removal. The list of terms that cannot be altered or removed is found in section 20(3).

Supplementary terms

Supplementary terms are similar to fundamental terms in that they are prescribed.

The prescribing regulations are the Renting Homes (Supplementary Provisions) (Wales) Regulations 2022.

A supplementary term can be modified or removed if the landlord and contract-holder agree (s.24).

The contract-holder's position is not required to be improved where a supplementary term is modified or removed (but must be agreed upon).

In the same way as fundamental terms, if a supplementary term is modified/removed, it must be identified on the contract. The statement can achieve this by striking through removed or changed text and new words shown in CAPITALS.

A supplementary term should be identified in the statement, which could be by using (S) in the heading.

Supplementary terms are more general terms that might be important, for example:

  • Use of dwelling
  • Changes to the provision of utilities to the dwelling
  • Security of the dwelling
  • provision for an inventory

Like fundamental terms, the regulations specify which supplementary terms apply to which types of occupation contracts. Almost all apply to fixed-term contracts, and some only to periodic contracts.

If a supplementary term is not incorporated, the statement must identify this. If the statement doesn't identify the missing term, section 36(4)(b) provides that the term will be treated as incorporated as a contract term without modification unless it's incapable of being included or the contract-holder claims it was not incorporated. A similar provision applies to fundamental terms but won't likely apply to our audience because a fundamental term is not incorporated if that improves the position of the contract-holder or there is some legislative conflict resulting in the term not being included. However, if this were the case, it must be identified in the statement similar to the supplementary provisions.

Explanatory information

Similar to supplementary terms, explanatory information is prescribed.

The prescribing regulations are the Renting Homes (Explanatory Information for Written Statements of Occupation Contracts) (Wales) Regulations 2022.

This explanatory information is similar to what we're used to with deposit prescribed information.

It is a list of information that must be included and explained.

Like the terms previously, it will be best to make the text as close to the wording within the regulations as possible. All the information must be provided, and there's no power to agree to modification or removal.

Some of the information applies to all contracts within the regulations, and other parts apply to specific contracts, i.e. fixed-term or periodic standard contracts.

The amount of information required is extensive and lengthy.

Model written statements

Under the Act, it's a requirement that a model written statement of contract is published, which is all the fundamental, supplementary and explanatory information combined without modification.

The prescribing regulations are the Renting Homes (Model Written Statements of Contract) (Wales) Regulations 2022.

The regulations prescribe model contracts for:

  • secure occupation contract
  • ‌relevant periodic standard occupation contract
  • relevant fixed-term standard contract

IMPORTANT: a landlord or agent should not be confused by this model statement. It is not a model statement that a landlord can use off the shelf despite a downloadable version available on the Renting Homes information website of the Welsh Government.

It is simply all the terms and explanatory information without modification which means, for starters, the following apply to the model contracts if no changes are made:

Additional terms

Additional terms are agreed terms that have not been described earlier.

They are the typical regular clauses such as:

  • no pets without consent
  • look after the garden
  • no smoking
  • and so on …

All the additional terms must be fair and comply with the Consumer Rights Act 2015.

Written statement for converted tenancy

Producing a written statement for a converted tenancy is complex due to the conflicting existing provisions in the previous tenancy agreement and the fundamental/supplementary terms within the legislation.

Section 240 sets out what happens to the terms of a converted tenancy when it is converted.

The fundamental provisions applicable to the contract are incorporated as terms of the occupation contract.

The existing terms of the contract continue to have effect, except to the extent that they-

  • are incompatible with a fundamental provision incorporated, or
  • are contract terms because of an enactment repealed or revoked under the Act.

The supplementary provisions applicable to the contract are incorporated, except that they are incompatible with the existing terms of the previous agreement.

The written statement rules are the same for a converted contract (fundamental, supplementary, additional terms, and explanatory to be included) as they are for a new contract. The statement must not be inaccurate or incomplete.

Let's take a typical deposit clause in the previous tenancy agreement. It might say, "… the landlord shall protect the deposit within 14 days of it being received…."

Remember, if our existing term is compatible with a fundamental term, it remains in the contract and must be in the written statement. If, however, our term isn't consistent, then it is of no effect (s.240(5)(a)), and if that's the case, it mustn't be in our written statement (otherwise, it could be regarded as an incorrect statement).

The relative deposit fundamental term is found in section 45 and says that the landlord must protect the deposit within 30 days.

That term cannot be modified (even if that improves the position of the contract-holder).

As a result, the current term saying 14 days to protect, is incompatible with the fundamental term, therefore, of no effect. Our written statement must remove the existing term and incorporate the fundamental term from the legislation.

But what would happen if the existing deposit clause said 30 days? It would depend on the wording in the previous clause and a judgment on which to include, but the safest would be to have the legislated version.

Another example might be from an old agreement that mentions tenant fees. As those terms are now of no effect, the landlord cannot insert them into the written statement; otherwise, they will be inaccurate.

If the previous tenancy has a term covered by a supplementary term, the existing agreement term is incorporated (not the term from the legislation). But, as the contents of a written statement require agreed changes to be identified (s.32(3)(b)), the legislated supplementary term must nevertheless be identified by being crossed out, and then the existing tenancy term inserted in CAPITALS (or a combination of both). The statement would identify the legislated supplementary term and show the agreed modification imported on conversion. A failure will risk the statement being regarded as incomplete (s.36(2)).

Furthermore, each term must be identified as a fundamental, supplementary or additional term.

This process will have to be completed for every clause in the agreement. It would need to be decided whether the existing clause is acceptable as a fundamental or supplementary term and inserted. The remainder of the explanatory information, fundamental and supplementary clauses from the legislation that aren't covered by our existing clauses, are inserted. Then, you must add all additional terms (gardens, pets, etc.) to the statement (that continue to have an effect).

What should landlords and agents do?

Given the complexities of producing a written statement for a converted contract, issuing a new tenancy as an occupation contract before the Act starts might be a good solution. Despite the wording, it will be an assured shorthold tenancy (or contractual tenancy if excluded) (s.1 Housing Act 1988).

However, it will have the wrong terms for an assured shorthold tenancy before the start. Not having the correct terms means that possession, for example, would be difficult, if not impossible. But how and why would you need possession soon before the Act commences?

Once the Act starts, all the new rules take effect, the contract is converted, and you've complied with all the written statement rules because they will have the correct wording. A copy of the statement will need to be sent within six months of the start of the Act, but that's all.

An advantage of this method is that there is an ability to serve two months' notice during the fixed term after six months of original occupation (paras 25A and 25B of Schedule 12). However, if the tenancy was fixed term on conversion, the no-reason notice is six months when it goes periodic.

Under changes made, the notice periods were changed so that two months' notice will be available until 31 May 2023, and from 1 June, it will become six months' notice where the converted contract is periodic.

Another advantage is that even though it was done as an occupation contract because it will be a converted contract, the one-year grace period applies for mains smoke alarms, CO alarms and electrical safety reports.

For this to work, though, the occupation date (the renewal tenancy commencement) must be before the start of the Act.

Further guidance on written statements for converted contracts

The Welsh Government has produced guidance: Creating a converted occupation contract: guidance for landlords.

Written statements for new tenancies on or after commencement

The written statement for new occupation contracts should be straightforward because they will be available from landlord associations, solicitors and other providers. Providers that will be supplying occupation contracts include:

Guild of Residential Landlords

Training for Professionals

Events that trigger a further written statement

Change in contract-holder's identity

If the identity of the contract-holder changes, the landlord must give the new contract-holder a written statement before the end of the period of 14 days starting with:

  • the day on which the identity of the contract-holder changes, or
  • if later the day, the landlord becomes aware that the identity of the contract-holder has changed.
  • If there has been a change in the identity of the contract-holder in relation to a converted contract:
    • before 1 June 2023, a written statement must be provided to the new contract-holder before 14 June 2023 (paragraph 11(1A)).
    • from 1 June 2023, a written statement must be provided to the new contract holder within 14 days.

Request for copy statements and charging a fee for a written statement

## Charging for a written statement

Under section 31 of the Renting Homes (Wales) Act 2016, a landlord must not charge any fee for providing the initial written statement of the occupation contract to the contract-holder. This means that when a new tenancy begins or when there is a change in the identity of the contract-holder, the landlord must supply the written statement free of charge within the prescribed 14-day period.

However, if a contract-holder requests a further copy of the written statement at any time after the initial provision, the landlord is permitted to charge a reasonable fee for providing this additional copy. The fee should reflect only the reasonable costs incurred in supplying the further written statement, such as printing or postage, and must not be excessive.

The landlord must provide the further written statement within 14 days of the request. If a fee is charged, the landlord is only required to supply the statement once the contract-holder has paid the fee.

This distinction ensures that tenants have free access to their contract terms initially, while landlords are fairly compensated for any subsequent requests that involve additional administrative effort (s.31).

Varying a contract

Varying a contract will be discussed in later guidance, but where a variation is made, the landlord must provide a written statement within 14 days of the variation in one of two ways:

  • a written statement of the term or terms varied, or
  • a written statement of the contract as varied

No charge can be made for the written statement containing the variation.

Adding or removing a contract holder is not a variation under the rules.

When the fixed term ends

When the fixed term ends and a contract-holder remains in occupation, the landlord and contract-holder are treated as having made a new standard periodic contract (s.184).

Without appropriate wording in the fixed term statement when given initially, a new written statement will have to be provided to the contract-holder containing the applicable terms for a periodic contract before 14 days of going periodic. It's worth noting the model agreement on the Welsh Government website is not suitable for a new periodic contract treated as having been made this way.

It's allowed under the legislation to insert terms into a fixed-term contract about the potential periodic contract. Giving a new periodic written statement is not required if this is done.

The landlord can also avoid this second written statement by giving a periodic contract from the outset.

Penalties

Failure to provide a written statement

The penalties for failing to provide the statement are severe.

A failure to provide the written statement means the tenant is entitled to compensation of one day's rent per day of non-compliance for up to two months, plus interest (section 35). The contract-holder can set off the payment of each day's rent from the rent payable (section 88).

If the court finds that the landlord's failure to provide a written statement was intentional, it may increase the amount of the compensation payable by up to 100 per cent, as it thinks fit. 

A landlord cannot serve a no-reason section 173 possession notice whilst a written statement has not been given.

Furthermore, a landlord who has failed to give the statement within 14 days may not provide the notice for six months from when the landlord provides the written statement to the contract-holder (para 2(2), sch.9A)

Incorrect written statement

The penalty for an incorrect statement works differently from a failure to provide one.

The contract-holder must ask the court for a declaration about the terms (s.37(1)).

The court will determine what terms should be in the written statement.

Suppose the court is satisfied that the written statement is incorrect because of the intentional default of the landlord. In that case, it may order the landlord to pay the contract-holder compensation of up to two months' rent. In addition, the contract-holder can apply to increase that compensation by up to 100% (s.87(5)).

Penalties for an incomplete written statement

An incomplete statement is where the written statement doesn't contain everything required by section 32 (contents of a written statement) (s.36(2)).

Written statement contents have been discussed earlier but are the fundamental, supplementary, additional terms, key matters, and explanatory information. In addition, a statement is incomplete if it fails to identify the agreed modification of a fundamental term (where allowed and contract-holder position improved) or the agreed change or removal of a supplementary term. Anything missing could render the statement incomplete.

The penalties and procedure are the same as the inaccurate statement above.

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