Changes for occupancy agreements in Wales – Important update
The long-awaited Renting Homes (Wales) Act 2016 is almost here. Much time has passed since it obtained royal assent in January 2016. Implementation is just around the corner, on 15 July 2022.
Aims of the Act
The aim of the Act is to simplify the process in Wales, replacing several pieces of current legislation. It also seeks to provide clarity and flexibility around the legal framework. It also marks a clear divergence from the approach in England.
There will be two types of contracts: a standard contract for private rented landlord and a secure contract for community landlords (social landlords). New contracts will need be in place by 15 January 2023.
Changes being delivered
There is a significant shift in language with tenancies now referred to as ‘occupation contracts’ and tenants as ‘contract holders.’ However, there is much more to the Act than a change in language. We set out some of those changes below:
Written contracts are compulsory
Tenants or licensees are now referred to as ‘contract holders’ and they must have a written contract setting out key information around rights and responsibilities. The Act provides two model contract agreements, one for fixed term contracts and one for periodic contracts. Interestingly, most of the clauses within these model contracts are mandatory.
A landlord must provide the occupation contracts within 14 days of the tenancy commencing. If they do not, the contract holder will be legally entitled to withhold or reclaim the rent payable for the period they are without an occupation contract.
Provision to tackle retaliatory evictions
The Act allows provision for the Court to refuse to make a possession order, should the court be satisfied that the landlord is seeking such an order to avoid compliance with obligations under the Renting Homes (Fitness for Human Habitation) (Wales) Regulations 2022.
Changes to a ‘no fault’ ground for possession
The Act has included the provision of a ‘no fault’ eviction notice. However, it is much more favourable to the contract holder than the current provisions under Section 21 of the Housing Act 1988. Also, it only applies to private contracts and community/social landlords cannot use a ‘no fault’ notice.
If you are engaged in current section 21 proceedings at the date of implementation you can continue on that basis. However, after the 15 July 2022, social landlords will not be able to obtain possession using a no-fault ground. The Act has been designed to encourage landlords to rely upon the most appropriate ground for possession and allow the ‘contract holder’ the ability to defend such an application should they feel that it is unfair.
The private landlord can bring a periodic standard contact to an end by giving the contract holder not less than 6 months’ notice. Furthermore, the notice cannot be served in the first six months of the contract. This affords the contract holder a guaranteed 12-month occupation under a periodic contract. Also landlords cannot serve another ‘no-fault’ notice within 6 months of any previous one.
There are transitional provisions which apply different notice periods for existing tenants. For example, existing tenancies that become periodic contracts holders once the Act comes into force will retain a notice period of a minimum of two months, with notice not being allowed to be given in the first four months of the contract.
Other notice periods
On the grounds of anti-social behaviour, you will still be able to issue proceedings immediately after the notice is served. On the grounds of non-payment of rent, you may issue proceedings one month after the notice is served or if the arrears are more than 2 months’ rent liability, after 14 days of the notice being served.
There are some changes to other grounds for possession too. No provision has been brought forward for many of the mandatory grounds which currently exist in Schedule 2 of the Housing Act 1988.
Fitness for Human Habitation (Wales) Regulations 2022
The Act brings into force the Fitness for Human Habitation Act (Wales) Regulation 2022 upon implementation. One key change here is to electrical safety condition report.
From the 15 July 2022, the Act makes it a requirement that the landlord has an electrical safety report. The report can last up to a maximum of five years and will apply to all new occupation contracts after implementation.
For those tenancies that existed prior to the 15 July 2022, the Landlord will have 12 months to comply with these new regulations.
Changes made to the contract and right of succession
The Act is more flexible than the current provision in making changes to the contract, with changes to the contract holder being easier to make, with no new agreement needing to be put in place.
The right of succession on the death of the contract holder is provided for, however, it can be expressly excluded.
Next steps
As the implementation date approaches all landlords should start to review their tenancies held in Wales and ensure careful drafting on new occupation contracts to ensure compliance. Planning should also begin in transitioning existing tenancies over to occupation contracts in order to meet the January 2023 deadline.
