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Renting property in Wales – What you need to know

 

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1 When will the new Wales law apply?

When will the new Wales law apply?

The Renting Homes (Wales) Act 2016 comes into effect on 15 July 2022. All of the regulations made under the Act (e.g. the Fitness for Human Habitation Regulations) will also come into effect on the same date.

What happens to existing Welsh tenancies?

Under the new Wales law, ‘occupation contracts’ will replace existing tenancies and licences.

There are two main types of occupation contracts: standard and secure. Standard contracts will replace assured shorthold tenancies currently used mainly in the private rented sector, and secure contracts will replace the secure tenancies used mainly in the social rented sector.

On 15 July 2022, all existing Wales tenancy agreements will automatically convert to an occupation contract. For example, if an existing tenancy is a fixed-term assured shorthold tenancy, it will convert to a fixed-term standard occupation contract.

Likewise, a periodic assured shorthold tenancy will convert to a periodic standard contract if it is a periodic assured shorthold tenancy.

Whilst a Wales occupation contract can be initiated verbally, it needs to be followed up with a written contract statement. Written statements must be given within 14 days of the occupation date for new contracts from 15 July 2022.

Written statements for converted contracts need to be issued by 15 January 2023.

What do I need to do to comply with the requirement to provide a written copy of the occupation contract?

You or your agent will need to draw up a written statement for new occupation contracts from 15 July. The model written statements should provide a good basis for this.

For all your existing Welsh tenancies or licences, you or your agent will need to consider which of your existing terms need to be carried across to the written statement of the converted contract. You will need to provide a copy of the written statement to your existing tenants by 15 January 2023.

How do I convert an existing tenancy agreement or licence into an occupation contract?

The Welsh Government’s website contains information and advice on the Act, including model written statements for the new occupation contracts, which landlords can download and use. Read the guidance on creating a converted occupation contract.

When do I need to provide written occupation contracts to my existing tenants?

For converted Wales contracts, you have up to six months from 15 July 2022 to provide your existing tenants or licensees with a written statement of the contract.

For new occupation contracts which begin on or after 15 July 2022, you will be required to issue the written statement within 14 days of the occupation date under the contract.

Can I use the relevant Model Written Statement as it is published on the Welsh Government’s website without having to make any changes to it?

For new contracts made on or after 15 July 2022, a landlord could use the appropriate model written statement as published on the Welsh Government website without making any changes.

However, the model written statements include the relevant fundamental and supplementary terms set out in the legislation, which could be included in the occupation contract.

Landlords should note that supplementary terms can be omitted to benefit either the landlord or the contract-holder, but any changes must be agreed upon. Some fundamental terms can also be omitted or varied, but this is only permissible if it benefits the contract-holder.

It is also possible for landlords to include their additional terms (for example, a pets clause) as long as these do not conflict with a key matter, a fundamental term, or a supplementary term and are fair under consumer protection law. 

For existing tenancies, landlords should carefully consider all of the terms in tenancy agreements that are already in place and then make the necessary changes to the relevant model written statement to ensure that these terms are carried over into the new occupation contract.

In addition, guidance on creating a converted contract can be found. Read the guidance on creating a converted occupation contract: guidance for landlords.

Why hasn’t the Welsh Government provided model contracts for all of the contract types in the Act?

Wales model written statements have been provided for three of the six contract types set out in the Act: secure contractsperiodic standard contracts, and standard fixed-term contracts of less than seven years, as these are the three main contracts that most landlords will use.

The other contracts set out in the Act (introductory standard contracts, prohibited standard contracts and support contracts) vary the three main types of contract.

Given that most of the terms would be duplicated with only a few adjustments, it was not considered proportionate to produce separate model written statements for these other contracts.

Instead, guidance has been provided to illustrate the changes to the main types of contracts necessary to create one of these variations.

Are landlords required to provide an inventory for an unfurnished property?

The Wales Renting Homes legislation includes a supplementary provision requiring an inventory to be provided. The provision states, ‘the inventory must set out the dwelling’s contents’.

If the property is unfurnished, the inventory would reflect this and may refer only to fixtures. It is in both parties’ interests to have an accurate inventory.  

Will I still be able to regain possession without citing a fault on the part of the tenant (currently done using a ‘section 21 notice’)?

You will still be able to issue a ‘no-fault’ notice to end a periodic standard contract – this is called a Landlord’s Notice – under section 173 of the new law. Section 173 enables a landlord to regain possession without giving a reason for doing so.

The main difference is that landlords will be required to give the contract-holder six months’ notice under the new law, rather than the two months required under section 21 of the Housing Act 1988.

Also, a section 173 notice cannot be served during a fixed term standard contract (the equivalent to a fixed-term AST) and can only be served during a periodic standard contract after the first six months of occupation.

This means that a Wales contract-holder who does not breach the terms of their contract is entitled to occupy for one year from the occupation date of a new contract. However, for all tenancies which began before 15 July 2022, landlords will only be required to give two months’ notice under section 173.

The six month notice period only applies to occupation contracts that begin on or after 15 July 2022.

If I have started possession proceedings before Renting Homes commencing (using a Section 21 notice), will the tenancy still become an occupation contract, and will I have to issue a written statement?

Yes. It will convert automatically to an occupation contract on 15 July. However, the possession proceedings can also be continued on the basis of the Section 21 notice served before implementation.

Please see the questions ‘How do I convert an existing tenancy agreement or licence into an occupation contract’ and ‘When do I need to provide written occupation contracts to my existing tenants’ for further information.

Can I issue a six-month fixed-term contract instead?

You can issue a standard fixed-term contract of any length, but if a new fixed-term contract is not agreed upon before the end of the fixed term and the tenant (contract-holder) remains in occupation after the fixed term, a periodic standard contract will automatically arise.

Importantly, a fixed-term contract cannot generally be ended by issuing a Landlord’s Notice during the fixed term period.

Is my contract-holder (previously known as ‘tenant’) required to sign and return the written statement document to me?

There is no statutory requirement for a contract-holder to do so. However, it is good to encourage them to sign the document to confirm understanding. In addition, the contract holder should keep the signed document in a safe place should they need to refer to it at a later date.       

Under section 21 notice, I can seek possession quickly without having to go to court if a tenant is not paying rent or is committing anti-social behaviour: will I still be able to do this using section 173 notice?

No. The new Welsh law has been designed to encourage landlords to use appropriate grounds for seeking possession when a tenant (or ‘contract-holder’ as they are known under the new law) breaches the terms of their contract, rather than relying on a ‘no-fault’ notice.

This will make for a fairer system that allows the contract-holder to challenge a possession claim if they feel it is being made unfairly.

How can I evict a tenant who is not paying rent?

If a contract-holder stops paying rent, the landlord can serve a possession notice because they have breached their contract (which has a one-month notice period). Or, if they are in serious rent arrears (two months or more non-payment), a landlord may serve a notice on that ground, which has a 14 day notice period.

How can I evict a tenant who is committing anti-social behaviour?

Under the new Welsh law, all occupation contracts must include the anti-social behaviour term in the model written statements.

Anti-social behaviour and other prohibited conduct can include excessive noise, verbal abuse and physical assault. It also includes domestic abuse (physical, emotional and sexual, psychological, emotional or financial abuse).

If the contract holder breaches this contract term, the landlord can serve a possession notice and commence court proceedings on the same day. The contract-holder can also be held responsible for the behaviour of anyone else who lives in or visits the dwelling.

How much notice does a tenant have to give me if they want to end the contract?

The notice period a tenant (or ‘contract-holder’ as they are known under the new law) is required to give to end a contract is a minimum of four weeks. However, the contract-holder cannot end a standard fixed-term contract unless a contract holder’s break clause has been included. 

Will I still be able to increase the rent every year (if I need to)?

Yes. A landlord must give two months’ notice of a rent variation, which may be issued annually.

Does the new Wales law say anything about subletting?

A contract-holder will not be able to create a sub-contract unless that is permitted by the contract (i.e. if the landlord and contract-holder have agreed to include an additional term in the contract to that effect).

If I have an existing fixed-term tenancy that has an end date after 15 July 2022, will that end date still apply after the new law comes into effect?

Yes. A fixed-term assured shorthold tenancy will automatically convert into a fixed term standard contract on 15 July 2022. The fixed-term will end on the same date as the existing tenancy agreement set out.

What about joint tenants: will anything change under the new law?

The Welsh Act will introduce new provisions around joint contract-holders. This will allow a contract-holder to be added or removed from a joint contract without ending the contract for all, as is currently the case.

 All contract-holders must be given a written statement of the occupation contract.

What about pets?  

As elsewhere in the UK, we have not legislated to create a statutory right to keep a pet; landlords and contract-holders can agree on additional terms covering the keeping of pets.

The explanatory information that must be included in written statements of contracts makes it clear that all additional terms must comply with the Consumer Rights Act 2015 regarding fairness.

Any pet clause as an additional term in the contract should allow a contract-holder to ask for permission to keep a pet, and the landlord would not be allowed to refuse the request unreasonably.

I am a private landlord letting students. I currently use nine months of assured shorthold tenancies. Will I still be able to issue a 9-month contract?

Under the new law, a standard fixed-term contract can be agreed upon at any time.

However, should a contract-holder remain in occupation at the end of the fixed-term, a periodic standard will arise, and the landlord could seek possession by issuing a notice under section 173 of the Act (unless there are other grounds on which possession may be sought: breach of contract, rent arrears, etc.).

What if the property is mortgaged, and the mortgage lender wishes to gain vacant possession for whatever reason?

If the mortgage lender repossesses the property and becomes the landlord, they would then be able to issue a six-month notice under a Landlord’s Notice for a periodic standard contract.

Do Tenant deposit schemes remain the same from 15 July?

Yes. Existing deposits protected in approved schemes will be unaffected.      

What are the Fitness for Human Habitation Requirements?

The aim of the Fitness Regulations is one of prevention, to help ensure landlords maintain dwellings to prevent them from becoming unfit for human habitation.

The new law places an obligation on the landlord to ensure the dwelling is fit for human habitation. Regulations set out further information on the Fitness for human habitation requirement.

For example, a contract-holder will not be liable to pay rent for any period the property is deemed unfit. In addition, a landlord will not be able to issue a Landlord’s Notice or break clause if they do not comply with the Fitness requirements.

If a contract-holder believes that a property is unfit, but the landlord does not agree, it would ultimately be for the court to decide whether a property is unfit based on the standards set out in the Regulations.

A court claim would be made the same way as a disrepair claim currently. However, if a contract-holder withheld rent on the basis that the property was unfit, this would potentially create a ground for possession, this being either breach of contract or the serious rent arrears ground.

Has the law changed concerning smoke alarms?

Yes. The new requirements are set in the Renting Homes (Fitness for Human Habitation) (Wales) Regulations 2022. Regulation 5 says that:

(1) The landlord must ensure that, during each period of occupation, on each storey of the dwelling, there is a smoke alarm which is:

(a) in repair and proper working order,

(b) connected to the dwelling’s electrical supply, and

(c) linked to every other smoke alarm in the dwelling connected to the electrical supply.

Therefore, whilst it is not a requirement that every smoke alarm at a property is connected to the dwelling’s electrical supply, at least one smoke alarm on each storey of the dwelling must be.

Provided that this requirement is met, there is nothing to prevent additional battery-powered alarms from being fitted, which (as they are not hardwired) do not have to be interlinked.

For new contracts that begin on or after 15 July 2022, landlords must ensure properties they let in Wales comply with these requirements. For tenancies that existed before 15 July 2022, landlords will have 12 months to comply with these requirements (i.e. by 15 July 2023).

Has the law changed about carbon monoxide alarms?

Yes. The new requirements are set in the Renting Homes (Fitness for Human Habitation) (Wales) Regulations 2022. Regulation 5 says, amongst other things, that:

During each period of occupation, the landlord must ensure that a carbon monoxide alarm that is in repair and proper working order is in each room of the dwelling, which contains a gas appliance, an oil-fired combustion appliance, or a solid fuel burning combustion appliance.

The Regulations do not stipulate whether the carbon monoxide alarms should be battery-powered or connected to the dwelling’s electrical supply. However, these requirements will apply to all occupation contracts from 15 July 2022.

Has the law changed about electrical safety in Wales?

Yes. The new requirements are set in the Renting Homes (Fitness for Human Habitation) (Wales) Regulations 2022. Regulation 6 requires the landlord to ensure there is a valid electrical condition report (a copy of which must be provided to the contract-holder) regarding the dwelling during each period of occupation. 

An electrical condition report is provided following an inspection of the property’s electrical installation. This report will remain valid for a maximum of 5 years, beginning with the day on which the electrical safety inspection is carried out.

These five years may be reduced if the report indicates the need for testing at shorter intervals. 

For new contracts that begin on or after 15 July 2022, landlords must ensure properties they let in Wales comply with these requirements. For tenancies that existed before 15 July 2022, landlords will have 12 months to comply with these requirements (i.e. by 15 July 2023).

Read Fitness of homes for human habitation: guidance for landlords |. GOV.WALES

Is any financial support available for bringing a property up to the required standards?

The cost of bringing home in the private rented sector up to the required standard is high; it may be that assistance is available in the form of home improvement loans or similar. Again, you should contact your local authority for advice on eligibility about this.

Are there any changes to the Rent Smart Wales requirements for Landlords?

There are no changes to the Rent Smart Wales registration and licencing requirements. However, there will be an additional training module for new and re-registering landlords. Please get in touch with Rent Smart Wales directly for any further queries.

Is there any training available for landlords on the new law?

Yes, contact Rent Smart wales.

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Disclaimer:

This post is for general use only and is not intended to offer legal, tax, or investment advice; it may be out of date, incorrect, or maybe a guest post. You are required to seek legal advice from a solicitor before acting on anything written hereinabove.

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