The Renting Homes (Wales) Act 2016 is yet to be implemented. However, after consideration and review the Welsh Government has decided to amend the legislation now and bring the (amended) Act into force as a whole before the end of the current Assembly term.
The Renting Homes (Wales) Act 2016 will replace the secure tenancy and assured tenancy regimes in Wales which currently operate under the Housing Act 1985 and Housing Act 1988. The 2016 Act will introduce occupation contracts. There are two types of occupation contracts, these are secure contracts and standard contracts. Furthermore, there will be two kinds of standard contracts, these are fixed-term standard contracts and periodic standard contracts.
Renting Homes (Amendment) (Wales) Bill
The Welsh Government wants to extend the minimum notice period for a notice given under section 173 – Landlord’s Notice – from two months to six months and to restrict the issuing of such a notice until six months after the occupation date of the contract. The 2016 Act currently sets this at four months.
What does this mean?
If the contract has been breached landlords will be able to issue a possession notice with a one-month notice period.
Essentially, this means that the proposed changes will double the length of time before a landlord can obtain possession at the beginning of a periodic standard contract from six months to one year – as long as the contract holder does not breach the terms of the contract.
Breach of terms
If the contract has been breached landlords will be able to issue a possession notice with a one-month notice period.
Extension
Mandatory possession under section 173 will still be available to a landlord without the need to cite a specific reason relating to a breach of contract. However, under the Bill, the two-month notice period applicable to a section 173 notice is amended to a period of six months.
Beginning of a contract
In addition, landlords will no longer be able to issue a notice at the start of the tenancy regardless of whether they intend to seek possession as they can do currently under the 1988 Act.
The 2016 Act allows a section 173 notice to be issued after the expiry of four months from the occupation date of the contract. However, the Renting Homes (Amendment) (Wales) Bill increases the period before a landlord can issue a section 173 notice from four to six months.
Fixed-term standard contracts
During a fixed term standard contract the Bill will remove a landlord’s ability to issue a notice to end the contract at the expiry of the fixed term. As a result, if a contract-holder chooses not to vacate the property at the end of the fixed term, the contract will automatically be replaced by a periodic standard contract.
Expired notices
Following the expiry of a previous notice, the Bill prevents a landlord from issuing another notice for six months.
Landlords will also be restricted from issuing another notice for a six-month period should a claim for possession fail on the basis that the notice was invalid on a technicality. However, the Bill allows a landlord a period of 14 days to address any errors and re-issue a corrected notice. Under these circumstances, the six-month notice period will start from the date of the reissued notice and not the original serving date.
Use of break clauses
The inclusion of break clauses in an occupation contract only arises where a landlord and contract-holder will have agreed to the same. The Renting Homes (Amendment) (Wales) Bill also says that a break clause cannot be used in contracts of a duration of less than 24 months and cannot be activated until month 18. Landlords will also be required to serve a six-month notice in relation to a break clause.
Timetable
The Bill was introduced on 10 February 2020 and it will be initially considered by the Equality, Local Government and Communities Committee on 12 February. Oral evidence sessions are scheduled to start from 27 February 2020.
Should the Bill be passed by Members of the Senedd, it is anticipated the new law will come into force in the Spring of 2021.
Extending notice periods from two months to six months under the Renting Homes (Amendment) (Wales) Bill will cause further shockwaves for landlords and agents. The proposals will make it even more difficult for landlords to reclaim possession of their property and add further longevity to an already lengthy and expensive eviction process.
We are concerned that landlords will have no viable option of evicting problem tenants quickly and efficiently due to current court procedures. If landlords sell up due to the perceived risk, this will shrink the sector and contribute to landlords being more selective about who they let their property to. The Welsh Assembly must reconsider extending the minimum notice period and take a long-term, holistic view that supports those who are providing professional and well managed tenancies.
We are digesting the proposals and will be engaging with Members of the Senedd to mitigate the negative impacts of the Bill. Resources will also be provided to ARLA Propertymark members to support agents with the changes.
