The new Renting Homes (Wales) Act 2016 that came into effect on 1 December 2022, will bring about significant changes to the rental market in Wales. Both landlords and tenants are affected by how contracts are implemented, homes are maintained, and how parties communicate with each other.
The Welsh government announced the new law to simplify renting, clarify the rights and responsibilities of tenants and landlords, and provide more protection for tenants.
All social and private landlords, plus tenants must comply with the new law and make the necessary changes to existing contracts. Whether you are a tenant or a landlord, you should familiarise yourself with the new rules.
New rentals after 1 December 2022 have 14 days from occupation to issue the written statements to the contract holder. Existing rental agreements will automatically convert to the new law. Landlords must issue written statements of the “new” occupation contract to the contract holder within six months maximum.
Before we discuss the changes, we need to understand the new terminology. From 1 December 2022, tenants and licensees become ‘contract-holders’ and tenancy agreements are replaced with ‘occupation contracts’.
How did the law change for contract holders (tenants)?
Generally speaking, the new Renting Homes (Wales) Act will provide greater security for contract holders.
Under the new law, contract-holders will have:
• A written contract setting out the rights and responsibilities of both parties
There are two types of occupation contracts:
• Standard contracts used for private rentals.
• Secure contracts replacing secure and assured tenancies issued by local authorities and housing associations that are Registered Social Landlords (RSLs).
These contracts must be in the form of a written statement. This agreement replaces previous tenancy agreements. “Written” includes agreeing to an electronic copy.
Written statements must include the following:
• Key matters such as the names of the parties and the property address.
• Fundamental terms covering the most important aspects of the agreement, for example, the landlord’s obligation regarding repairs, etc.
• Supplementary terms dealing with practical everyday matters like notifying the landlord if the property will be left unoccupied for four weeks or more.
• Any expressly agreed additional terms, for example, whether pets are allowed. The additional terms must be reasonable, fair, and in line with the Consumer Rights Act of 2015.
• An increased ‘no-fault’ notice period
The new laws provide greater protection from eviction for private rentals. If the contract holder did not breach any terms of the agreement, the landlord must now give contract holders at least six months’ notice to end the contract. Previously, it was two months. These are called ‘no-fault’ notices and cannot be given within six months of occupation. In effect, it means that the contract holder is secure for 12 months from occupation in a no-fault situation.
If you have a fixed-term contract, the landlord cannot usually end the contract. If you remain in the property at the end of the fixed term, it will become a periodic standard contract. If the landlord wants to end the contract, they will have to issue a six-month ‘no-fault’ notice.
If your contract is for less than two years, your landlord can no longer include a break clause. (A break clause allows the landlord to end the agreement during the fixed term). If the fixed term is for more than two years, the landlord can only give you notice in month 18 of the fixed term. The notice will have to be for at least six months.
• Greater protection from eviction
The new law also addresses the issue of ‘retaliatory eviction’. Landlords can no longer ask tenants to leave because they complained about the condition of the house or request repairs.
If the contract holder breaches the occupation contract, the minimum notice period is one month. It can be shorter if it relates to serious rent arrears or anti-social behaviour. For serious rent arrears, the notice period can be 14 days.
• Better succession rights
The Renting Homes (Wales) Act allows contract holders to have ‘priority’ and ‘reserve’ successors
if the contract holders pass away.
A priority successor is a spouse or someone living with the contract holder as their only home.
A reserve successor could be a family member who lives in the property as their primary home or who occupied the property in the 12 months before the contract holder passed away.
These provisions allow two successions to occur – first to the spouse and then to a family member who qualifies.
Carers can also qualify as reserve successors if they lived in the property as their main home when the contract holder died.
• More flexible terms for joint contract holders
From 1 December 2022, a joint contract holder can leave the occupation contract without ending the entire contract. New joint contract holders can also be added to an existing contract. There is no need for a new contract.
New laws for landlords
In general, landlords must take note of all the above-mentioned changes applicable to tenants and ensure they comply with the new laws.
In addition, landlords must be aware that they are only allowed to issue a ‘no-fault’ notice if they comply with certain conditions. Conditions include deposit protection rules, registration, and registering with Rent Smart Wales.
Obligations relating to keeping the property in a “fit for human habitation” condition
The Renting Homes (Wales) Act places a responsibility on landlords to ensure that rented properties are safe and fit for human habitation. The property’s structure and exterior must be kept in a good state. All installations for water supply, gas, electricity, sanitation, heating, and hot water must be in good working order.
To meet the obligation, the property must be fit for human habitation. The Act explicitly requires landlords to do the following:
• Have working smoke alarms on every floor of the property.
• Have working carbon dioxide alarms fitted.
• Arrange for electrical testing and have a valid EICR (Electrical Installation Condition Report). The Act requires that this must be done every five years.
For existing tenants, landlords have a year to comply with electrical safety and smoke alarm requirements.
Landlords should also know that contract holders can avoid paying rent for any period in which the property is not fit for human habitation.
If a landlord resorts to retaliatory eviction in response to a request for repairs, the court can refuse to make a possession order. In such a case, the landlord can only serve a ‘no-fault’ notice six months later.
What is the position if the occupation holder abandons the property?
The Renting Homes Act makes it easier for landlords to repossess abandoned property. The landlord can serve a 4-week warning notice on the contract holder after carrying out an investigation to ensure that the tenant indeed abandoned the property. The landlord can then repossess the property without a court order.
The warning notice must include the following:
• State that the landlord believes the contract holder abandoned the property.
• Request that the contract-holder informs the landlord in writing if they have not abandoned the property.
• Inform the contract holder that the landlord will end the contract at the end of the warning period if the landlord is satisfied that the property was, in fact, abandoned.
Converting existing tenancy agreements to an occupation contract
Many landlords face having to convert existing agreements since the implementation of the Act. The Welsh Government website provides valuable guidance on how to convert existing agreements into occupation contracts.
The ‘new’ occupation contract will depend on the type of tenancy. It will either convert to a secure occupation contract if it is a secure tenancy held by a local authority tenant, or a standard occupation contract if held by a private tenant.
Either way, the default terms of the contract will be those set out by The Renting Homes Act. When converting an existing contract, the landlord must review all the current agreement’s terms and consider whether they are compatible with the new laws. Any incompatible terms should be deleted or modified.
The law recognises that there could be situations where a direct conversion might be unfair to either the landlord or the tenant. Schedule 12 of the Renting Homes Act overrides some of the outcomes of direct conversion.
To conclude, the Renting Homes (Wales) Act affects both existing and new rental agreements in Wales. Landlords and tenants should ensure they understand their rights and obligations under the new Act and take the necessary steps to comply with the new laws.