Possession Reform

Summary

Last year, the Welsh Government announced its intention to reform possession law in Wales. It has decided to press forward with its proposals – which it consulted on last summer – in the form of the Renting Homes (Amendment) Bill. The proposals are:

• Extend the minimum notice period required under a Section 173 notice – this will replace Section 21 once the Act is commenced – from two months to six months.
• Restrict the issue of a S173 notice until six months after the date of issue of a contract (as opposed to four months as currently set out in the Act).
• Restrict the issuing of a S173 notice for six months after the expiry of a previous notice.
• Remove a landlord’s ability issue a notice, during a fixed term standard contract, to end the contract at the expiry of the fixed term (under S186).
• Restrict the use and ability to include break clauses in contracts of a certain duration.

The Bill - if passed before the end of the Senedd term in March 2021 will amend the Renting Homes (Wales) Act 2016 before it is commenced. The Welsh Government has said it intends to commence the then-amended 2016 Act in Spring 2022.

At what stage is the Bill at now?

The Bill has been laid by the Minister for Housing and Local Government, Julie James MS and the Senedd's Equality, Local Government, and Communities (ELGC) Comittee recently concluded their scrutiny of the Bill and reported their findings in October, taking on board NRLA proposals. The NRLA presented written and oral evidence as part of this work.

In November, the ELGC Committee concluded stage two proceedings, even amending the Bill with an NRLA proposal. In February 2021, the Bill completed stage three and stage four of its legislative path.

The Bill should receive royal assent before the Welsh Parliament is dissolved ahead of the 2021 election. The then-amended 2016 Act is then expected to be implemented in Spring 2022. Landlords will get a six-months’ “head’s up” of its commencement as 2021 is used to consult on and draft resources such as model contracts and fitness for human habitation standards.

See the latest news here.

Issues Identified by NRLA Wales

NRLA Wales has identified the following issues with the legislation as it stands:

• The Bill’s creation of year-long tenancies creates problems for landlords who need to maintain an annual cycle for their business, mainly those who operate in the student sector, in its current form. To maintain a strict annual churn, the landlord would have to serve a S173 notice on the final day of the sixth month of the tenancy, currently prevented by the Bill. There should be a period in which notice can be served, taking effect at the end of the six month period and still six months long. Thus, the Welsh Government’s objectives are not compromised.
• Some tenants will want short tenancies and the Bill, as it stands, is not clear on how a landlord and tenant can go about arranging for a short tenancy when notice cannot be served until after six months.
• Mistakes and human error do occur, so there should be means by which a landlord can correct their mistake. This has been provided for in the Bill through being able to withdraw a S173 notice within 14 days of it being served. However, given the extension of the notice to six months, the NRLA believe more than 14 days is needed for a proportional duration to such an extension of the notice period. For the same reason, there should be a deadline by which a legal challenge to a notice should be raised. It also provides an opportunity to prevent malicious challenges without basis being made months down the line, slowing down a legitimate possession process. This system is currently undertaken in Scotland through a “sift” to check the compliance of documents.
• Landlords who live in service accommodation by virtue of being in the armed forces are given a three-month notice period when they are asked to vacate the property. Such landlords will not necessarily be well-paid and will often be living with their family. However, with the S173 notice being increased to six months, this creates a situation by which armed service personnel could be left homeless, dependent on housing services, or taking on an emergency tenancy because they cannot reclaim their property in a timely manner

The NRLA (then as the RLA) put our concerns to the Senedd’s ELGC Committee in March 2020 in the form of written and oral evidence. The team has also had conversations with Welsh Government officials to put its views forward.

Potential Solutions

The NRLA has put forward solutions that ensure an equitable balance is reached so that landlords can still have the necessary safeguards and flexibility necessary for them to conduct their business, all without compromising on the Welsh Government’s objective of providing 12-months’ security of tenure for tenants and a six-month notice to vacate the property. Those proposals are:

• Allow for a six-month S173 notice to be served after four months but take effect at the end of the six-month fixed term, giving tenants more notice (and time to prepare for moving) but the landlord flexibility to preserve the annual business cycle and reducing the chance of administrative errors.
• Allow for a S173 notice to be given within the initial period of a fixed term standard contract, but amending the minimum contract length to 12 months but allowing a six-month tenant-only break if landlord and tenant agree at the outset of the contract, allowing tenants to still have six-month tenancy agreements if both sides are happy with this.
• Ensure a legal challenge to a S173 notice by a tenant would need to be raised within 28 days of service.
• *Allowing for a S173 to be withdrawn after longer than 14 days – 28 days should be sufficient.
• **A properly resourced Housing Court to cope with the influx of possession cases.
• ***Add more mandatory grounds for eviction, including one for anti-social behaviour, to the new grounds system and give more prominence to a persistent pattern of arrears in the rent arears grounds.
• ****Address the issue for armed forces personnel who could be left homeless as they cannot reclaim their own property in time after receiving notice to leave service accommodation.

*The ELGC Committee recommended the Welsh Government amend the Bill to introduce this change. The Welsh Government agreed and the Bill has now been amended as such

**Two Senedd Committees have recommended the Welsh Government explore the feasibility of a housing court for Wales. The Welsh Government agreed the next Senedd term provides such an opporunity

***The ELGC Committee recommended to the Welsh Government that they investigate whether there is a need for more mandatory grounds for possession and undertake post-legislative scrutiny of the 2016 Act – as part of this to ensure landlords have the legislative tools necessary to address anti-social behaviour

****The Minister indicated that she could use regulation-making powers to exempt armed forces personnel who need to take possession of their rental home to live in if they are themselves evicted from service accommodation. This is because the Bill creates an aberration as Ministry of Defence notices will not affected.

Consultation Responses

The Welsh Government released a summary of consultation responses in January 2020 that showed widespread opposition to the reforms, with landlords providing the vast majority of replies.

• 88% disagreed with extending minimum notice period to six months.
• 78% opposed extending the period to serve notice to six months into the tenancy.
• 73% disagreed with restricting re-issuing a notice for six months after the previous one’s expiry.
• 80% opposed removing a landlord’s ability to give notice to end a fixed-term contract.

Documents

The Renting Homes (Amendment) (Wales) Bill - here

The Bill's Explanatory Memorandum - here

The Bill's legislative progress - here

Justice System Impact Assessment - here

Equality, Local Government, and Communities Committee Report - here