Do You Know The Terms of Your Tenancy Agreement?
Author: Harriet Bland
Background of the 2016 Act
Under the Renting Homes (Wales) Act 2016 (the “Act”), in force since 1 December 2022, tenancy and license agreements have been replaced by ‘occupation contracts’, and tenants and licensees have become ‘contract-holders.’ Any new tenancies granted in Wales, with very limited exceptions, are now subject to the new regime. This is also the case for any existing tenancy agreements which have been ‘converted’ to the relevant occupation contract. The Act is designed to give contract-holders more security of occupation and in many circumstances, a periodic tenancy will automatically arise at the end of the fixed term which cannot be terminated by less than six months’ notice. There is an exception for converted contracts where the notice period is reduced to two months provided that notice is served prior to 1 June 2023.
The Act requires landlords to provide a written statement that sets out the terms of the contract. The statement must include all the required contractual terms, including:
- Key matters – including the address of the dwelling, the occupation date, the amount of rent, and the rental period;
- Fundamental terms are divided into F and F+ terms. An F term cannot be omitted from the contract or changed and an F+ term can be omitted or changed, if the parties agree, but only if it improves the position of the contract holder. For a converted contract, if any of the existing terms are incompatible with a fundamental term, then they will be deleted;
- A supplementary provision will automatically be included as part of the contract unless the contract-holder and landlord agree to omit the term or change it to benefit the contract-holder or landlord. These terms cannot be omitted or modified in a way that would make them incompatible with a fundamental term. For converted contracts, if these terms are incompatible with the terms of the existing tenancy, they will be omitted. Once the landlord has subsequently given the contract-holder a written statement, these terms can be left out or changed as above. Any omission or change to a supplementary provision must be set out in the contract; and
- Additional terms are provisions agreed between the landlord and contract-holder, which can cover any other matter, provided they do not conflict with a key matter or a fundamental or supplementary term. Converted contracts can include terms of the contract, which are not incompatible with a fundamental or supplemental term, agreed by contract-holder and landlord prior to its conversion, which continues to have an effect.
For new rentals, the written statement must be issued within 14 days of occupation under the contract and for existing tenants, landlords have a maximum of 6 months from the implementation date to issue the statement. This means landlords only have until 1 June 2023 to provide this statement before sanctions start to apply. Irrespective of the content of the written statement landlords still need to comply with the sections of the Act which regulate or restrict standard occupation contracts which have been in force since its implementation. These include provisions relating to the consequences of failing to comply with certain statutory requirements, the landlord’s consent procedure, and a right of succession.
A contract holder is entitled to compensation equivalent to the amount of rent paid under the occupation contract until the written statement is provided. The sanctions may also apply if the landlord provides an incomplete or incorrect statement. Punitive sanctions can be imposed for deliberate default.
Model written statements have been issued by the Welsh Government; however, these do not include many of the additional terms a landlord would expect to see and landlords must remember, any that are included must not cut across the fundamental terms.
A Landlord is also prevented from serving termination notices under an occupation contract unless the written statement has been given within the prescribed periods.
How we can help
We have advised landlords on transactional and contentious matters under the Act since its inception. For further information or advice, please reach out to our Real Estate Team.