The Renting Homes (Wales) Act 2016 has finally come into force, aiming to protect the interests of both landlords and tenants.
The Welsh Government says the new law "transforms the rented sector in Wales". The Act replaces various, complex pieces of existing legislation and case law with one clear legal framework. In many ways, as Higgs LLP Principal Associate Daniel Greatrix sets out here, it provides contract-holders in Wales with greater security than in any other part of the UK – including increasing ‘no-fault’ eviction periods.
The “Occupation Contract”
The Act introduces a new form of rental agreement for residential property in Wales known as an “occupation contract”. The Act prescribes the majority of the content of that contract and introduces new rights for the “contract-holders” (tenants / licensees).Existing residential tenancies and licences will automatically convert into occupation contracts on
December 1, whilst residential tenancies granted on or after December 1 2022 will be occupation contracts.
The “Standard” (private rental sector) contract
Standard contracts can be granted for a fixed or periodic term. A fixed term standard contract will automatically convert into a periodic standard contract if the contract holder stays in possession at the end of the fixed term.
Every contract holder must be given a written statement of their occupation by their landlord, within 14 days of moving into the property.
Where a tenancy agreement has converted into an occupation contract, the landlord must give the contract holder a written statement within six months.
The Welsh Government has issued model occupation contracts that landlords are encouraged to use as they include the prescribed or ‘key matters’, ‘fundamental terms’, 'supplementary terms’ and ‘additional terms’, which cannot be excluded.
Some of the fundamental terms can be amended by agreement, provided that the amendment
benefits the contract holder.
Whilst supplementary terms are included within the model contracts, they may be amended by the landlord provided that they are agreed by the parties.
The additional terms are terms that the parties are free to negotiate, for example, a term allowing the contract holder to keep pets.
Termination; general breach
A landlord has the right to seek to terminate an occupation contract where there is a breach of contract. If a landlord wishes to terminate for breach of contract, it must serve a possession notice. The amount of notice which needs to be given depends on the nature of the breach relied upon. If the breach concerns antisocial behaviour or other prohibited conduct, a landlord can make a possession claim as soon as it gives the possession notice. For other breaches (save for serious rent arrears), the landlord must wait for one month before making a possession claim.
If the contract holder remains in possession after the expiry of the possession notice, the landlord must issue a possession claim. All claims for possession based on breach of contract are
discretionary and the Court must be satisfied that it is reasonable to make a possession order. After six months from service of the possession notice, the landlord loses the right to make a
possession claim.
Serious rent arrears breach
The process for termination where there are serious rent arrears is slightly different. “Serious rent arrears” are generally at least two months’ rent being unpaid, but will vary depending on the period of rental payments being weekly, monthly, quarterly etc.
A landlord must give the contract holder a possession notice specifying the serious rent arrears ground. Possession proceedings cannot then be issued until 14 days from the date of giving the notice and any claim for possession must be brought within six months of the date of the possession notice. The contract holder must remain “seriously in arrears” on both the day the possession notice is served and on the hearing date.
If this ground is satisfied it is a mandatory ground, meaning that the Court must make a possession order.
No-fault
Provided certain requirements are met, the landlord also retains the right to terminate the contract where there is no fault by the contract holder. A landlord may bring a periodic standard contract to an end by giving not less than six months’ notice to the contract holder. This remains two months’ notice, where the contract is a converted contract.
A landlord cannot serve a notice to terminate within the first six months of the occupation contract, commencing on the defined occupation date. Where the contract is a converted contract, the relevant period remains four months (from the occupation date).
In order to serve a no-fault eviction notice, the landlord must have provided the contract holder with a written statement and information relating to the occupation contract, have complied with the tenancy deposit requirements, have complied with the Welsh equivalent of the Tenant Fees Act, and have served EPCs, gas safety certificates, electrical condition reports and smoke and carbon monoxide alarm reports on the contract holder. The landlord must also be registered and licensed with Rent Smart Wales.
If the contract holder does not vacate the property after the no fault eviction notice, the landlord must issue and serve the possession claim within two months of the date for possession specified in the eviction notice.
By the tenant
A contract holder can terminate a contract on giving the landlord 4 weeks’ notice, provided that such notice does not end before the expiry of any fixed term (unless there is a break clause in the contract).
The Welsh Government has dubbed the Act a “momentous moment” for the rented sector in Wales. We will be keeping a close eye on how things develop – and wait to see if any further changes are imminent for England.
