Written by Josie Edwards and Erica Williams
The Renting Homes (Wales) Act 2016 (RHWA) is due finally to be implemented on 1 December 2022.
It reforms substantially the basis on which residential property in Wales is occupied and introduces new terminology, quite different from that used until now.
The RHWA will have retrospective effect. With a limited number of exceptions, it replaces all current tenancies and licences with either a secure or standard occupation contract. These contracts set out the rights and responsibilities of both the landlord and the contract-holder (formerly a tenant, licensee or occupier).
Existing agreements affected by the RHWA will automatically ‘convert’ to the relevant occupation contract on 1 December 2022.
The RHWA affects all existing arrangements that meet the section 7 criteria for an occupation contract in the RHWA, subject to a closed list of exclusions.
Accordingly, the majority of tenancies and licences which exist in Wales prior to 1 December 2022 will convert to occupation contracts on 1 December 2022 provided all of the following apply:
The type of occupation contract to which they convert will depend on the type of tenancy or licence they were before 1 December 2022:
Assured Shorthold Tenancy (AST)
Standard Contract but:
– no ability for the landlord to serve a s.173 ‘no-fault’ notice
– the contract-holder must occupy the dwelling as their only or principal home
Assured Agricultural Occupancies
As above, landlord will not have the ability to serve a s.173 ‘no-fault’ notice + the contract-holder must occupy the dwelling as their only or principal home
Short-notice termination provisions will apply (Schedules 8A, 9B, 9C)
Note that the existing arrangements will not be brought to an end – they will ‘convert’ under the RHWA. The existing terms of converted contracts will remain effective, provided they do not conflict with the fundamental provisions of the RHWA – see further below.
Certain tenancies and licences are never occupation contracts. These include:
Schedule 12 governs the transformation of tenancies and licences in existence on 1 December 2022 into “converted occupation contracts”. The following key points arise:
All occupation contracts must be in writing.
Deadline – Landlords have a maximum of six months from 1 December 2022 to issue a written statement of the converted occupation contract to their contract-holders.
If this deadline is missed, financial penalties can be imposed on landlords / compensation may become payable to the contract-holder. Landlords’ ability to serve a valid notice to regain possession will also be restricted.
Form of Written Statement – it can be issued in hardcopy or, if the contract-holder agrees, electronically.
The written statement sets out the parties’ names and the terms of the contract (discussed below).
Once a written statement has been provided to the contract-holder the terms of the converted contract may be varied, if agreed.
The Welsh Government has produced Model written statements with accompanying explanatory information: see Renting homes: model written statements.
Unlike new occupation contracts, where the default terms will be those set out in RHWA, the conversion process recognises that there may be certain terms, which exist within current tenancies and licences, which it would be unfair to replace.
The Welsh Government has produced a helpful guide for Landlords on the process of Creating a converted occupation contract: guidance for landlords, although note that it is not an exhaustive guide and provides examples only.
Conversion aims to strike a balance between the required terms necessary for the occupation contract to operate under RHWA, whilst making specific provision for some existing terms to be maintained within the converted contract.
Under the RHWA, the terms are split into 4 categories:
Terms of the former tenancy or licence agreement will remain effective as long as they do not conflict with the fundamental terms of the contract. Supplementary terms will become incorporated, unless they conflict with the existing terms of the former agreement, which will take precedence.
IMPORTANT: In addition to the above, Schedule 12 of RHWA makes special provision in relation to some fundamental terms, preserving the existing term even where it conflicts with a new fundamental term under the RHWA. A key example of this is in relation to termination.
A prime example of where Schedule 12 works to overrule the new fundamental term in the converted contract is in relation to notice periods.
In new periodic occupation contracts, the landlord is entitled to serve a no-fault notice to terminate the arrangement, but must give 6 months’ notice to end the tenancy. However, this is incompatible with previous notice provisions under the Housing Act 1988.
To reflect this, Schedule 12 of the RHWA will operate as follows:
Part 4, Chapter 2 of the RHWA contains a new set of repairing obligations which will apply to occupation contracts. They contain some differences to the section 11 Landlord & Tenant Act 1985 provisions that previously applied.
In addition, the Renting Homes (Fitness for Human Habitation) (Wales) Regulations 2022 SI 2022 No. 6 (W. 4) (the FFHH Rules) will apply to converted contracts, although there is a 12-month grace period for certain requirements, e.g. mains wired smoke alarms, valid electrical inspection report: landlords must ensure compliance by 30 November 2023. See Fitness of homes for human habitation: guidance for landlords
Further detail is set out in our article Welsh residential tenancy reform: How will new lettings operate?
The RHWA introduces a right of succession for occupation contracts, which will apply to both new and converted contracts.
Specific provisions apply to converted contracts if, immediately before the RHWA comes into force, the tenancy was an assured tenancy, which had vested in the contract-holder under section 17 of the Housing Act 1988 or paragraph 3 of Schedule 1 of the Rent Act 1977 (see paras 20 and 21, Schedule 12, RHWA).
Further detail on the succession provisions is set out in our article Welsh residential tenancy reform: How will new lettings operate?
Service Occupiers & Assured Agricultural Occupiers
The impact of RHWA on service occupancies and assured agricultural occupancies is considered in our separate article Welsh residential tenancy reform: Agricultural workers & service occupiers
The RHWA heralds a significant change to housing law in Wales.
It is anticipated that the conversion process will pose navigational challenges for many, not least adjusting to the new terminology and documentation. The requirements relating to written statements and FFHH will require careful thought and planning, and some landlords will need to consider the saving provisions that apply to less commonly encountered arrangements, such as assured tenancies.
As noted above, the Welsh Government is already consulting on further harmonisation between the rules applying to the termination of new and converted contracts. These changes could be in force by Summer 2023. We anticipate that the rights and protections afforded to ‘new’ occupiers after 1 December 2022 will soon form the baseline for converted contracts and any differences that arise within converted contracts are likely to favour occupiers.
The Welsh Government has a dedicated landing page containing links to various guidance notes, standard form documents, prescribed form notices and the relevant legislation: See Renting Homes: housing law is changing.
For more information, please contact Erica Williams.