PROPERTY JOURNAL

Preparing landlords for new Welsh legislation

Implementation of the Renting Homes (Wales) Act 2016 has been put back until December to give residential landlords more time to ready themselves for the significant new obligations they face

Author:

  • Rebecca Rees
  • Bethan Gladwyn

25 July 2022

Landlords and agents who own or manage residential property in Wales will be aware that housing law in the principality diverged from English legislation some years ago.

The divergence will become much more significant when the Renting Homes (Wales) Act 2016 comes into force on 1 December. This follows a delay in implementation announced by minister Julie James in late May, in recognition of the significant preparation landlords have to make.

Act creates retrospective liabilities for landlords

Unlike the various Housing Acts (1980, 1985, 1988 and 1996), which only affected tenancies created after they came into force, the 2016 Act is retrospective. That is, with very few exceptions, all existing residential tenants and licensees in Wales will become 'occupation contract holders' on 1 December, and their contracts will be governed by the 2016 Act.

With somewhere approaching 500,000 residential tenancies in Wales, a significant proportion of the population will find their rights of tenure changing – largely in their favour. The 2016 Act will affect almost every aspect of residential property management, from creating the contract to bringing it to an end.

What also makes the act so significant is the effect of being unaware of its requirements, or overlooking the importance of observing its requirements strictly. Depending on exactly what they have overlooked or carried out incorrectly, landlords may find themselves unable to charge rent or regain possession of their property. They may also find that by overlooking a request for consent from a contract holder (for example) to add a new contract holder to the contract or to make alterations to the property, they are deemed to have granted consent.

They may also be ordered to pay compensation to contract holders if they have failed to provide the correct documents (in particular a statement of the terms of the contract) at the proper time. In short, landlords – or their agents – simply cannot afford to be unprepared.

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Drawing up contracts and their terms

In referring to tenants and licensees as occupation contract holders, the act removes any distinction between a tenancy and licence. A contract may be a secure one, as will be the default for the social rented sector, and this will grant long-term security of tenure. Alternatively, a contract can be standard, which is the default for private sector landlords and is modelled on but by no means identical to an assured shorthold tenancy.

Landlords will be obliged to give contract holders a correct and complete written statement of terms within 14 days of the contract holder going into occupation (or within six months of 1 December for tenants and licensees who are already in situ). 'Correct and complete' means that it must accurately reflect the terms which are created by the 2016 Act and Regulations (unless modified by agreement, in which case they must also accurately reflect the modifications).

In addition to the contract, the landlord must provide formal notification of their own address in prescribed form, as well as further formal notifications if they change address. A landlord who acquires a property with a contract holder in situ will need to serve formal notification of their address following acquisition.

For tenancies that are converting in December, landlords will have to prepare contracts carefully. These will need to set out accurately which terms of the tenancy survive the 2016 Act's implementation, and this will depend on assessing whether each term is inconsistent with its provisions. They will have six months from 1 December to provide the new contract.

'Landlords will be obliged to give contract holders a correct and complete written statement of terms within 14 days of the contract holder going into occupation'

Model contracts are available for use – they set out the terms which are prescribed by the 2016 Act and Regulations. It is unlikely that they can be used without amendment for existing occupiers (given the need to have something which 'fits' the existing agreement) but they can be used for new occupancies, and carry the assurance that the contract will be correct.

Deposit protection is also covered by the 2016 Act. While arrangements will be similar to the current provisions, landlords will need to ensure that the correct prescribed information is given (namely, information about where the deposit is protected and how the contract holder can access it at the end of the contract).

Landlords will be unable to seek possession if they have not provided the contract and deposit information, or if the gas safety reports, electrical inspection condition report or energy performance certificate have not been given to the contract holder.

By and large, a standard contract will last for a minimum of 12 months. A landlord may not serve notice to end it within the first six months of occupation and, when they do serve it, it must be for a minimum of six months.

Under the 2016 Act, a landlord's repair obligation will be very similar to that which applies to current short-term lets (those under seven years). Section 92 requires landlords to keep the structure and exterior of their dwellings in repair and the service installations in dwellings in proper working order, much like the current obligation in section 11 of the Landlord and Tenant Act 1985. However, a landlord will not be required to remedy a defect in design or construction, as is already the case under present legislation.

Legislation requires fitness for habitation

Section 91 of the 2016 Act creates a new requirement of fitness for human habitation, and while there are similarities to the English equivalent the legislation is not identical. Since 2019, there has been such a requirement in England (the Homes (Fitness for Habitation) Act 2018 amended the Landlord and Tenant Act 1985 for England only). However, the 2018 Act does not apply in Wales, where the current fitness obligation has only been enforceable if the rent is below £52 a year.

Now, detailed guidance published by the Welsh government addresses the 29 hazards that will form part of an assessment of the property under the Housing health and safety rating system (HHSRS). 

In determining whether a property is fit, attention must be paid to these hazards and anything else that might make the property unfit. For each of the 29, the guidance lists measures which may – but do not have to be – taken by a landlord to help ensure their property is fit.

The guidance clarifies that even if one of the hazards is present that does not necessarily make the entire property unfit. In each case a sensible assessment must be made of whether the dwelling is truly unfit as a result.

The example given in the guidance is a variation in floor surface. This may be considered a hazard under the HHSRS, but is highly unlikely on its own to result in a determination that the property is unfit. The obligation will not require a landlord to undertake unreasonably expensive works either, and they must have been notified of the issue before being liable to do any work.

The regulations also create specific obligations, detailed in part 2 of the guidance, to install hardwired, interlinked smoke alarms on each storey of the property, and carbon monoxide alarms wherever there is a fuel-burning appliance. Landlords are also obliged to carry out electrical testing every five years.

Failure to comply with any one of those specific requirements will automatically render a property unfit. There will be a 12-month period of grace to provide smoke alarms and begin regular electrical testing for tenancies that are converting into occupation contracts under the 2016 Act. However, the grace period does not apply to any new tenancy after 1 December.

Landlords also need to be aware that the Regulations made under the 2016 Act provide that, if the contract holder reports a repair issue, then following an inspection the landlord must inform the contract holder in writing if work is required, if it is the landlord's responsibility and, if so, what work will be done and when. In fact, all documents and notices that are served under the 2016 Act must be in writing; this arguably applies to any correspondence related to works and inspections.

Contract holders' rights extended

The 2016 Act also covers a multitude of other issues. For instance, it creates rights for contract holders to seek consent to add a new, joint contract holder as a party, and to withdraw from a joint contract without ending it. Rights to succeed to the contract when the holder has died are also widened considerably. Therefore, landlords may well find themselves in a contractual relationship with someone entirely different to the person with whom they originally signed.

As the ministerial statement announcing that the implementation would be deferred to December acknowledges, the 2016 Act is a wholesale, once-in-a-generation reform of residential landlord and tenant law in Wales. Landlords and their agents must therefore start their preparations now if they have not done so already.

'The 2016 Act is a wholesale, once-in-a-generation reform of residential landlord and tenant law in Wales'

Rebecca Rees is a partner and head of property dispute resolution at Hugh James
Contact Rebecca: Email

Bethan Gladwyn is a partner and head of housing management at Hugh James
Contact Bethan: Email
 

Related competencies include: Housing strategy and provision, Landlord and tenant, Leasing and letting, Property management

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