Important Update: The Welsh Government has announced the introduction of the Renting Homes (Wales) Act is delayed until 1 December 2022.
Fitness of Homes for Human Habitation, an integral part of the new legislation in Wales rental market, was due to come into effect on 22 July 2002 however there is now a 6 month delay after the Welsh Government admitted that there are still significant issues to address before implementation so want to give landlords more time to complete the necessary preparations ahead of implementation.
Although the Renting Homes (Wales) Act was passed in 2016, it will only come into force once the issues around implementation are sorted.
According to the Welsh government minister Julie James, the six-year delay before the original implementation date of 22nd July 2002 was necessary to allow time for the development of a complex collection of statutory instruments.
Statutory instruments (SIs) give powers to ministers and civil servants to take actions in the service of a law without having to return to parliament for approval. However, they still need to be subjected to scrutiny and consultation before being introduced into law.
Now that this lengthy process has been completed, the new provisions, which have been so long anticipated, will assume legal status and bring about the biggest change to housing law in Wales since at least 1988.
What are the most significant effects of the law for tenants, landlords and the wider industry?
In a major overhaul of the diverse range of tenancies and licences, including short-hold assured and secure tenancies, the Renting Homes Act replaces all of these variants with just two types: a secure occupation contract and a standard occupation contract. In keeping with the new terminology, tenants will now be known as contract holders.
The difference between the two types depends on whether the rental property is owned by a private landlord (standard) or by a council or housing association (secure).
At Inventory Base our clients are in the private rental sector, so this is our focus in examining the new Renting Homes law.
A standard occupation contract will be for a fixed term of virtually any length up to seven years, or for a periodic week to week or month to month open-ended term. On expiry, a fixed term contract will automatically become a periodic one if the contract holder is still living in the property.
It will now be a legal requirement for every occupation contract to be in writing, and to incorporate a number of mandatory terms. The landlord must supply a written statement of terms and conditions within 14 days of the start of the contract.
This applies to all new contracts created after 1st Dec, while existing ones will be automatically converted, with landlords being obliged to provide the written statement within 6 months.
The terms required in the statement fall into four categories:
- Key Matters – include the physical and financial details
- Fundamental Terms – cover mutual rights and obligations
- Supplementary Terms – deal with practical issues like access and maintenance
- Additional Terms – these are any matters not provided for elsewhere, such as keeping pets
One of the main benefits for tenants is that a tenancy governed by a joint contract will no longer have to end for all parties if one party leaves. They can be removed from the contract, which will survive that removal, and may even have new parties added to it.
Section 21 and Section 8 notices cease to be available, and new notices will strengthen the position of contract holders by requiring a minimum of six months’ notice, not to be served within the first six months of the contract.
Furthermore, landlords are prohibited from giving this kind of ‘no fault’ notice unless they have complied with obligations such as health and safety provisions, deposit protection, the preparation of a satisfactory report on the safety of all electrical installations and the issuing of energy performance and gas safety certificates.
It will no longer be possible to insert break clauses into any occupation contract that has a fixed term of two years or more and any break clause cannot be exercised within the first 18 months of occupation.
Other tenant benefits include the requirement for properties to pass a test based on the Housing Health and Safety Rating System.
Fitness of Homes for Human Habitation is an integral part of the new legislation that was due to come into effect on 22 July 2002 however there is now a 6 month delay after the Welsh Government admitted that there are still significant issues to address before implementation.
Part 4 of the Renting Homes (Wales) Act 2016 (The Act) also sets out the obligations placed on a landlord renting homes with regard to the condition of a dwelling. These obligations apply to all occupation contracts made for a term of less than seven years.
A landlord under an occupation contract is obliged to ensure a dwelling is both in repair and fit for human habitation (FFHH).
Key points of the Renting Homes act include:
- Whether a property is FFHH – this is determined the 29 matters and circumstances the property is assessed against
- Whether the dwelling is a fit place to live should – this should be clear to both landlord and contract-holder
- If a dispute cannot be resolved – the FFHH will be a matter for the court to determine
Landlords also remain responsible for the maintenance of the property’s structure, interior, sanitation and all utilities and appliances. Relatives and carers will find it easier to exercise succession rights should a tenant die in occupation.
While the position of tenants, or contract holders, is strengthened, not everything in the act represents a burden on landlords.
Councils will be given new powers to repossess abandoned properties without the need for a court order and they are free to introduce contract clauses addressing anti-social behaviour and other forms of prohibited conduct.
Domestic abusers can also be much more easily targeted for eviction and there will be temporary exclusion powers available in some supported contracts.
Impacts and benefits on the private rental sector
Such a far-reaching overhaul of the private rental sector will inevitably cause some difficulties for landlords, such as increased costs, particularly in terms of maintenance and property inspection reports.
However, for the industry as a whole it is an act to be welcomed for the way in which it will raise standards of renting homes and promote a less adversarial atmosphere.
The obligation to prepare an explicit and exhaustive statement of conditions will improve certainty for both parties not just in the event of disputes but in more clearly identifying responsibilities.
A landlord who runs their businesses fairly, professionally and legally has nothing to fear from the new provisions, as they do not impose onerous new demands but simply seek to codify and support the principles of good practice.
It is clear that landlords and tenants will find it in their interest to be even more vigilant regarding the condition of rental properties. Inventory clerks and lettings agents are well placed to contribute, by reviewing their reporting practices in line with enforceable standards.
How Inventory Base can help you to manage the requirements of renting homes in Wales
The use of advanced property management and reporting software is sure to play a significant role in complying with the new legal regime.
Inventory Base will be launching a new Fitness For Human Habitation Template for landlords use as well as professional risk assessors to capture key information across all 29 risk assessment areas.
Throughout October and November 2022, we will be hosting a number of e-learning sessions with Inventory Base Academy that will help you to understand the impacts of the new Renting Homes (Wales) Act and how as an inventory professional, you can add the assessment of properties to your service portfolio.
Register interest by emailing us here and we will keep you up to date with changes and webinar dates.