Blog: The latest on the Renting Homes (Wales) Act
Landlords in Wales have had quite a lot to contend with of late with the implementation of the Renting Homes Wales Act 2016.
Whilst we don’t expect any further legislative amendments in this area, landlords may have seen the consultation on fair rents has been launched in Wales.
In this article we will look at some of the other latest goings on in Wales and our advice for landlords.
Rising possession claims in Wales
It appears that Renting Homes (Wales) and the recent interest rate rises have led a number of landlords to consider their investments in the PRS.
The recent landlord and mortgage possession quarterly statistics released by the government showed a large increase in possession claims across Wales in the first quarter of 2023.
For the accelerated possession process:
• Possession claims increased 236%
• Possession orders increased by 249%
• Warrants increases by 275%
In contrast, in England possession claims, orders and warrants increased by 16%, 46% and 95% respectively over the same time period.
The statistics are not available for April to June 2023 yet but it is highly likely that this period will continue to be higher than normal given landlords had until May 31st to issue their converted written statements and/or serve the two month ‘no cause’ notice for their periodic converted contracts.
While possession claims in Wales remain relatively low (around 1 accelerated possession claim for every 100 PRS properties in Wales), these increases are likely to lead to longer waits for bailiffs and court hearing dates over the next few months.
Why is this happening?
The author of the government’s own statistics directly references the introduction of the Renting Homes (Wales) Act - alongside rising interest rates and mortgage cost increases – as being “very likely” to have led to some landlords selling up and exiting the market.
It is highly likely that the difficulties with converting existing contracts, the extra administrative burdens of the Renting Homes (Wales) Act, the lack of available alternative properties, and the short deadline for using existing Section 21 notices/shorter Section 173 notices, has led to a spike in claims.
What should I be doing?
The last six months have been extremely difficult for landlords and it is no surprise that some are choosing to exit. However, demand remains far higher than supply and we should now be entering a period of calm in Wales.
With that in mind, it may be sensible to simply allow your converted contracts to end naturally wherever possible and give yourself time to consider your options.
If you are happy to continue on, you might look to enter into a new contract with them. This could give both parties greater clarity by using a proper template, such as the NRLA template, so you both fully understand your position on certain obligations. This would also ensure that your current contract is not incomplete or incorrect should you need to rely on it later in court.
Of course, possession will sometimes be required. Landlords should be aware that there are still a number of grey areas relating to converted contracts and there is a risk that your converted contract may be incomplete or incorrect. Given that, if you do need to seek possession, we would strongly advise you employ a solicitor to handle the possession claim from start to finish.
Long term leasing scheme
For landlords who are looking to take a step back and have someone else manage their properties, the Welsh Government are also offering a leasing scheme, where you can lease your property directly to a local authority in return for incentives.
This includes a guaranteed rent at the Local Housing Allowance (LHA) rate, and up to £5000 as a grant to improve properties to an agreed standard between the landlord and the local authority, or to increase the EPC to C, ahead of any potential future regulations bringing the minimum up to a C. Where properties are empty, this funding could be up to a maximum of £25,000.
This might not be appealing to many landlords given the current cost pressures they face, and the fact that LHA still remains frozen below the market rents in most areas. It is also only available for leases between 5-20 years, which is a long time to be locked into an agreement when landlords are often more used to a typical 1 year fixed term.
