A single social tenancy: significant changes to housing law in Wales
By Sarah Salmon
Background to Renting Homes
It is almost 20 years ago when, in November 2003, the Law Commission released Renting Homes (Law Com No 284) suggesting a new legal framework to regulate the relationship between landlords and the occupiers of residential accommodation.
On 7 May 2006, the Law Commission published Renting Homes Final Report (Law Com No 297). The recommendations – to create one social tenure and consumer protection – were captured in the Rented Homes Bill which was published alongside the Report.
The recommendations by the Law Commission were rejected in England but in 2012 – following housing becoming a devolved area in 2011 – the Welsh Government announced it would be implementing Renting Homes. Following the announcement, on 9 April 2013, the Law Commission published the report Renting Homes in Wales (Law Com No 337) and, on 18 January 2016, the Renting Homes (Wales) Act 2016 (“the Act”) was granted Royal Assent.
On 12 January 2022, Julie James, Minister for Climate Change, announced Renting Homes will be implemented on 15 July 2022.
What it means for social housing in Wales
The Act is far too comprehensive to set out in full but, essentially, the changes will put tenants of housing associations and local authorities on exactly the same footing by creating one form of social tenancy. The Act, which has retrospective effect, will apply to all existing tenants in Wales once implemented.
There are two types of landlords under the Act: community landlords (predominantly local authorities and registered social landlords); and private landlords (those that are not community landlords): ss.2, 9 and 10. Tenants and licensees will be “contract-holders” with an “occupation contract”.
Section 7 sets out when a tenancy or licence will be an occupation contract. It will be an occupation contract where rent or other consideration is payable under it and 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 (or, if there is more than one individual, on one or more of them) the right to occupy a dwelling as a home: s.7(1)-(3).
There are exceptions to the above set out in Schedule 2 of the Act, which provides:
(a) that certain tenancies and licences that do not meet the criteria in subsections 7(2) or (3) can be occupation contracts if notice is given;
(b) that certain tenancies and licences that meet subsections (2) or (3) are not occupation contracts unless notice is given;
(c) that certain tenancies and licences are never occupation contracts; and,
(d) that certain tenancies and licences can be occupation contracts, but special rules apply.
An individual cannot be a contract-holder under an occupation contract if they have not reached the age of 18: s.7(6). There are provisions within the Act as to what happens when the minor turns 18.
There will be two types of occupation contracts: s.1. Community landlords will, in the main, use a periodic secure contract. Unless they opt to grant a secure contract pursuant to section 17, private landlords will use a standard contract (fixed or periodic) although there are certain circumstances, for example for supported accommodation, where these can also be used by community landlords.
The Act also dictates the type and nature of the terms that can be included with the contracts.
Key terms must be included: the property, the date the contract holder can move in, the rent (or other consideration) and the rental period: s.26. There are further key terms for standard contracts set out in section 27. These are: (a) whether the contract is periodic or made for a fixed term, (b) if it is made for a fixed term, the term, and (c) if there are periods during which the contract-holder is not entitled to occupy the dwelling as a home, those periods.
After that, there will be fundamental, supplemental and additional terms: ss.18-25, 28. It is the fundamental terms that are incorporated into every occupation contract and they deal with matters such as succession, anti-social behaviour, ending the contract, possession and repairs. Some fundamental provisions cannot be modified and those which can be modified or removed: (a) need the landlord and contract holder to agree; and, (b) can only be modified in favour of the contract holder.
Supplementary terms are provisions – set out in regulations made by the Welsh Ministers – automatically included as terms of an occupation contract: see e.g. Renting Homes (Supplementary Provisions) (Wales) Regulations 2022/23 and Renting Homes (Supported Standard Contracts) (Supplementary Provisions) (Wales) Regulations 2022/24.
Where a landlord and contract holder agree supplementary terms can be left out or be modified. Supplemental terms can be modified for the benefit of either party to the contract but cannot be omitted or modified in a way that would make those terms incompatible with a fundamental term.
Additional terms are any other terms on agreed matters. The Welsh Government suggest, by way of example, that it might include a term relating to the keeping of pets.
Other changes of particular note include:
(a) an increase in the “no fault” notice period from two to six months;
(b) greater protection from eviction for contract holders;
(c) succession rights have been strengthened under the Act: ss.73-83;
(d) landlords will need to ensure that homes are fit for human habitation: ss. 91-94 and the Renting Homes (Fitness for Human Habitation) (Wales) Regulations 2022/6 (fitness and repair).
There is also a potential impact on how properties are occupied and how landlords tackle social housing fraud. Under the Renting Homes (Supplementary Provisions) (Wales) Regulations 2022, there is a supplementary term applying to secure, introductory and prohibited conduct standard contracts which provides that a contract holder (or if there is more than one, one of them) must occupy the dwelling as his or her only or principal home during the term of the contract: reg. 20. Failure to do so, however, does not lead directly to a loss of security of tenure (obviously the supplementary term (or similar) has to be used for it even to amount to a breach of contract). Furthermore, subletting is not automatically prohibited and, even if a property is sublet, security will not be lost. Subletting will need to be prohibited by the contract.
Social landlords also need to pay attention to the provisions dealing with assignment and transfers: ss.57, 69, 71, 84, 114 and 118.
What happens on transition day?
What will happen on transition day is dealt with by section 240 and schedule 12 of the Act.
Existing tenancy agreements will “convert” to the relevant occupation contract on the day of implementation, and landlords have a maximum of six months to issue a written statement of the converted occupation contract to their contract-holders. Written statements must comply with the Act. Sections 31 to 38 deal with written statements and the consequences of incomplete and incorrect statements as well as a failure to provide one.
For any new contract holders after the implementation date, the written statement must be issued within 14 days of occupation under the contract.
Existing licences or tenancies which fall within one of the exclusions will not be affected but all other occupants, whether they hold tenancies or licences, will become a “contract holder” and will receive a new contract which will be a combination of:
(a) existing terms (but not any existing term which conflicts with a fundamental term or which is only there because of existing legislation which is repealed); and,
(b) all of the fundamental terms; and,
(c) any supplementary term which does not conflict with the existing terms.
RSLs need to be aware that if assured shorthold tenancies (including starter tenancies) are used, then notice under section 13 should be served within two months. The notice must:
(a) specify the paragraph of Schedule 3 (Occupation contracts made with or adopted by community landlords which may be standard contracts), and the description of occupation contract set out in that paragraph, on which the landlord relies, and
(b) state that the contract is a standard contract.
The notice must also inform the contract-holder of the right to apply for a review under and of the time by which the application must be made: see s.14.
Be prepared
These are significant changes for Wales with a tight timescale. Landlords will need to be prepared for the changes in good time and be clear as to what is required and when. Some of the Act throws up a number of questions for which advice may be required. Practically, landlords need to identify how many different types of tenancy their current tenants hold, contracts need drafting in readiness for transition, policies need drafting/amending, systems may need updating and other documents, for example, notices need to be thought about.