In effect since 1 December 2022, here's what letting agents and landlords need to know about the Renting Homes (Wales) Act 2016.
The Renting Homes (Wales) Act 2016 came into force on 1 December 2022. The act aims to simplify how landlords rent properties, and the government has said that this represents the "biggest change to housing law in Wales for decades."
Our guide to the act covers:
- What is the Renting Homes (Wales) Act 2016?
- How are tenancy agreements changing?
- What are your legal obligations for new tenancies?
- What are your obligations for existing tenancies?
- What's changing for "no fault" evictions and notice periods?
- What happens if a contract holder breaches their contract?
- What are the new safety requirements?
- What is the 'fair rents' consultation?
What is the Renting Homes (Wales) Act 2016?
The Renting Homes (Wales) Act 2016 aims to simplify the Welsh rental process and make being a tenant in Wales more "straightforward".
The individuals your landlords welcome into their properties from 1 December will no longer be known as "tenants" but "contract holders".
Safety regulations, contract types, and notice periods are also changing, as outlined in the sections below.
How are tenancy agreements changing?
Assured shorthold tenancies will be replaced with two types of "occupation contract" - either a secure contract, for "community" or social housing landlords, or a standard contract, for private landlords.
These contracts must include certain "key matters", covering:
- Address
- Occupation date
- Amount of rent, or other consideration due
- Rental period
Standard contracts for private landlords must also include:
- Whether the contract is periodic or fixed-term - with the term specified for the latter
- Any periods where the contract holder is not allowed to occupy the property as their home
Aside from the above terms, there are other terms classed as fundamental, supplementary, or additional. Supplementary terms can be left out if that benefits the landlord or the contract holder - but the contract holder must agree to the changes.
“While the government has helpfully published model written statements for some occupation contracts, it is important to highlight that those statements will need to be reviewed and additional terms inserted,” says Vicky Smith, Solicitor at Devonshires.
What are your legal obligations for new tenancies?
From 1 December, you'll need to draw up and use a written statement version of the occupation contract for any new contract holders within 14 days of the move-in date specified in the contract.
You can find model contracts on the government's site to adapt for your agency.
What are your obligations for existing tenancies?
For existing tenancies and licences, tenancy agreements converted to the new occupation contract on 1 December. You'll need to communicate this at least verbally with your tenants by this date.
However, you and your landlords will have six months to provide your current tenants with a copy of the new written statement of their contract.
This written statement should take into account all of the terms in the existing tenancy agreement, even if using a model written statement, to ensure that the terms are reflected in the new occupation contract.
You can find a full guide on how to convert the contracts on the government's website.
What's changing for "no fault" evictions and notice periods?
Section 21 possession notices will be replaced with section 173 notices, under the new act. This extends the minimum notice period that landlords can give tenants on a periodic contract to six months for a "no fault" eviction.
For tenancies starting before 1 December 2022, you'll only be required to give two months’ notice under section 173.
From 1 December 2022, the six month notice periods will apply to new tenancies, while the notice period for existing tenancies will need to increase to six months from 1 June 2023.
Landlords and agents won't be able to serve a section 173 notice during a fixed term standard contract, and can only serve one for a periodic standard contract after six months.
Unless a periodic contract holder breaches the contract, they'll therefore have the right to stay in the property for a minimum of one year.
What happens if a contract holder breaches their contract?
If your contract holder stops paying rent or breaches their contract in another way, you or your landlord will still be able to serve one month's notice.
If the rent arrears are for over two months, a 14-day notice period may apply.
What are the new safety requirements for private rented properties under the act?
The new laws means that landlords are now obligated to make sure a private rented property is "fit for human habitation". New rules under the Renting Homes (Fitness for Human Habitation) (Wales) Regulations 2022 also highlight that landlords should ensure:
- At least one working smoke alarm on each floor is connected to the property's mains supply
- Every room with a gas appliance, an oil fired combustion appliance or a solid fuel burning combustion appliance has a working carbon monoxide alarm
- A valid Gas Safety Certificate, Electrical Inspection Condition Report, and Energy Performance Certificate are provided to the contract holder
If a contract holder believes a property doesn't meet the new fitness for human habitation requirements, they may be entitled to withhold rent, something that landlords and agents will need to bear in mind when preparing a property to let out.
What is the 'fair rents' consultation?
In June 2023, the Welsh Government called for responses on ‘fair rents’ in the private rented sector. This consultation closed in September 2023, with a white paper setting out proposed future policy changes, expected to be published in 2024.
This consultation asked for views on topics such as defining ‘low’ and ‘local’ incomes, rent controls, and housing prices. The paper states that over the last eight years, private rental prices have risen by 12%, with a third of that growth (4.2%) between January 2022 and
January 2023.
It is likely that we will see the outcome of the consultation in 2024.
This article is intended as a guide only and does not constitute legal advice. For more information, visit the government's website for guidance and a list of FAQs.
