The renting regime in Wales is set to undergo radical change. David Smith looks at the key points.
The Renting Homes (Wales) Act 2016 has been a long time in its gestation. There has been a considerable challenge for the Welsh government in putting together all the subsidiary material that is required to make the Act work in practice. There has also been a delay caused by negotiations with the Ministry of Justice to make sure that the court processes are in place to make things work.
When I originally wrote this post it seemed as though the Welsh Minister for Housing and Local Government was saying that she was giving six-months notice of the implementation of the Act. That meant we should be expecting Renting Homes to come into force in January 2020. However she was not in fact saying this at all! She was in fact reaffirming the Welsh government’s commitment to give six months' notice of their intention to bring the legislation into force.
However, the Welsh Minister was also stating how the Welsh Government now plans to deal with the equivalent of section 21 in Renting Homes. These are the provisions in sections 173 and 186 of the Act. These act like s21 in that they allow a landlord to give 2 months' notice at the end of a fixed term or in a periodic tenancy provided that the tenant has been in occupation for at least 4 months by the time the notice is given. It seems from this that they do not now propose to do anything about s21 of the Housing Act 1988 and so things will carry on in Wales as they are until Renting Homes comes into force.
In relation to the landlord notice provisions in Renting Homes, the Welsh Government now proposes that the notice period will need to be at least 6 months, rather than 2. Some commentators have incorrectly stated that this means that a tenant will have to be in a property for a year but that is not correct. In fact, as the notice can be give after 4 months the tenant will actually get at least 10 months of occupation and not 12. The Welsh Government could make this 12 months if they were to change the period of time a tenant has been in occupation before notice can be served from 4 to 6 months but they have not clearly stated that they will do so.
For some landlords this change will be welcome as it is far less severe than the original proposal, which was to get rid of this landlord notice altogether and only allow eviction for cause. However, the original Renting Homes proposals that were produced by the Law Commission proposed a landlord notice which could be given at any stage. The Law Commission felt this would encourage landlords to accept riskier tenants who would effectively be given short “starter” tenancies. However, at a late stage in the committee process the Welsh Government amended the legislation to restore the position to being the same as s21 and give tenants at least 6 months in their properties. This decision was made on the back of little evidence and the current decision appears to be much the same. The proposal to do away with the landlord notice was being made without any real evidence that it was needed in Wales and it is hard to avoid the conclusion that this new plan, which is also lacking in any evidence that it is either necessary or will provide a benefit, is a half way house between leaving things as they were and getting rid of the landlord notice altogether.
Renting Homes brings a radical change to the renting regime in Wales and will leave it entirely unlike England. Renting Homes gets rid of Assured and Assured Shorthold tenancies under the Housing Act 1988, secure tenancies under the Housing Act 1985 and residential licences, replacing them with standard and secure contracts. This change is intended to happen for all such tenancies, new and existing, on the date it comes into force. Tenants will have to be given a written tenancy agreement which will contain a great deal of standard wording and the changes permitted to that will be very limited. The possession regime is also entirely different and tenants have a great deal more rights in terms of changing tenancy and giving up possession early. Finally, the repairing requirements on landlords are far greater and tenants will be entitled to make claims where the property has any HHSRS category 1 hazard, which is a considerably greater level of obligation than is available in England, even after the passing of the Homes (Fitness for Human Habitation) Act.
While the six month countdown has yet to start and new legislation will now be needed to make changes to a Renting Homes there is still a lot for the Welsh government to do, especially if they plan to get this into force in the life of the current assembly, that is before the next election in May 2021. As well as passing the relevant legislation to make changes to Renting Homes, they will need to produce the standard tenancy agreement wording they require, produce all the other guidance documents for local authorities, landlord and tenants that has been promised and provide opportunities for all involved to learn about the new legislation. That’s a lot to do in less than two years!
The wider market changes will also be interesting. Agents and landlords in Wales have faced substantial changes with the new landlord and agent licensing and registration scheme being operated in Wales and will face another big change with the introduction of Renting Homes. How they cope with this will be of great importance for the availability of property in the Private Rented Sector.