Use and Occupancy (U&O) Explained: 2025 Guide for Australians

In Australia’s fast-evolving property market, “Use and Occupancy” (U&O) agreements are becoming a key tool for both buyers and sellers. With 2025 bringing new regulations and heightened market activity, understanding how U&O works—and when it’s most useful—can save you time, money, and stress during real estate transactions.

What Is a Use and Occupancy (U&O) Agreement?

A Use and Occupancy agreement is a short-term legal arrangement that lets a party use and live in a property before or after settlement, without granting them full tenancy rights. In Australia, these agreements are often used when property settlement is delayed, or when a buyer or seller needs flexibility around move-in or move-out dates. Unlike a standard lease, U&O agreements are typically short-term, highly specific, and tailored to unique situations.

• For buyers: Move in before settlement if the seller agrees, often paying a daily fee.
• For sellers: Remain in the property post-settlement while finalising their next move.
• For landlords/agents: Provide legal clarity in cases where early or late occupation is needed outside of traditional rental agreements.

With increased off-the-plan sales and construction delays in 2025, U&O arrangements are more common than ever, especially in major cities like Sydney and Melbourne.

2025 Legal Updates and Market Trends

This year, several states—including New South Wales and Victoria—have tightened regulations around U&O agreements. In response to past disputes, new consumer protections require written agreements that spell out:

• Exact start and end dates
• Daily or weekly occupancy fees
• Responsibility for utilities and insurance
• Maintenance and repair obligations
• Procedures for resolving disputes

For instance, New South Wales Fair Trading now recommends using standardised templates for all U&O agreements to reduce legal ambiguity. Meanwhile, the Victorian government has clarified that U&O does not confer tenant rights under the Residential Tenancies Act—meaning occupants have fewer protections than standard renters, and both parties should be clear on their rights and obligations.

Recent property market volatility, combined with ongoing construction and supply chain delays, has led to more settlements being postponed. As a result, legal professionals recommend negotiating U&O terms early in the buying or selling process to avoid last-minute complications.

Real-World Scenarios: When U&O Makes Sense

U&O agreements are not just for emergencies—they can be strategic tools. Here are some practical examples from 2025:

• Delayed Settlement: A Melbourne couple’s off-the-plan apartment is delayed due to supply chain issues. Their U&O agreement lets them move in and pay a daily fee to the developer, with clear terms on repairs and insurance.
• Seller Needs to Stay: In Sydney, a seller secures a two-week U&O post-settlement while their new home is finalised. They pay an agreed rate and cover utilities, with both parties protected by a written agreement.
• Early Move-In: A Brisbane family negotiates a U&O to occupy their new house before the official settlement date, after their rental lease expires early. The agreement includes conditions for property care and insurance coverage.

In all cases, clear documentation and open communication are essential. Legal experts advise that both parties seek professional review of any U&O agreement to ensure fairness and compliance with 2025 regulations.

Key Risks and How to Mitigate Them

While U&O agreements can be a win-win, they do carry risks:

• No Tenancy Rights: Occupants under U&O do not have the same protections as tenants. If disputes arise, legal recourse may be limited.
• Insurance Gaps: Standard home insurance policies may not cover damage or liability during U&O occupancy. Both parties should check coverage before signing.
• Ambiguous Terms: Vague or verbal agreements can lead to costly legal battles. Using a written, detailed contract is crucial in 2025’s regulatory landscape.

To reduce risk, always use a written agreement, clarify responsibilities, and confirm insurance arrangements in advance.

Conclusion: Making U&O Work for You

Use and Occupancy agreements are increasingly relevant in 2025’s unpredictable property market. Whether you’re a buyer, seller, or investor, understanding the ins and outs of U&O can help you navigate settlement delays and secure your property plans with confidence. Always negotiate terms clearly and document everything—proactive planning will protect your interests and reduce stress during major property moves.