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New types of occupation contract under Renting Homes (Wales) Act 

In March we explained how the Renting Homes (Wales) Act 2016 will affect landlords once it comes into force. 

The Act provides for the creation of two types of occupation contract namely, secure and standard. The two types of standard contract are fixed term and periodic standard; and can be terminated in different ways.

In this article we look at how landlords and receivers will be able to obtain possession of property let under one of the new occupation contracts. The Act does not just apply to future agreements. From the date it comes in, any existing agreements or licences will be converted to the new types of occupation contracts.

Ending the occupation contract by agreement

A tenant and landlord may agree to end the contract in accordance with its terms, or if the landlord commits a repudiatory breach of contract. However, in other cases the landlord can use statutory grounds for possession to take back occupation of either a standard or a secure contract. These are explained below in more detail.

Landlord's right to terminate for breach of contract

If a tenant breaches a term of the contract, the landlord may apply to court to take back possession of the property. The landlord must give the tenant notice specifying the breach, and the court can make the order one month from the date of the notice. However, if the tenant has caused a breach for anti-social behaviour, the court can order them to leave that day.

Landlord's right to terminate for estate management reasons

The landlord may also apply for a possession order on one of the estate management grounds set out in Part 1 of Schedule 8 of the Act. These are quite wide and include for landlord's building works; the property being subject to a redevelopment scheme and special accommodation grounds or under-occupation grounds, which may arise when the tenant has succeeded to the tenancy and the accommodation is more extensive than it reasonably requires. A catch all provision allows the landlord to take back a property where it is desirable for some other substantial estate management reason.

However, the right to exercise the estate management grounds is subject to two qualifications. Firstly, where the court makes an order for possession for estate management reasons, it must be satisfied that suitable alternative accommodation, (as defined in Schedule 11), is available to the tenant when the order takes effect. In most cases the landlord will have to pay the tenant's reasonable moving costs.

Secondly, the court will only grant possession if it is reasonable to do so (Schedule 10). It will consider the nature, frequency and duration of the breaches and the degree to which the tenant is responsible.  he court can also consider the likely effect of not making the order on the landlord's interests, including financial interests. Also, in the case of a community landlord, the effect of not making the order on the landlord's ability to fulfil its housing obligations.

Tenant's right to end a secure contract

These are periodic contracts that run for an undefined term, normally held by community landlords. A community landlord is a local authority, registered social landlord or private registered provider of social housing.

A tenant has the right to end their secure contract by giving the landlord four weeks' notice that they are leaving.  f they fail to leave, the court can then grant the landlord possession. The tenant will have between 14 days and six months from giving notice before they have to leave the property.

Landlord and tenants' rights to end non secure contracts

Where the contract has not been granted for a fixed term, or extends after the fixed term on a periodic basis, the tenant must give four weeks' notice to the landlord to end it. Otherwise, the landlord must give two months' notice before the end of the term to either take back possession of the premises for serious rent arrears or, to exercise a break clause in the contract. If the tenant fails to leave the landlord can apply to court for an order for possession. A landlord is not allowed to exercise a break clause within the first four months of the term (or six months, if they haven't provided written notice of the contract), or if they have failed to return the deposit.

General Provisions

Chapters 11, 12 and 13 of the Act set out the county court's powers to make possession orders in more detail. If the tenant abandons the property, the landlord may recover possession provided that it has made reasonable attempts to notify the contract holder.  Chapter 14 provides that the landlord can exclude a joint contract holder who does not actually occupy the property. Future regulations will set out the landlord's powers to dispose of the belongings in the property, and the detail to go into the prescribed notices. In the future community landlords will also need to consult tenants on their housing proposals.

Comment

There is a lot of detail in the Act and you should seek advice on how the Renting Homes Act 2016 will apply to you and recovering possession of properties in Wales.

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


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