The Renting Homes (Wales) Act 2016 completely rewrites the position in Wales in relation to residential tenancies. It is intended to entirely replace the secure tenancy and assured tenancy regimes which currently operate under the Housing Act 1985 and Housing Act 1988 respectively.
The Act also requires far more information to be given to occupiers about the nature of their occupation and their rights and reforms the entire process around the termination of tenancies. Finally, the Act introduces a new repairing standard for Wales which will place a greater obligation on landlords to ensure that a property is habitable and free from more serious defects.
1. The Welsh Government decided relatively early on that it wanted to completely review and overhaul the provision of residential rented homes in Wales. This was to be a from the ground up review that would seek to create a better integration between social and private renting and create a simpler and clearer rental sector for all users. As well as protecting occupiers it would reduce the barriers to renting by removing restrictions on landlords that did not serve a definable purpose and by streamlining certain processes.
2. The Law Commission had already produced a report, Renting Homes, which sought to overhaul the residential rented sector. While this model was not adopted in England it was attractive to the Welsh Government, and the Law Commission was asked to update its report to take account of the time that had passed since its production and to deal with the unique environment of Wales and the particular restrictions of the devolved assembly. This updated report has come to characterise much of the structure of the Act as well as providing its name.
3. The Act works by replacing the entire existing regime of licences and tenancies with the new concept of the occupation contract: Renting Homes (Wales) Act 2016 s.1 (RH(W)A). This will involve complete replacement of assured and assured shorthold tenancies and assured agricultural occupancies from the Housing Act 1988 and secure tenancies from the Housing Act 1985: RH(W)A s.7. Tenancies held under the Rent Act 1977 and Rent (Agriculture) Act 1976 will remain unaffected.
4. The Act is very complex but it helpfully has summaries at the beginning of each section as to what can be found in that section and setting out some of the intent of each section.
5. Late in the passage of the Act the Welsh Government accepted that the distinction between a licence and tenancy at common law would remain, but it is clear that the objective is for them both to obtain essentially equal protection under the Act. However, the Act uses the terms landlord and contract holder for landlord/licensor and tenant/licensee irrespective of their status at common law and this note will do the same.
6. Unusually, the Act does not contain any list of consequential repeals and amendments. This is to be provided later by way of a statutory instrument. This makes aspects of the legislation hard to interpret as it remains unclear which pieces of existing legislation will continue in force and which are to be replaced or amended.
7. There are two types of occupation contract: the standard contract and the secure contract. Standard contracts can be fixed term or periodic, secure contracts are always periodic: RH(W)A s.8.
8. Standard contracts have rights similar to those enjoyed by assured shorthold tenants in that they have a tenancy which is protected for a limited period. The landlord can end the contract for cause or without cause after a set period on notice. At the end of a fixed term standard contract the occupier will automatically be granted a new periodic standard contract if they remain in occupation on similar terms and conditions to the previous fixed term contract: RH(W)A s.184.
9. Secure contracts are similar to existing secure tenancies. In general, the landlord can only end the contract for cause.
10. Private landlords will normally enter into standard contracts but can elect to enter into secure contracts. Social landlords, defined as community landlords in the Act: RH(W)A s.9, will normally enter into a secure contract and can only enter into a standard contract in limited circumstances.
11. There are variants of the secure contract to allow for introductory tenancies and supported standard contracts.
12. All contract holders must have a written occupation contract: RH(W)A s.31. If they do not have one they can ask the landlord for such a statement and if they are not provided with one after a request can apply to the court to set the terms of their contract and to obtain compensation: RH(W)A ss.34-5. The power of the landlord to obtain possession is also restricted if the contract holder has not been given a written statement of their contract terms.
13. The wording of the occupation contract is also restricted. It is split into fundamental, supplementary, key, and additional terms. Many of these are prescribed by the Welsh government and there is only a limited amount of modification that can be made: RH(W)A ss.18-28.
14. As with existing legislation relating to Assured Shorthold Tenancies, there is a requirement that any deposit must be protected with an authorised deposit scheme within 30 days of its receipt: RH(W)A s.45(1) and (2). The Welsh government can also prescribe information about which scheme is protecting the deposit and how that scheme works, which must be given to the contract holder: RH(W)A s.45(3). However, unlike the existing system, this will apply to all landlords and occupation contracts of whatever type where they have taken a deposit.
15. Joint Contracts: The Welsh government had always intended that it would make better provision for situations where one or more people held a contract jointly. However, during committee stages these provisions were limited so that they would only apply in part to standard contacts. Individuals can apply to be added as joint contract holders in all contract types with the consent of the landlord: RH(W)A s.49. The landlord is not permitted to refuse this consent unreasonably: RH(W)A s.50.
16. Adding someone as a joint contract holder has a value from the perspective of a tenant because if one joint contract holder subsequently dies then remaining joint contract holders remain liable under the contract but also inherit the rights provided by that contract in full RH(W)A s.52.
17. Additionally, in secure contracts only, one or more joint contract holders can withdraw from the contract on giving notice to the landlord and the other joint contract holders: RH(W)A s.111. The Welsh government can prescribe the form and notice period of withdrawal notices: RH(W)A s.112.
18. In periodic standard contracts a similar set of provisions apply for the withdrawal of joint contract holders: RH(W)A s.130-1. However, in fixed term standard contract withdrawal of a joint contract holder is only permitted if the contract itself makes provision for that: RH(W)A s.138.
19. There is also a restriction on joint contract holders terminating the tenancy in such a way as to deprive other joint holders of that tenancy as the consent of all is required to do so: RH(W)A s.231.
20. Fitness Standards: The Act creates a new set of standards for property condition. This was a relatively contentious area in committee, with committee members keen to ensure that Welsh tenants derived a direct benefit from the Act in terms of ensuring that they had access to property of a good quality.
21. The fitness standards apply to all secure contracts and all periodic standard contracts: RH(W)A s.89. They do not apply to fixed term standard contracts that are for more than seven years. However, it appears that they would apply where a standard contract for a fixed term has ended and then a periodic contract has arisen at the end of that. Where a fixed term standard contract has a landlord's break clause which can be used at less than seven years then it will not be treated as being a fixed terms standard contract for seven years. Where the fixed term standard contract is for less than seven years but contains a tenant's option to renew which, if exercised, would take the term to seven years or more, then the term will be treated as being for seven years: RH(W)A s.90.
22. There is a general obligation on all landlords to ensure that the dwelling is fit for human habitation (FFHH): RH(W)A s.91. This is a matter which is subject to further consultation and secondary legislation and guidance: RH(W)A s.94. At the moment the intention of the government appears to be to link this to the HHSRS under the Housing Act 2004, and it is seeking to require landlords to ensure that there are no category 1 hazards. There are some complex problems with these proposals as the HHSRS works on the basis of a notional occupier rather than the actual occupier, whereas the Welsh government is proposing to base the FFHH on the actual occupier. In addition, it is not clear that all of the hazard areas under the HHSRS will apply.
23. There is also a replication of existing repairing obligations as are found under s.11 Landlord and Tenant Act 1985: RH(W)A s.92. So landlords must keep the structure and exterior in repair and keep installations for the supply of water, gas or electricity, for sanitation, for space heating, and hot water in repair and proper working order. The landlord must also make good any repair work required by ss 91 and 92: RH(W)A s.93.
24. Landlords are not liable to do any work where they cannot do so at reasonable expense, to make good damage caused by fire, storm, flood or other accident, repair anything that the tenant is entitled to remove from the premises, or anything which does not affect the contract holder's enjoyment of the property: RH(W)A s.95. Landlords are also not required to do any work which has been caused due to the tenant breaking something or not taking proper care of the property or its contents: RH(W)A s.96.
25. Landlords have a reasonable time to carry our works once they become aware that the works are necessary: RH(W)A s.97. There is no specific anti-avoidance provisions such as are found in the Defective Premises Act so it may be possible for landlords to avoid awareness.
26. Landlords may give 24 hours' notice at any stage to gain access for inspection or to carry out works. If access is required to a part of a building which is not controlled by the landlord then, provided the landlord has made reasonable efforts to obtain that access, he is not liable to carry out works until it is provided: RH(W)A s.98.
27. As these are implied terms of the tenancy, a breach of these terms creates a right to make a damages claim for breach of contract. However, there is a further provision which allows occupiers to make claims for personal injury or loss or damage to their property: RH(W)A s.99. In addition, occupiers are permitted to seek specific performance of any obligation to repair: RH(W)A s.100.
28. Termination: The termination provisions in the Act are relatively complex. They are made more complex due to the fact that there are no grounds for possession and the various provisions are found spread across a number of different sections of the Act.
29. As with existing tenancy provisions, some termination rights apply only in standard contracts as opposed to secure contracts, and some provisions cannot be used inside a fixed term standard contract. Also, as with existing systems, some of the termination provisions require the court to make a possession order if the requirements of the provision are made out whereas other provisions allow the court to exercise its discretion.
30. The Court has a power to refuse any possession claim where it believes that the claim is being made in retaliation for the tenant seeking to exercise any of his rights under the Act: RH(W)A s.217.
31. Abandonment: The Welsh government always intended to make the process of dealing with situations where a landlord reasonably believes that a contract holder has abandoned the property easier. If this is the case then the landlord must give four weeks' notice to the contract holder at the property with appropriate warnings that the landlord believes the property has been abandoned and that they will take possession of it at the end of the notice period. During that same period the landlord must make inquiries to establish whether the belief that the property has been abandoned is correct: RH(W)A s.220. The landlord who reasonably believes that the contract holder has abandoned may enter the property to make it safe or to safeguard its contents: RH(W)A s.224. The notice period can be adjusted by order: RH(W)A s.223.
32. The contract holder can make an application to the court on the basis that the proper notice was not given, that no proper enquiries were made, that the property had not been abandoned but the contract holder had a good reason for not responding to the notice, or that the landlord had no reasonable grounds for believing that the property was abandoned. This application can be made for six months from the date the notice of believed abandonment has been served. The court can order the landlord to allow the contract holder back into the property, order the landlord to provide alternative accommodation, or any other it deems fit: RH(W)A s.222. The application period can be adjusted by order: RH(W)A s.223.
33. The Welsh government can also make an order to require landlords to safeguard contract holders' personal possessions where a property has been abandoned: RH(W)A s.221.
34. Exclusion: This is a particularly controversial power which was substantially cut back during committee stages of the Bill. The Act allows for community landlords or charities who provide accommodation under supported standard contracts which are contracts provided alongside a support service such as addiction therapy or independent living support to exclude a person from the property. This requires a notice to be given in writing and can be for up to 48 hours. This does not require a court order or any form of external oversight RH(W)A s.145. The Welsh government is obligated to issue guidance on the use of this power: RH(W)A s.146.
35. This Act is not yet brought into force.