Alternative ways to end a standard occupation contract

Obtaining and then retaining good contract-holders is the primary goal of many landlords. Inevitability the time may come when a landlord will need to end an occupation contract. The Renting Homes (Wales) Act 2016 (‘the Act’) sets out the various ways in which an occupation contract can be terminated and introduces some new termination options.  

The starting point for many landlords will be to consider serving a possession notice. For many reasons this termination option may not be possible, or preferable. Landlords should be aware of the other termination options which are available.  

• Mutual Termination 
  When: Anytime 
  Occupation Contract Type: Periodic and Fixed Term 

Landlords and contract-holders are able to terminate an occupation contract on agreed terms. If there are multiple landlords and contract-holders, all parties must agree to terminate.  

Once terms are agreed, the occupation contract will end once the contract-holder gives up possession of the property in accordance with the terms agreed. In the case of a surrender and re-grant, the occupation contract will terminate immediately before the occupation date of the new substitute occupation contract. 

This option may be suitable where a landlord wishes to sell a property but is unable to serve an RHW16 no-fault eviction notice due to lack of compliance, or needs to regain possession quickly. Landlords may need to offer financial incentives to make this option attractive to contract holders.  

• Abandonment 
  When: Anytime 
  ​​​​​​​​​​​​​​Occupation Contract Type: Period and Fixed Term 

A new concept introduced in the Act, landlords may be able to terminate an occupation contract if the contract holder has abandoned the property. This option is only available if the occupation contract contains a term (however expressed) that the contract holder must occupy the property as their only or principal home.  

The landlord must serve the relevant notice which states: 

• The landlord believes the contract holder has abandoned the property,  

•  A date (or warning period) by which the contract holder must inform the landlord in writing that the property has not been abandoned, and 

• The landlord’s intention to terminate the occupation contract if at the end of the warning period the landlord is satisfied that the property has been abandoned.  

Following service of the notice, the landlord must make enquiries during the warning period to ascertain whether the contract holder has in fact vacated the property. The Act contains no guidance about what enquiries should be made, but can include: 

• Making discreet enquiries with neighbours or family members, 

• Contacting the local authority to see if council tax liability has reverted to the landlord,  

• Taking meter readings at different intervals to check consumption, if the property has external gas or electricity meters,  

The accumulation of rent arrears alone is not indicative that the contract holder has vacated the property.  

If the contract holder fails to contact the landlord, and the enquiries made satisfy the landlord that the contract-holder has vacated, the occupation contract can be terminated by serving a final prescribed notice; a court order for possession is not required.  

• Exclusion of a Joint Contract Holder 
  ​​​​​​​When: Anytime 
  Occupation Contract: Periodic and Fixed Term 

When joint contract holders suffer a relationship breakdown, it typically results in one partner vacating the property. Very often parties are of the understanding that the out-going contract holder is automatically removed from the occupation contract, or can simply be removed from the occupation contract by notifying the landlord they have vacated. This is not the case.  

It is possible to end the rights and obligations of a joint contract holder if the landlord believes they are no longer occupying the property. This option is only available if the occupation contract contains a term (however expressed) that the contract holder must occupy the property as their only or principal home. 

The landlord must serve the relevant notice which states: 

• The landlord believes the contract holder does not occupy the property and does not intend to occupy the property,  

•  A date (or warning period) by which the contract holder must inform the landlord in writing that they still occupy the property, and 

• The landlord’s intention to terminate contract holders’ rights and obligations under the contract if at the end of the warning period the landlord is satisfied that the contract holder does not, and does not intend, to occupy the property.  

Similar to the abandonment process, following service of the notice the landlord must make reasonable enquiries during the warning period to satisfy themselves that the contract holder doesn’t occupy the property, and does not intend to occupy the property. If the contract holder fails to contact the landlord, and the enquiries satisfy the landlord, a further notice is served to end the contract holders’ rights and obligations under the contract. Notices must also be served on the other joint contract holders.  

Regardless of the circumstances that have arisen that necessitate the need for an occupation contract to be terminated, landlords must ensure that the statutory processes are followed correctly. Failure to do so could result in invalid notices; this could delay, or derail, attempts to gain possession and result in increased costs.  

If you need assisting terminating an occupation contract don’t hesitate to contact our dedicated Landlord and Tenant team on 0333 014 4455 or via email at [email protected].