The Renting Homes (Wales) Act 2016 aims to streamline the law governing the rental of residential properties in Wales. But how will it change the housing environment? In this blog, the first in a series on the topic, Holly Mehigan looks at new terminology introduced.
First introduced in parliament on 9th February 2015, the Act is finally set to become law on 15th July 2022.
The new legal framework will replace the current secure, assured, assured shorthold and assured agricultural occupancy tenancy regimes under the Housing Act 1985 and Housing Act 1988, and seeks to create a clearer, more prescribed system for landlords and tenants
It will introduce the following key terminology, which will change the way we refer to tenants and tenancy agreements.
Contract holders: the new all-encompassing terminology which will refer to all tenants/licensees.
Occupation contracts: the term used for the written agreement a landlord will provide contract holders in relation to their occupation of the property. Each occupation contract must include three elements, namely the key matters, fundamental terms, and the supplementary terms. An occupation contract can also include additional terms agreed between the landlord and contract holder.
Community Landlords: Local Housing Authorities and Registered Social Landlords who provide secure contracts.
Private Landlords: Landlords who are not considered to fall under the category of a community landlords. For example, private housing landlords who historically provided Assured Shorthold Tenancies.
Secure contracts: The occupation contract offered by community landlords. Secured contracts will be replacing the existing secured and assured tenancies currently used by Local Housing Authorities and Registered Social Landlords.
Standard contracts: The occupation contract offered by private landlords, and which will be for either a periodic or a fixed term. Standard contracts will replace the previous contracts used for Assured Shorthold Tenancies, Demoted Tenancies, Introductory Tenancies and any other private tenancy or licence.
Key matters: The first, and mandatory element of an occupation contract, which sets out the details of the property, the start date of the contract, how much rent (or any other consideration) is to be paid by and the how long the rental period is for.
Fundamental terms: The second element covered within the new occupation contracts which sets out the obligations of both the landlord and the contract holder, as well as how a landlord can regain possession of the property. Whilst these terms can be removed or modified, this is only possible if such changes benefit the contract holder.
Supplementary terms: The third element covered within the new occupation contracts which outlines regulations created by the Welsh Ministers to be included within the occupation contract. Whilst these terms can be removed or amended, the fundamental terms of the occupation contract must not be compromised.
Additional terms: The fourth element covered within the occupation contracts which can include further terms negotiated between the parties which have not been addressed by either the key matters, fundamental or supplementary terms detailed above.
Written statements: To ensure that all contract holders understand the terms of their occupation contract a written statement of the contract needs to be provided by the landlord to the contract holder within 14 days of the contract holder taking up occupation of the property. Failure to do so could result in the loss of two months’ rent for the landlord.
Existing tenancies will “convert” automatically to the relevant occupation contract when the Act comes into force. Landlords will then have up to 6 months to provide a written statement to the contract holder of the converted occupation contract. The Renting Homes (Model Written Statements of Contract) (Wales) Regulations 2022 provide model written statements that can be used as a basis for new and converted contracts.
The new regime will bring in other changes that will affect both landlords and contract holders, one of which being how a landlord proceeds to recover possession of a rented property. In this series of articles, we will look at the changes from the perspective of the community and private landlord, as well as the contract holder. Next time, we will look at how an occupation contract can be brought to an end.
If you have any queries or would like to discuss the impact of these changes on your organisation, please contact our specialist property disputes team.