Letting out property in Wales? – Be aware of the new rules!

Calling all private landlords with properties in Wales, the Renting Homes (Wales) Act 2016 (the Act) is now in force. You need to be aware of the rules, requirements, and the looming 1^st June 2023 deadline.

New Agreements

Any new agreement granted on or after 1st December 2022, to an individual for use as their home, must now be created using a Fixed Term Standard Occupation Contract rather than an Assured Shorthold Tenancy.

A landlord is required, within 14 days of the start of an Occupation Contract, to provide the contract holder (formerly the tenant) with a “written statement”. The written statement must clearly set out the respective rights and responsibilities of the landlord and the contract holder. Although this doesn’t have to be in a prescribed form, it must set out the names of the parties to the contract, key matters, together with fundamental and supplementary terms of the contract. Additional terms, for example rules on pets at the property, no smoking / vaping, can also be included. Whilst this may sound a complex document to draft, happily, the Welsh Government have produced a template for landlords to use.

Failure to Act

There are financial consequences for landlords who fail to comply. If a landlord doesn’t provide the written statement in the 14 days or it’s defective, the contract holder is entitled to compensation, equivalent to one day’s rent for each day the landlord fails to provide a compliant written statement (up to a maximum of two months’ rent). The contract holder would also be entitled to recover this compensation by withholding rent. Not only this, but the landlord would not be able to serve a valid notice to quit until six months after the contract holder has been supplied with a valid written statement.

What happens at the end of the fixed term?

When a Fixed Term Standard Occupation Contract expires and the contract holder remains in occupation, a Periodic Standard Contract arises. At this point, the landlord is again required to provide the contract holder with a written statement. The same rules on compensation and six months’ notice to quit apply.

Existing Agreements

Any existing assured shorthold tenancy automatically became an Occupation Contract on the 1^st December 2022. To comply with the new requirements, a landlord has until the 1^st June 2023 to provide a written statement to the contract holder containing those all-important terms. If they don’t or the written statement is defective, the one day’s rent compensation and the six months’ notice to quit rules will again apply.

Far worse, where compensation is payable, a contract holder can make an application to the court for a declaration, with the possibility of the compensation being increased by up to 100%. Effectively meaning the landlord could end up paying the contract holder to live in the property!

Notice to Quit

The time limits for serving a notice to quit have also changed. Any landlord now wishing to terminate an Occupation Contract on a no-fault basis will now need to serve a Section 173 notice (as opposed to a Section 21 notice) and must give the contract holder at least six months' notice.

As before, the notice will only be valid if the landlord has complied with their obligation to protect the contract holder’s deposit under an approved deposit scheme.

What else you need to know

Firstly, it is not possible to opt out or vary any of the new requirements. Any terms which attempt to do this will be invalid.

Secondly, if a sole contract holder dies, it will be possible for a family member, spouse/civil partner or common law spouse or carer to take over the Occupation Contract. Though only one succession will be allowed. Further, a contract holder can request to add a joint contract holder and whilst the landlord’s consent is required, the landlord can’t refuse a request without a good reason.

If you require any advice or assistance, please do not hesitate to contact a member of our specialist Residential Conveyancing team.