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Why is the Bill needed?
The proportion of homes in Wales which are privately rented has increased from 9% in 2007 to 15% in 2019, with changing demographics of private renters happening alongside it – more families, more older people. As a result, there’s a need to provide greater security in tenancies.
While the Renting Homes Act 2016 provides some of this security – such as increased protections from certain types of eviction/possession order – parts of it haven’t yet been fully implemented. This allowed the Welsh Government to reconsider the changing nature of private renting and add some amendments to the 2016 Act in time for it to come into force by the end of the Fifth Assembly in 2021.
A public consultation revealed 35% of landlords who responded used a “no-fault eviction” notice within the last two years, said to be mainly to remove an “unsuitable” tenant as quickly as possible.
The Lowdown: 2 Key Proposals in the Bill
1. The minimum notice period for a “no-fault eviction” will increase from two to six months
There have been calls from opposition AMs, particularly Plaid Cymru, to completely ban Section 173 notices in the Renting Homes Act (also known as section 21 notices) – known as “no-fault evictions”, whereby a landlord can evict a tenant without a reason or cause.
As a compromise, the Bill will instead extend the minimum notice period from 2 to 6 months – because there may be some instances where a landlord may want the property for themselves (i.e. to sell it or to live in it themselves).
Also, the Bill will ensure such an eviction notice can’t be issued until at least 6 months into a tenancy (currently 4 months), effectively guaranteeing private renters at least a year’s tenancy as long as they don’t breach the contract (where a 1 month notice period still applies). The Bill will also prevent landlords from issuing additional notices for at least six months after a previous notice has expired.
2. “Break clauses” can’t be used on contracts shorter than two years in length
Landlords and tenants can agree a “break clause” in a tenancy between themselves. While this practice can continue as part of the Bill, they can’t be included in any contract shorter than 24 months and a break clause can’t be activated until at least 18 months into a contract (with a 6-month notice period).
How much will the Renting Homes (Amendment) Bill cost?
The Bill is expected to cost up to £13.2million in total by 2024-25, with the vast majority of that falling on letting agencies and landlords relating to compliance costs.
There may be a saving of up to £670,000 for local authorities on an expectation that tenancies will be easier to understand and tenants may not have to seek advice as often.