Update: The implementation of the Renting Homes (Wales) Act 2016 has been postponed until 1st December 2022. Please see this written statement from the Welsh government.
For landlords in Wales, 1st December 2022 is an important date. This is when the Renting Homes (Wales) Act 2016 comes into force. The intention behind the new legislation is to bring the existing law and letting process in Wales into one clear legal framework.
Renting Homes (Wales) Act 2016: New Terminology
There is a raft of new terminology which may seem confusing at first. For instance:
- A tenancy agreement will now be called an ‘occupation contract’.
- The tenant will now be known as the ‘contract-holder’.
- Assured shorthold tenancies will become ‘Standard occupation contracts’. ‘Standard occupation contracts’ can be for a fixed term or periodic in the same way ASTs can be a fixed term or periodic. Similarly, ‘standard occupation contracts’ will automatically become periodic at the end of the fixed term.
- The day on which the ‘contract-holder’ (tenant) is entitled to begin occupying the ‘dwelling’ will be known as the ‘occupation date.’
What OpenRent is Doing
At OpenRent we will provide you with a professionally-drafted fixed term occupation contract (formerly AST). You will only need this if you are beginning a new occupation contract (tenancy) in Wales on or after 1st December 2022; this includes fixed term tenancy renewals. If your tenancy is continuing on from before 1st December 2022 then the AST will become what is known as a ‘converted occupation contract’ and you will have a 6 month grace period in which to serve the ‘contract-holder’ (tenant) with a copy of the ‘written statement’ (contract). Some of the existing legal requirements will continue to apply to converted contracts (see below).
Fitness for Human Habitation
There are new regulations that apply from 1st December 2022 which require landlords to keep the property ‘fit for human habitation’ at the time of occupation and throughout. These are detailed in the The Renting Homes (Fitness for Human Habitation) (Wales) Regulations 2022 (SI 2022/6). For occupation contracts beginning on or after 1st December 2022 the landlord will have to make sure that the property complies with these rules from the outset. Some of the broad changes are the following:
Smoke alarms: there must be a smoke alarm on each storey of the property which is in repair and proper working order, connected to the property’s electrical supply, and linked to every other smoke alarm in the property which is connected to the electrical supply.
Carbon monoxide: there must be a carbon monoxide alarm which is in repair and proper working order and is in each room of the property which contains a gas appliance, an oil fired combustion appliance or a solid fuel burning combustion appliance.
Electrical safety: The landlord must ensure that there is a valid electrical condition report (a copy of which must be provided to the contract-holder) in respect of the dwelling during each period of occupation.
There will be a 12 month grace period with regard to the electrical safety and smoke alarm requirements for tenancies that started before and continue through 1st December 2022, known as ‘converted contracts’. If the converted contract ends within 12 months of 1st December 2022 then any new occupation-contract will need to comply with these requirements.
A contract-holder will not be liable to pay rent for any period during which the property is deemed to be unfit, and a landlord will not be able to issue a Landlord’s Notice (formerly Section 21) if the premises were deemed to be unfit. Please see this government guidance for more information on compliance: Fitness of homes for human habitation: guidance for landlords | GOV.WALES.
How the Occupation Contract is Set Out
The occupation contract is set out in a different way to a traditional AST. At the start of the contract there is information, written for the benefit of the contract-holder (tenant), on how to interpret and understand the contract.
Each of the terms of the contract fall into one of four broad classifications. The purpose of these classifications is to group terms by their importance and the extent to which they can be changed. The Renting Homes (Wales) Act 2016 lists certain terms (known as Fundamental terms) which have to be included in the contract. Other terms known as Supplementary terms can be modified or excluded by agreement between the parties. To complicate matters slightly, there are certain Fundamental terms that can be modified but only by agreement and to benefit the contract-holder. There are also Additional terms that may be added to the contract as long as they do not conflict with existing terms. So, to recap, the following is how terms in the contract are classified:
Key matters: These set out the essential facts for the contract such as: a description of the property, the occupation date, the amount of rent, and the rental period. These matters must be included in the contract.
Fundamental terms: These are provisions of the Act that are automatically included as terms of an occupation contract. Some cannot be changed and must reflect the wording in the Act. Others can be left out or changed by agreement between the landlord and contract-holder, but only to the extent that the change benefits the contract-holder.
Supplementary terms: These terms are also automatically included in the contract however, provided the landlord and contract-holder agree to it, these can be left out or changed, either to benefit the contract-holder or the landlord.
Additional terms: These are terms that can be added to the contract but only to the extent that they do not conflict with the key matters, Fundamental or Supplementary terms.
Restrictions on Landlord’s Notice (previously S21)
A big change in the legal framework is the further restrictions on the service of a Landlord’s Notice (formerly S21 notice). Landlords will be required to give the contract-holder six months’ notice, rather than the two months’ required under section 21 of the Housing Act 1988. Landlords will not be able to give the contract-holder a Landlord’s Notice (formerly S21 notice) until the occupation contract has become periodic and not before 6 months of occupation. The exception is if the fixed term contract is for more than 2 years – in which case the landlord can incorporate a break notice giving 6 months’ notice, however, only after 18 months.
Restrictions on No Fault (previously S21) Notices for Converted Contracts
For ASTs that began before, and continued through, 1st December 2022 (known as converted occupation contracts), landlords will still be able to give a two months’ no fault notice. For fixed term ASTs the notice must not end before the last day of the term for which the converted contract was made and the contract-holder must have been in occupation for at least 6 months. For periodic contracts the contract-holder only needs to have been in occupation for 4 months. There are other provisions that apply to converted contracts. For more information please see the following guidance document.
Contract-Holder’s Right to Terminate the Contract
A contract-holder does not have an automatic right to terminate a fixed term standard contract unless a contract-holder’s break clause is incorporated into the contract. However, they can terminate a periodic standard contract on 4 weeks’ notice. If the contract-holder does not then vacate after serving the notice, the landlord can issue possession proceedings by giving a possession notice within two months’ of the date the contract-holder should have moved out.
The landlord is able to serve a possession notice for non-payment of rent on the basis that the contract-holder has breached their contract (which has a 1 month notice period). If the Contract-holder is in serious rent arrears (two months or more non-payment), a landlord may serve a notice on that ground with a 14 day notice period.
The landlord will also be able to terminate the occupation contract on a number of other grounds, including anti-social behaviour. For more information please see the link to government guidance below.
For more information please see the following government guidance.