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How will the Renting Homes (Wales) Act 2016 affect you?

On 18 January 2016, the Renting Homes (Wales) Act 2016 was passed. However, all but the provisions in Part 11 (definitions, interpretation and operation of the Act), are yet to come into force. They will be brought in at a later date by way of statutory instruments. 

The Act only applies to residential properties situated in Wales. It creates two forms of occupation contract – a standard contract (which can be periodic or fixed term and will largely follow the current form of Assured Shorthold Tenancy) and a secure contract. 

It will only be possible to deviate from these two forms of contract in limited circumstances. Generally, contracts made with private landlords will be standard contracts, whilst those made with community landlords will be secure contracts. 

However, a private landlord can choose for its contract to be secure rather than standard. There are specific provisions in the Act in relation to community landlords but this article will focus on the impact of the Act on private landlords.

The Act also sets out fundamental terms, which must be included in every occupation contract. 

The Act does not just apply to future agreements; from the date on which the relevant provisions come into force, any existing tenancy agreements or licences will be converted into one of the two new forms of occupation contract. Their terms will continue to have effect as long as they do not conflict with the fundamental provisions.

This will have implications for both landlords and receivers.

When will the changes come in?

Unfortunately we do not yet know. It is likely that the provisions of the Act will come into force in a piecemeal fashion. For landlords of (and receivers who have been appointed over) residential properties in Wales, the critical date will be the "appointed day" under section 240. On this date, provided that they satisfy the specified criteria, any tenancies or licence agreements in existence will automatically be converted into one of the two forms of occupation contract. Effectively, any lease or licence will be an occupation contract if:

  • It is made between a landlord and an individual;
  • It gives that individual the right to occupy the dwelling as a home;
  • Rent or other consideration is payable under it.

There are limited exceptions to this. For example, a person under 18 cannot make an occupation contract. There are also instances in which something that would not ordinarily be an occupation contract can become one if the landlord serves notice on the occupier (for example, where an agreement is made with one person under which another person is allowed to live in the dwelling).

What are the fundamental provisions?

The fundamental provisions are set out in Schedule 1 and vary according to whether you are dealing with a secure contract, a periodic standard contract or a fixed term standard contract. Certain terms, such as those relating to the payment of deposits and the fact that the landlord has to use an authorised tenancy deposit scheme, must be incorporated without modification. Other fundamental provisions can be varied, as long as the parties agree and the contract-holder is of the opinion that the modification would improve his or her position.

Supplementary provisions

These will be set out in regulations made by the Welsh Ministers. The parties will be free to choose to leave out or modify the supplementary provisions provided that doing so does not make the occupation contract incompatible with a fundamental term.

Questions to ask

What types of tenancies are in place now? 

  • If you have granted secure tenancies, they will automatically be converted into secure contracts. However, the landlord has two months from the appointed day to give notice to the occupant that the agreement will, instead, be a standard contract. 
  • Likewise, the landlord can give notice (within two months) that an agreement that has been automatically converted to a standard contract will, instead, take effect as a secure contract.
  • If you have granted a fixed term contract for which a premium was paid, the contract holder has one month to decide that it should be a fixed term standard contract.

What other action may the landlord need to take?

  • The landlord has six months to give the tenant a written statement setting out the details of the contract. If the written statement is incomplete or inaccurate, the contract-holder can apply to the court (but not until the expiry of the six month period) for a declaration as to the terms of the contract. In certain circumstances, the landlord can be liable to pay the tenant compensation.

Do your agreements already include the fundamental provisions? 

How will it affect the grant of future tenancies?

Under section 29 of the Act, the Welsh Ministers must prescribe model written statements of contracts. This will make it easier to ensure that future contracts comply with the requirements of the Act. 

What should you do?

There is a lot of detail in the Act, so you should ensure that you seek advice on how it will apply to your particular circumstances. We will be producing another update on obtaining possession of premises under the Act shortly.

For more information contact Graham Walters on +44 (0)333 006 0157 or graham.walters@TLTsolicitors.com or Andy Bell on +44 (0)333 006 0366 or andy.bell@TLTsolicitors.com

Contributor: Alexandra Holsgrove Jones

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2016. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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