Renting Homes: The Final Report - Law Commission

(1) the concept of the occupation contract;
(2) types of occupation contract;
(3) the use of occupation contracts (including special rules affecting
community landlords);
(4) the written statement of the contract;
(5) enforcement;
(6) modification and variation; and
(7) conversion of existing tenancies and licences.
THE OCCUPATION CONTRACT
3.7 At the heart of the scheme is the occupation contract. 6 So long as a contract
conferring the right to occupy premises satisfies normal common law rules
relating to the creation of contracts – that there should be an offer, acceptance of
the offer, and consideration 7 − it is potentially an occupation contract within the
scope of the scheme. A landlord and a contract-holder can reach a binding
occupation contract orally without the need for any written formality. 8
3.8 In addition, the parties must have the capacity to enter into a contract. (We
discuss below the particular recommendations we make in relation to those aged
16 and 17.) 9 In the context of our consultation and research on supported
housing, 10 an issue of general application to our scheme arose. This related to
capacity to enter into contracts, particularly among those with mental health
problems. The lack of clarity in the law made us ask whether our Bill should
address this issue. In the event, the enactment of the Mental Capacity Act 2005
has gone a long way to clarifying the law, and setting down decision-making
frameworks for those who lack capacity. We have concluded that to make distinct
provision in relation to mental capacity and the making of occupation contracts
would not be helpful. We note that the Mental Capacity Act 2005 provides for a
Code of Practice to be issued by the Lord Chancellor. We recommend to the
Department for Constitutional Affairs that this should contain consideration of the
relationship between the law of mental capacity and the capacity to enter into
occupation contracts.
5 The written agreements or occupation contracts were discussed in Parts 7 and 8 of
Renting Homes (2003) Law Com No 284.
6
Cl 1(1). In Renting Homes (2003) Law Com No 284 this was called the occupation
agreement.
7
It will be possible for a landlord to bring a tenancy or licence in relation to which there is no
consideration within the scheme by giving the occupier notice: see sch 1 para 1(2).
8 The Bill specifically provides that any requirements in the Land Registration Act 2002 for
tenancies must be satisfied: cl 217. Nothing in the Bill prevents the creation of leases,
though long leases are outside the scope of the scheme: see below at para 3.14.
9 Paras 3.10 to 3.12.
10 See Part 10.
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