Member Article

Fundamental changes to the housing law regime in Wales took effect on 1 December 2022 when the Renting Home (Wales) Act 2016 comes into force.

New form of rental agreement

The Renting Home (Wales) Act 2016 (the “Act”) introduces a new form of rental agreement for residential property in Wales known as an “occupation contract”. The Act largely dictates the content of that contract and introduces new rights for “contract-holders” (formerly known as tenants or licensees). The majority of residential tenancies granted on or after 1 December 2022 will be occupation contracts and existing residential tenancies and licences will automatically convert into occupation contracts on this date.

There are two forms of occupation contracts; a standard contract that applies to the private rental sector and a secure contract that applies to social housing.

What must a standard contract contain?

Standard contracts can be granted for a fixed term or can be periodic. A fixed term standard contract will terminate at the end of the fixed term and, at that point, will automatically convert into a periodic standard contract if the contract holder stays in possession. 

Every contract holder must be given a written statement of their occupation contract by their landlord within 14 days of the contract holder moving into the property. Where a tenancy agreement has converted into an occupation contract, the landlord has six months to give the contract holder a written statement.  

The Welsh government has issued model written occupation contracts that most landlords are likely to use.

The Act introduces terms which are defined as “key matters”, “fundamental terms”, “supplementary terms” and “additional terms”. 

Key matters and fundamental terms are set in the Act and must be included within an occupation contract. They cannot be excluded. However, some fundamental terms can be amended by the agreement of the parties and provided that the amendment benefits the contract holder. 

Supplementary terms are also included within the model contracts but may be amended by the landlord provided that they are agreed by the parties. 

Additional terms are terms that the parties negotiate and agree to include within the occupation contract. For example, a term allowing the contract holder to keep pets.

Termination of occupation contracts

An occupation contract can only be terminated in accordance with the fundamental terms that are incorporated into the contract by the Act. 

A landlord has the right to seek to terminate an occupation contract where there is a breach of contract by the contract holder.  

Provided certain requirements are met, a landlord also has the right to terminate the contract where there is no fault by the contract holder and, in this regard, the Welsh Government has not (to date) indicated that it will follow the UK Government’s statement intention to legislate to outlaw no-fault evictions.

A contract holder can terminate a contract on giving the landlord 4 weeks’ notice, provided that such notice does not end before the expiry of any fixed term (unless there is a break clause in the contract).

Termination on breach (general rules)

If a landlord wishes to terminate for breach of contract, it must serve a possession notice on the contract holder. 

The amount of notice which needs to be given depends on the nature of the breach relied upon. If the breach concerns antisocial behaviour or other prohibited conduct, a landlord can make a possession claim as soon as it gives the possession notice. For other breaches (save for serious rent arrears), the Landlord must wait for one month before making a possession claim. 

If the contract holder remains in possession after the expiry of the possession notice, the landlord needs to issue a possession claim. All claims for possession based on breach of contract are discretionary and the Court must be satisfied that it is reasonable to make a possession order. When exercising its discretion, the Court must have regard to the probable effect of the Order on the contract holder and any permitted occupiers, the effect on the landlord of not making the Order and the nature, frequency and duration of the contract holder’s breaches. The Court retains the ability to postpone possession if it considers it reasonable to do so. If it is reasonable to do so, possession can be ordered even if the breach has been remedied by the date of the hearing.

After six months from service of the possession notice, the landlord loses the right to make a possession claim.

Termination on breach (serious rent arrears)

The procedures for termination where there are serious rent arrears are slightly different. Whether there are serious rent arrears will depend on the amount of rent unpaid and whether the rental periods are weekly, monthly, quarterly or yearly. For example, where rent is payable monthly, a contract holder will be in serious rent arrears if at least two months’ rent is unpaid.

A landlord must give a contract holder a possession notice specifying the serious rent arrears ground. Possession proceedings cannot be issued until 14 days from the date of giving the possession notice and any claim for possession must be brought within six months of the date of the possession notice. The contract holder must remain “seriously in arrears” on both the day the possession notice is served and on the hearing date. If that is the case, the Court must make an order for possession.

No-fault termination

A landlord may bring a periodic standard contract to an end by giving not less than six months’ notice to the contract holder or two months’ notice where the contract is a converted contract.

A landlord cannot serve a notice to terminate the occupation contract within the first six months starting with the occupation date stated in the contract. If the contract is a converted contract, the relevant period is four months starting from the date of occupation.

In order to serve a no-fault eviction notice, the landlord must have provided the contract holder with a written statement and information relating to the occupation contract, have complied with the tenancy deposit requirements, have complied with the Welsh equivalent of the Tenant Fees Act, and have served EPCs, gas safety certificates, electrical condition reports and smoke and carbon monoxide alarms on the contract holder. The Act also requires the landlord to be registered and licensed with Rent Smart Wales.

If the contract holder does not vacate the property after service of the no fault eviction notice and the landlord wishes to recover possession, they must serve the possession claim within two months of the date specified in the landlord’s notice.

 

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