Latest key judgment on Renting Homes (Wales) Act 2016 limits Welsh landlords’ exposure for rent repayments after regulatory breaches
Public Law and Judicial Review, Housing
Beacon Cymru judgment clarifies that rent paid during periods of unfitness need not be returned.
At 10.30 on 2 October 2025, the Divisional High Court of Wales (Mr Justice Griffiths and His Honour Judge Jarman KC) handed down judgment in Beacon Cymru Limited & Ors v Mitchell & Ors [2025] EWHC 2477 (Ch). The judgment can be found here.
Where were we? Coastal Housing Group & Ors v Mitchell & Ors [2024] EWHC 2831 (Ch)
This latest decision follows the earlier (November 2024) judgment in Coastal Housing Group & Ors where the Divisional Court held that:
- Welsh landlords are under an obligation to provide copies of electrical condition reports (“ECRs”) to their contract-holders;
- At any time when a landlord has failed to comply with that obligation, the premises are deemed to be unfit for human habitation even if they remain in a safe condition throughout; and
- At any time when the premises are deemed to be unfit for human habitation, rent is not payable. The (future) rent falling due will become payable again once landlords have belatedly complied with the duty to supply a copy of the ECR.
What’s new? Judgment on the counterclaims
Between 29-31 July 2025, the Court heard a trial of the counterclaims for restitution brought by three contract-holders against their landlords. They sought repayment of rent paid during the period when they had not received copies of their ECRs, on the basis they were unaware their rent was not payable.
The judgment handed down on 2 October 2025 dismissed those counterclaims. No money needed to be paid back to these contract-holders during the relevant period of unfitness.
The court has provided answers on three of six issues that arose:
- Did the contract-holders pay rent because of a mistake of law?
- Were the landlords unjustly enriched as a result of the contract-holders’ mistake?
- Is a claim for unjust enrichment unavailable to the contract-holders in any event, given that there is a subsisting contractual relationship between them and the claimant landlords?
How did the court reach its conclusions on these issues?
Issue (i) was fact-sensitive. On the basis of the evidence, the court held that none of the rent counterclaimed in this case was paid as a result of a mistake.
On issue (ii), restitution was not available in these cases because the enrichment of the landlords by the contract-holders was not unjust. In all three cases, the Court found that the contract-holders suffered no loss as a result of the failure by the landlords to provide the ECRs: the contract-holders received the housing they were expecting, which was safe from an electrical point of view, in return for their payment of rent.
On issue (iii), the court held that given the subsistence of a contractual relationship, it would be wrong for the contract-holders to counterclaim for repayment of rent not pursuant to the contract but by way of a restitutionary claim, because it overrides the allocation of risk as agreed between the parties and as provided by the legislation.
Breach of contract?
The counterclaims raised an issue of breach of contract which was not pursued by the contract-holders at trial on the basis of a concession that even if they could prove breach of contract, only nominal damages could be claimed. Whilst the court did not make any findings on this issue, it went further than simply recording the concession and explicitly said it agreed with that assessment.
What was not dealt with?
The court held that three issues did not fall to be determined:
- Are the claimant landlords entitled to retain the disputed rent on the basis of counter-restitution?
- Was one of the contract-holders entitled to withhold rent in February 2025 by way of set off against his counterclaim?
- If the counterclaims succeed, in whole or in part, are the claimants’ rights under Article 1 Protocol 1 of the European Convention on Human Rights (as enacted in Schedule 1 of the Human Rights Act 1998) engaged and breached?
What does the judgment mean for the Welsh housing sector?
The latest judgment does not undermine the importance of complying with the (sometimes complicated) statutory and regulatory requirements of the Renting Homes (Wales) Act 2016 and its supporting suite of regulations. However, in many cases, the decision is likely to significantly reduce the back-dated financial risk facing landlords following the Coastal Housing Group Ltd judgment, since exposure is generally confined to unpaid rent during non-compliance periods. Auditing and evidencing ongoing compliance with regulatory requirements will remain necessary, as will reviews of arrears policies to ensure rent recovery aligns with fitness status.
Legal representatives on the counterclaims:
Six members of chambers across the housing and property teams were among those instructed in these proceedings:
- Sarah Salmon, Jack Barber and Camille Richards were instructed by Lee Russell of Devonshires for the landlords (led by Justin Bates KC).
- Ranjit Bhose KC, Tara O’Leary and Hannah Taylor were instructed by Liam Hale of Winckworth Sherwood for the contract-holders.
