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Renting Homes (Wales) Act: What landlords, lenders and receivers need to know

To Let sign on terrace houses Print publication

05/08/2019

The Renting Homes (Wales) Act 2016 (RH(W)A) received Royal Assent back in January 2016 but it is yet to be enacted and has no set ‘in force’ date at this time.  It is, however, worth being aware of this Act.  When it comes into force it will make sweeping changes to housing law and practice in Wales and, crucially, it will apply with immediate effect – not only to future tenancies, but also to the vast majority of existing residential tenancies/licences.  Whilst the Welsh Government has announced that it will give six months’ notice prior to bringing the Act into force, significant developments are now ongoing.  If the changes are not implemented before the end of 2019 (as was previously anticipated), they may be very shortly thereafter.

Walker Morris’ Housing Management & Litigation Partner Karl Anders and Head of Recoveries Justin Coley explain that the RH(W)A is definitely ‘one to watch’, and highlight some of the key issues for landlords, lenders and receivers.

What do landlords, lenders and receivers need to know?

The RH(W)A will completely overhaul housing law and practice in Wales and will affect almost all rented housing from the moment it comes into force. The intention behind the Act is to simplify the existing law and letting process into one clear legal framework. However, concerns have been raised that the changes, particularly those relating to a landlord’s right to recover possession, benefit residential occupiers much more than they do landlords; and that they could significantly inhibit a landlord’s ability to recover possession – even from a problem tenant.

Key points to note include:

  • Whilst the legislation received Royal Assent in 2016, certain key aspects are still subject to consultation and to draft secondary legislation, so full details as to the final form of the RH(W)A are not yet known.
  • Many aspects of the RH(W)A affect landlords, lenders and receivers and so it is important that all familiarise themselves with the legislation and participate in the various consultation processes, as appropriate.
  • RH(W)A introduces the concept of an ‘occupation contract’ (as opposed to a lease or a licence) and creates:
    • A ‘standard occupation contract’ which is based on the current assured shorthold tenancy used mainly in the private rented sector (PRS); and
    • A ‘secure occupation contract’ which is modelled on the current secure tenancy currently issued by local authority landlords.
    • (There are also variations for specific types of housing or circumstances, such as for supported housing)
  • RH(W)A places new obligations on landlords to issue, within 14 days of the occupation date, a written statement of the occupation contract. The written statement must contain specified information and will set out the rights and responsibilities of the landlord and contract-holders.
  • RH(W)A requires landlords to ensure that the property is fit for human habitation at the time of occupation and throughout. It places higher levels of responsibility on landlords in that regard, and in relation to repairing obligations, than has previously been the case in Wales – and higher even than is the case in England post- the Homes (Fitness for Human Habitation) Act 2018.
  • RH(W)A seeks to protect contract-holders from ‘retaliatory evictions’ where occupiers are at risk of eviction for complaining about the condition of a property. It therefore allows the court to refuse to make an order for possession where it is satisfied that the landlord is seeking to avoid complying with its repair/human habitation obligations.
  • Certain grounds for possession have not been included in the RH(W)A regime. Notably grounds 2 (lender’s right to repossess where landlord defaults on mortgage payments) and 8 (mandatory eviction route for landlords where a tenant is in 8+ weeks’ arrears) under the Housing Act 1988 (HA) have not been carried over or replicated.
  •  A particularly controversial aspect of the RH(W)A is its equivalent to section 21 HA.  Originally, the Welsh Government proposed removing altogether the landlord’s ability to serve notice and recover possession in a ‘no tenant fault’ scenario. However, in its current form, RH(W)A provides that rental properties cannot be repossessed within the first 6 months and without the tenant being given 2 months’ notice.  As of 11 July 2019, however, the Welsh Government is consulting on extending this landlord’s notice period from 2 months to 6, thereby extending the period within which a property cannot be repossessed.  This proposal is attracting criticism from various landlords’ representatives and industry bodies.  The consultation is open until 5 September 2019 and can be accessed here [1].
  • Some of the less controversial aspects of the RH(W)A include:
    • Enabling landlords to repossess abandoned properties without a court order;
    • Introducing anti-social behaviour and other prohibited conduct clauses;
    • Allowing perpetrators of domestic abuse to be targeted for eviction;
    • Introducing a temporary exclusion power for some supported contracts;
    • Allowing the occupation contract to continue for a remaining occupier when a joint tenant leaves;
    • Simplifying succession arrangements; and
    • Creating succession rights for carers.
  • Finally, RH(W)A is being supplemented by the introduction of various other pieces of supporting housing legislation in Wales. For example, the Renting Homes (Fees etc) Act 2019 will come into force on 1 September 2019 and will ban the majority of landlord’s or letting agent’s fees being charged to residential occupiers.

Practical advice

It is advisable for landlords, lenders, receivers, managing agents and advisers to:

  • Become familiar with the terms and detail of the RH(W)A and, in particular, the options for recovering possession that remain under RH(W)A.
  • Consider how the RH(W)A will affect existing processes and whether any consequential changes will be required.
  • Await, and then review against existing documents and processes, the occupation contract model forms which the Welsh Government proposes to publish.
  • Review and update mortgage conditions, terms of appointment and any other documentation connected with the mortgage, possession and receivership processes to reflect new terminology and terms under the review.
  • Implement a training programme to ensure that all staff are made aware of the legal and practical changes brought about by the RH(W)A.
  • From a commercial perspective, monitor and evaluate residential property portfolios in Wales on an ongoing basis to assess any additional work, cost or risk associated with the letting and possession processes.

Walker Morris will continue to monitor and report on key developments connected with the implementation of the RH(W)A.

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[1] It is interesting to note that the Welsh Government’s consultation coincides with the UK Government’s consultation, launched on 21 July 2019, into the abolition of section 21 HA in England. See our recent briefing for further information.

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