Cathrine Grubb provides a summary of the changes being brought about by the Renting Homes (Wales) Act 2016, the biggest overhaul of housing law in Wales for decades.
On 12 January 2022, Julie James MS announced that the long-awaited Renting Homes (Wales) Act 2016 (‘RH(W)A 2016’) will be brought into force on 15 July 2022. At the same time a suite of complimenting regulations made under the act will also be implemented.
Welsh Government has published a helpful summary for landlords of what is changing here.
The coming into force of the RH(W)A 2016 marks the end of a long journey which formally began at the end of March 2001 when the Law Commission commenced one of the largest consultations exercises it had undertaken to date. The terms of reference were to review the law in relation to the domestic rental market with a view to providing a simple and flexible statutory regime for both social and private housing sectors. The Welsh Government largely adopted the recommendations in the Law Commission’s reports of 2003, 2006 and 2013 culminating in the RH(W)A 2016 and its accompanying regulations.
The Act represents the biggest change to housing law in Wales for decades. It abolishes many of the old forms of tenancy replacing these with statutorily regulated occupation contracts. Under the old scheme, certain types of landlord are precluded from using certain types of tenancy. The Act provides greater flexibility by breaking the link between the identity of the landlord and the statutory regime that applies.
An anticipated benefit of regulating different forms of domestic lettings more flexibly in one statute is that this will better facilitate the development of new partnerships between social and private sector landlords and provide greater scope for the development of new housing initiatives.
Although the new scheme recognises a convergence and overlap between providers of rental housing, the Act still distinguishes between two paradigms of provision: market provision and social provision and so makes the distinction between:
- private landlords and community landlords; and
- standard and secure occupation contracts modelled on the current assured and secure tenancy respectively.
In the standard contract, the security of the contract holder is principally determined by the contract – a prerequisite of a market system. A secure contract will offer greater security to the contract holder.
In general, community landlords will be required to enter into secure contracts and contracts made or adopted by private landlords will be standard contracts: s. 2. The Act however does provide for circumstances where the general rule can be dis-applied.
The distinction between tenants and licensees will have less importance than at present. In effect, the occupation contract, with all of its rights and obligations, will sit on top of the tenancy or licence. Tenants and licencees will all be referred to as ‘contract-holders’ under the Act.
Recognising that market mechanisms cannot redress imbalances in the bargaining power of landlords and occupiers, the Act takes a ‘consumer protection’ approach. It ensures that all landlords provide contract holders with a written contract (s. 31), which complies with statutory requirements and accurately reflects the legal position between them and the contract holder. Model contracts are available but not mandatory.
All occupation contracts will contain four types of terms:
- Key provisions: terms unique to the contract, such as the amount of rent and the address of the property. Whilst they cannot be statutorily prescribed, the Act provides that such terms must appear in the contract: s. 32(1)(a).
- Fundamental provisions: set out the essential rights and obligations of landlords and contract holders. They include grounds for possession, repairing obligations, the requirement that the landlord provide his or her name and address. For the first time, it will be a legal requirement that these rights and obligations are set out in the contract. Most fundamental terms can be modified or varied, but only in favour of the contract holder: ss. 20, 106 & 125.
- Supplementary provisions: deal with the practical matters needed to make the contract work, so, for instance, they cover the provision of receipts for rent, permission to change utilities suppliers, alterations to the dwelling. They are set out in The Renting Homes (Supplementary Provisions) (Wales) Regulations 2022, made under section 23 of the Act. As with fundamental provisions, they are automatically incorporated as terms of all occupation contracts to which they apply but can be modified and varied: s. 24, 107 & 125. There is no requirement that modification or omission of a supplementary provision improves the position of the contract-holder; the only limit is that a change to a supplementary provision must not render the occupation contract incompatible with any relevant fundamental term of the contract.
- Additional provisions: these terms that relate to any other matters that have been agreed between the landlord and contract holder such as the keeping of pets: s. 28 & 32 (2)(d).
This standardisation of contract terms also brings with it a standardisation of approach in relation to obtaining possession, with some differences operating between standard and secure contracts to account for the greater security to be offered by the latter. For example, in a standard contract after any fixed term has expired, the landlord will generally be able to evict the contract holder provided they have given six months’ (s. 173) notice. In secure contracts the landlord can generally only terminate the contract if the contract holder is found by a court to be in breach of the terms of the agreement, and eviction is determined by the court to be reasonable and proportionate.
Security in occupation contracts is further enhanced by the possibility of succession to family members or carers and allowing 2 successions: first to a ‘priority’ and then to a ‘reserve’ successor; ss. 73 – 83.
The Act fortifies the duty on landlords, to keep the premises in good repair (s. 92) and ensure the property they rent is fit for human habitation (s. 91) including the installation of smoke and carbon monoxide alarms, and regular electrical safety testing: s. 94 in conjunction with The Renting Homes (Fitness for Human Habitation) (Wales) Regulations 2022.
The Act implements safeguards against retaliatory eviction. The Welsh approach is less prescriptive than its English counterpart under s 33 of the Deregulation Act 2015. Under s. 217 RH(W)A 2016 the court may refuse to make a possession order where it considers it to be a retaliatory claim.
Under the Act contract holders can be added or removed from occupation contracts without the need to end one contract and start another: s. 52. This should make managing joint contracts easier and help victims of domestic abuse by enabling the perpetrator to be targeted for eviction.
Landlords are able to repossess an abandoned property without needing a court order, after serving a four week warning notice and carrying out investigations to satisfy themselves the property is abandoned: s. 220.
The need for landlords and letting agents to be registered and licences Rent Smart Wales and deposit protection rules continue to apply.
This is a first article in a series from Civitas Law on their new blog: RentingHomesWales.com to help you navigate the biggest change to welsh housing law in decades. Go to RentingHomesWales.com for further articles on the changes coming into force on 15th July 2022. The second article on what will be an Occupation Contract can be found here.
Cathrine Grubb is on the Lexis Nexis panel of experts for Wales. Her Practice note on secure contracts will be published on Lexis PSL in the next few months.