Renting Homes (Wales) Act 2016 – the new regime for ASTs in Wales

The type of tenancy and the rules for renting a home in Wales changed with the implementation of the Renting Homes (Wales) Act 2016 (‘The Act’) which came into force on 1 December 2022.  The Act aims to improve the security of tenure for tenants and make it easier for them to rent but it could be perilous for landlords and they must ensure that they familiarise themselves with its requirements. The Act introduces standardised terms to all contracts.

Subject to certain exceptions[1], most existing tenancy agreements granted to an individual converted to an occupation contract on 1 December 2022 as the Act has retrospective effect. If an existing tenancy is a fixed term assured shorthold tenancy, it became a fixed term standard occupation contract. If it was a periodic assured shorthold tenancy, it become a periodic standard contract.

Under the Act, tenants and licensees are now known as contract holders and tenancy agreements are now known as occupation contracts.  An occupation contract must be in writing and set out the rights and responsibilities of the parties.  The Welsh Government has published model written statements for use and updated its guidance notes on 28 February 2023[2], but the standard wording may not meet the needs for all landlords and advice should be sought especially regarding existing occupiers. 

As stated above, there are certain types of tenancies which can be excluded from the Act.  This must be done by notice— for example armed forces accommodation, holiday lets and accommodation in a care institution. There are tenancies which can never be occupation contracts including:

• Agricultural tenancies
• Business tenancies
• Long tenancies (over 21 years)
• Rent Act tenancies
• A protected tenancy or a statutory tenancy or a secure tenancy that is a housing association tenancy

There are two types of occupation contracts:

1. The secure contract – essentially those let by a local council or housing association
2. A standard contract – other landlords including those let by a private landlord.

Section 7 of the Act defines the types of tenancies and licences that are occupation contracts.  Essentially to be an occupation contract there must be rent or other consideration payable under it; it is made between a landlord and an individual (or two or more persons at least one of whom is an individual); and it confers on the individual(s) the right to occupy a dwelling as a home.

There does not appear to be any exception for service occupancy arrangements (but see below in respect of the notice period required).   Therefore, subject to any subsequent clarification, they will become standard contracts.

Landlords are required to issue a contract holder with a statement of terms within 14 days of the contract holder entering or becoming entitled to occupy (or within six months of 1 December 2022 if the tenant or licensee is already in occupation).  Failure to serve a written statement could have consequences for the landlord because the Act provides a remedy to a contract holder if they have not received such a written statement. 

A landlord can still issue a ‘no-fault’ notice under section 173 of the Act as a means of obtaining possession.  Section 174 of the Act extends the minimum notice period that landlords can give to contract holders on a periodic contract from 2 to 6 months for a ‘no fault’ eviction.  The notice period required to be given is:  

• If an occupation contract begins on or after 1 December 2022 then the landlord must give a minimum of 6 months’ notice. 
• A landlord will not generally 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 6 months[3].  Therefore, unless a periodic contract holder breaches the contract, they will have the right to stay in the property for a minimum of one year.
• For a tenancy agreement starting before 1 December 2022 and which has become a periodic tenancy, it will convert to a periodic standard contract on that date, and presently a minimum of 2 months’ no-fault notice will apply for a period of 6 months after 1 December 2022.  However, following a consultation[4] the Welsh Government has stated their intention to apply a 6 month notice no-fault notice period to existing tenancies to take effect from 1 June 2023.
• If the tenancy agreement was entered into prior to 1 December 2022 and is within the fixed term, it will convert to a fixed term standard contract on that date and after this date, a 6 month notice period will apply to the service of a no-fault (section 173) notice.
• Note that the notice period is shortened to a minimum of 2 months' notice in certain situations[5] including accommodation for asylum seekers or service occupancies (where the contract-holder is required to occupy the property under their employment contract).

There are additional obligations to comply with, pursuant to the Renting Homes (Fitness for Human Habitation) (Wales) Regulations 2022 which require the installation of smoke and carbon monoxide alarms and the provision of a valid electrical condition report to the contract holder[6]. 

The Act also extends contract holders' rights e.g. new joint contract-holders can be added without having to end the current contract and start another one and it also enhances succession rights and requires landlords to provide their address for service to the contract-holder.

FURTHER INFORMATION

If you have any questions about any of the real estate issues covered in this blog, please contact Peter Paul, Claire Lamkin or any member of the real estate team

ABOUT THE AUTHORs

Peter Paul is a Senior Paralegal in the Real Estate and Construction team (Litigation). Peter joined Kingsley Napley in January 2021 from a national law firm. Peter assists a wide range of clients including landlords, managing agents, retailers and private individuals across all aspects of property disputes.

Claire Lamkin is a Property Litigation partner within the Real Estate and Construction team providing advice, representation and support across the full spectrum of property matters including commercial and residential disputes. She acts for both landlords and tenants, landowners and developers as well as HNW individuals and is able to advise in insolvency situations where there are properties involved.