Notice period for converted contracts increase to six months following Welsh Government consultation
Weeks before Renting Homes Wales comes into force, the Welsh Government has announced that notice periods for converted contracts will change from two to six months.
From 1 December, private rented homes in Wales will no longer be let out on a ‘tenancy’. Instead, the agreement will be a fixed term or periodic ‘occupation contract’ with new rules and requirements set out by the Renting Homes Wales Act.
Tenancies that existed before 1 December are not exempt from this, and they convert into occupation contracts on the same day. However, to manage the transition and minimise changes from the original agreed terms, converted contracts have a number of special rules compared to new contracts.
One of these special rules covers the replacement for a Section 21 notice (Section 173). Normally a Section 173 notice requires six months' notice and cannot be served inside a fixed term contract. For converted contracts this is different, reflecting the rules in place when the contract was signed.
As a result, landlords with converted contracts can serve a two month notice under Section 173 inside the converted fixed term (Form RHW38) or during the converted periodic contract (Form RHW17).
Following the announcement, landlords will only be able to use the shorter notice period for periodic contracts until May 30 2023. For converted fixed term contracts, landlords only have access to the two months' notice until that fixed term ends. For any replacement contract they must follow the normal rules.
Consultation
The Welsh Government consulted on this change last month and received over 1200 landlord responses opposed to the substance and the timing of this change. The NRLA also responded to this consultation, arguing that ‘at this late stage, it would be inappropriate to introduce further changes to the Renting Homes Wales legislation. The legislative framework is weeks away from introduction and both landlords and tenants would benefit from an extended period where the initial legislation can be assessed before further rounds of changes are introduced.’
We went on to argue that the short window in which two-month notices could be used would be likely to incentivise serving notices over trying to resolve issues with tenants. We also argued that this would likely increase demands on the courts at a time where they are grappling with new legislation.
Despite the strong opposition from landlords and other letting professionals, the Welsh Government have decided that they will push forward with amendments to the Renting Homes Wales Act (2016) to the Senedd, to make the changes to the notice period.
What next?
The legislation still needs to be published meaning that not all of the details are available as yet. The NRLA will publish further guidance once the Welsh Government has laid the amendments to the Senedd. We expect this date to be the 29th November.
The late notice of this change means many landlords will have already prepared their converted contracts ahead of time. These contracts will now need to be amended to reflect the changing notice periods.
Converting contracts is a difficult task, especially when it requires the landlord to write a legally binding possession clause. Especially where the clause has to take into account different rules on different dates.
- To reduce the risk to landlords, we have written to the Welsh Government asking them to publish a suitable clause that landlords can insert into their converted contracts. Allowing them to confidently seek possession where they need to.
Ben Beadle, Chief Executive of the NRLA has said, “The Welsh Government changing the goalposts weeks before implementation really does not give landlords much confidence.
It is frustrating that despite 1,200 landlords writing in expressing their concerns, Welsh Government are pressing ahead regardless.
We will do all that we can for landlords in the build-up to the implementation of renting homes and will continue to offer our support to landlords post the 1 December.”
