Private renter security - Wales

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Security of tenure in Wales

On 1 December 2022 (the ‘appointed day’), a new system of security of tenure came into force in Wales for people who rent their homes under tenancy or licence agreements from private or social landlords. Since then, all new agreements covered by the Renting Homes (Wales) Act 2016 (the Act) have been either:

• secure contracts; or
• standard contracts.

Under this system, a tenant or licensee is known as a ‘contract holder’, and the letting agreement is known as an ‘occupation contract’.

A letting is covered by the Act if:

• it is between a landlord and an individual, rather than a company;
• it gives the individual the right to occupy the dwelling as their home;
• rent is paid for that right; and
• the tenancy or licence is not excluded from being an occupation contract.

Private and social landlords may offer either type of contract. However, unless the landlord states otherwise before the agreement is made:

• a letting by a social landlord’s will be a secure contract; and
• a letting by a private landlord’s will be standard contract.

A standard contract may be periodic or fixed-term, while a secure contract is always periodic.

A fixed-term contract ends when its term expires. If the contract holder remains in the property without agreeing a new contract, a standard periodic contract arises automatically. It retains the same rental periods and terms as the fixed-term contract, except for any fundamental and supplementary terms that apply specifically to periodic contracts.

Agreements made before 1 December 2022

Nearly all existing residential tenancies and licences were converted to occupation contracts on the appointed day. The type of occupation contract they converted to depended on the type of tenancy or licence they were before the appointed day. For example, a periodic assured shorthold tenancy from a private landlord was converted to a periodic standard occupation contract.

The contract holder’s agreement

The contract holder is entitled to a written statement that sets out all the terms of the contract which comprises:

• key matters: these are the address of the dwelling, the occupation date, the amount of rent and the rental period (e.g. weekly, monthly)
• fundamental terms: these are terms that are implied by law which the landlord cannot write out of the agreement unless the parties agree to a term that gives the contract holder an improved right. These include the landlord’s obligation in a short lease to keep in good repair the structure and exterior of the dwelling and to ensure it is fit for habitation throughout the life of the contract. The contract holder’s right to occupy without interference from the landlord (‘quiet enjoyment’) is also a fundamental term.
• supplementary terms: these are other terms that are implied by law but which the landlord and contract holder can agree to leave out or modify to the benefit of one of the parties. These include the right of the contract holder to permit others to live in the dwelling and that the contract holder must not carry on a trade or business without the landlord’s consent.
• additional terms – these are terms agreed between the contract holder and the landlord, which can cover any other matter, provided they do not conflict with a key matter, a fundamental term, or a supplementary term.

To make process of renting homes easier and cheaper the Welsh Government has published a set of approved model written statements (pro-forma tenancy agreements).

Notice periods for termination

The notice period and requirements differ for notice served by the tenant and notice served by the landlord. The processes and procedures also vary between periodic and fixed term contracts and between secure and standard contracts. Only the procedures for terminating standard contracts used by private landlords are covered here. The are other procedures that can be used to end a standard contract, but these don’t apply to private landlords, and it is assumed that most private landlords won’t opt-in to letting secure contracts.

Notice served by the contract holder: periodic standard contracts

The contract holder has the right to serve notice on the landlord to end the contract. This is a fundamental term of the contract. The notice must be at least four weeks from the date it is served and does not need to coincide with start/end of a rental period. The contract holder can withdraw their notice at any time before it expires by serving a further notice, provided that the landlord does not object within a reasonable period.

Once the contract holder’s notice has expired the landlord can rely on this ground to recover possession subject only to any available defence based on the contract holder’s (ECHR) Convention rights. Otherwise, if the ground is made out the court must grant possession and has only limited powers to postpone it.

The landlord has two months to serve notice starting from the date the contract holder was meant to move out and has six months from that day to make the possession claim – although this can be done the same day the landlord’s notice is served.

A joint contract holder has the right to withdraw from a periodic contract or a through a break clause in a fixed term contract. The joint contract holder’s notice does not terminate the contract with the remaining contract holders.

Termination without a court order: tenant abandonment

A landlord who believes that a contract holder no longer occupies the dwelling as their only or principal home may use the abandonment procedure to end a periodic or fixed-term contract without a court order. To recover possession, the landlord must give the contract holder notice:

• stating that the landlord believes the dwelling has been abandoned;
• requiring the contract holder to confirm in writing, before the warning period ends, that they have not abandoned the dwelling; and
• stating that the landlord intends to end the contract when the warning period expires.

The warning period lasts four weeks from the day the notice is given. During that period, the landlord must make inquiries to establish whether the dwelling has been abandoned. If satisfied that it has, the landlord may end the contract when the warning period expires by giving the contract holder a further notice. The landlord may then use reasonable force to re-enter and secure the dwelling.

If the dwelling was not abandoned, the contract holder may apply to the court for reinstatement within six months of receiving the final notice that ended the contract.

Landlord notice (‘no fault’) ground: periodic standard contracts

A periodic standard contract can be ended by the landlord’s notice (‘no fault’ eviction) this a fundamental term of the contract. If the landlord can show the ground is made out the court must grant possession unless one of the exceptions applies. If none of the exceptions apply the court has only very limited power to postpone possession.

The notice period is six months, and the landlord cannot give notice during the first six months of the contract. Once the initial waiting period has expired it does not apply to any replacement contract agreed with the same contract holder. The six-month notice period is reduced to two months for certain types of specialist accommodation, but these do not normally apply to private landlords.

Exceptions to the no fault notice ground

The only exceptions to the landlord’s absolute right to possession under the notice only grounds are:

• the landlord has breached one of their statutory obligations
• the landlord served notice in retaliation to the contract holder’s request that landlord carries out their obligations to repair
• the contract holder has an available defence based on their Convention (ECHR) rights.

If the court considers it is a retaliatory claim it can use its discretion to grant or refuse possession.

The statutory obligations that prevent the landlord from using the notice only ground are:

• the landlord has not provided the contract holder with the written statement of the contract terms or less than six months have passed since it was provided
• the landlord has not provided the address which the contract holder can use to serve notice
• where contract holder has paid a deposit, the landlord has failed to protect the deposit in the way the law requires
• the landlord has asked for prohibited payment (unlawful letting agent fees etc.) which has not been repaid
• the landlord has failed to ensure that a working smoke and carbon monoxide alarm has been installed
• the landlord has failed to provide the tenant with an electrical condition report or gas safety report as required
• the landlord has failed to provide the tenant with a valid energy performance certificate.

In any other case where the contract holder has a periodic standard contract the landlord can only get possession using one of the statutory grounds.

Termination of fixed-term standard contracts

The landlord cannot normally get possession during the fixed term unless:

• the contract has a term enabling the contract holder to give notice (a contract holder’s break clause)
• the contract is for at least two years and has a term enabling the landlord to give notice (a landlord’s break clause)
• the contract holder has breached the contract (including having been engaged in anti-social behaviour)
• one of the estate management grounds applies, or
• there are serious rent arrears.

A contract holders break clause works like a contract holders notice in a standard periodic contract (must be at least four weeks). If the contract holder fails to give up possession on the date in their notice the landlord can get possession by serving notice. The procedure mirrors that for a contract holders notice in a periodic contract with the exception that the contract holder’s notice can’t be withdrawn. A joint contract holder has the right to withdraw from a periodic through a break clause. The joint contract holder’s notice does not terminate the contract with the remaining contract holders.

A landlord’s break clause also works like the notice only procedure in a standard periodic contract (e.g. must be at least six months) except that it cannot be used during the first 18 months of occupation. The same defences available to tenant under a periodic contract (retaliatory eviction etc.) apply.

If the contract holder remains in occupation at the end of the fixed term (and no new fixed term has been agreed) a periodic standard contract automatically arises. The new contract has the same terms and rental period as the previous fixed term contract and with all the fundamental and supplementary terms that apply to a standard periodic contract (e.g., fit for habitation etc). The landlord can use the same procedures to get possession (notice only, breach of contract etc.) that apply to an ordinary periodic contract. Any notice the landlord served during the fixed term remains valid provided the time limit for use has not expired.

Early termination of contracts (grounds for possession)

The landlord can apply to the court for possession at any time – including during the first six months of a standard periodic contract or during the fixed term of a fixed standard contract if:

• If the contract holder has breached the contract (including having been engaged in anti-social behaviour)
• one of the estate management grounds applies, or
• there are serious rent arrears.

These are all fundamental terms of the contract and cannot be omitted or modified except by a term that improves the contract holder’s position. In each case, the landlord must serve notice on the contract holder before applying to the court for possession. The landlord cannot make the application until the notice period has expired. The relevant notice period is:

• for anti-social behaviour or prohibited conduct, the same day the notice served
• for one of the estate management grounds, one month
• for serious rent arrears, 14 days
• for any other breach of contract, one month.

Once notice is served it remains valid for six months from the date that it was served.

Anti-social behaviour/ prohibited conduct

The contract holder must not use or threaten to use the dwelling for criminal purposes nor engage in or threaten to engage in conduct capable of causing nuisance or annoyance to:

• anyone with a right to occupy the dwelling subject to the contract or in the locality of the dwelling
• engaged in lawful activity withing the dwelling subject to the contract or in the locality of the dwelling
• the landlord or their agent.

If the contract holder has been engaged in anti-social behaviour /prohibited conduct this is a breach of the contract. A joint contract holder can be removed from the contract if they if they have been engaged in anti-social behaviour, without it affecting the remaining contract holder(s) rights.

A breach of contract is a discretionary ground for possession, and the court can make an order for possession unless it is reasonable to do so and has wide powers to adjourn proceedings or postpone possession as it sees fit. When deciding whether it is reasonable to grant possession the court must have regard to certain factors regarding the contract holder and certain other matters this known as ‘structured discretion’.

Serious rent arrears

Serious rent arrears mean the equivalent of two months’ rent, both on the day the day the notice is served and the day of the hearing. If the ground is made out the court must grant possession subject only to a defence based on the contract holder’s Convention (ECHR) rights. The court only has very limited powers to postpone the possession.

Estate management grounds

The estate management grounds are discretionary. The court cannot make an order for possession unless:

• it is reasonable to do so, and
• it is satisfied that suitable alternative accommodation is available to the contract holder (or will be when the order takes effect).

In considering whether it is reasonable to give possession and what alternative is ‘suitable’ the court must take account of certain factors (‘structured discretion’). Except where one of the two redevelopment grounds (ground A or B) applies, if the court makes an order for possession the landlord must pay the contract holder’s reasonable moving expenses.

The estate management grounds are:

• the landlord intends to demolish, reconstruct or carry out work on the building and cannot reasonably do so without getting possession (ground A)
• the landlord intends to sell the dwelling because it is in an area which is the subject of an approved redevelopment scheme (ground B)
• the contract holder has succeeded to a fixed term contract other than basis of being the deceased sole contract holder’s partner (a ‘reserve successor’) and the accommodation is larger than the new contract holder reasonably requires
• one of the joint contract holders has given notice that they are withdrawing from the contract and the accommodation is larger than the remaining contract holder(s) reasonably require
• one of the joint contract holders has been removed from the contract on account of their anti-social behaviour and the accommodation is larger than the remaining contract holder(s) reasonably require
• the contract holder or joint contract holder has ceased to occupy the dwelling as their only or principal home (as required by the contract) and the accommodation is larger than the remaining contract holder(s) reasonably require, or
• it is desirable for some other substantial estate management reason.

There are other estate management grounds, but these do not apply to standard contracts (e.g. to community landlords only) or only would in rare cases (e.g. purpose-built accommodation for the disabled).

Lettings outside the occupation contract framework

Some tenancies and licences are not occupation contracts and therefore fall outside the Act. However, other legislation may still give the occupier security of tenure or require the landlord to obtain a court order after the agreement ends.

The following lettings become occupation contracts only if the landlord gives notice, before or when the tenancy or licence is created, that they will be treated as such:

• the tenant or licensee shares accommodation with the landlord, who occupied all or part of it as their only or principal home before the letting began;
• a tenancy or licence granted temporarily to a trespasser;
• a holiday let; or
• a letting by a care home or independent hospital.

The following lettings can never be occupation contracts:

• asylum accommodation provided by the Home Office;
• a tenancy of business premises;
• certain agricultural tenancies;
• a Rent Act regulated tenancy, usually where the original agreement with one or more tenants began before 15 January 1989;
• a tenancy with a fixed term of more than 21 years;
• armed forces accommodation;
• a bail hostel;
• a direct-access hostel provided by a charity or community landlord; or
• a licence relating to temporary homelessness accommodation.

Agricultural and Rent Act regulated tenancies are each governed by a separate security-of-tenure framework.