Deposits and no-fault evictions in Wales

The Renting Homes (Wales) Act 2016 introduced a number of key changes to the private rental sector in Wales. However, one aspect of the new legislation that remains consistent with the previous legal framework is the requirement to protect a deposit and provide the contract-holder with required information, and the potential consequences for failing to do the same.

The requirement to protect tenancy deposits was first introduced by the Housing Act 2004. Despite being introduced over 20 years old, failure to comply with deposit requirements continues to be one of the main reasons preventing landlords from issuing valid no-fault notices.

What are the requirements under Renting Homes (Wales) Act 2016?

Where a deposit is paid in connection with an occupation contract, landlords must do the following:

1. Comply with the initial requirements of an authorised deposit scheme, and
2. Give the contract-holder (and any person who paid the deposit on their behalf) the required information

To satisfy the first requirement landlords must protect a deposit with a relevant deposit scheme, and comply with the requirements of the scheme to achieve the same.  This must be done within 30 days of receipt of the deposit.

To satisfy the second requirement landlords must provide contract-holders with specific information that collectively makes up the required information. This must be provided to the relevant parties within 30 days of receipt of the deposit.

What is the Required Information?

In summary the following information, collectively, consists of the required information:

1. The name and contact details of the scheme administrator,
2. Any information provided by the scheme administrator to the landlord which explains the operation of the relevant parts of the Renting Homes (Wales) Act 2016,
3. The procedures that apply under the deposit scheme regarding any amounts that may be paid or repaid to the contract-holder at the end of the occupation contract,
4. The procedures that apply where either the landlord or contract-holder are not contactable at the end of the occupation contract,
5. The procedures that apply under the deposit scheme where the landlord and contract-holder dispute the amount to be paid or repaid to the contract-holder at the end of the occupation contract,
6. The facilities available under the deposit scheme for dispute resolution without resorting to litigation,
7. The following information:
   1. The value of the deposit
   2. The address to which the deposit relates,
   3. The name and contact details of the landlord,
   4. The name and contact details of the contract-holder,
   5. The name and address of any person who paid the deposit on the contract-holders’ behalf,
   6. The clauses of the occupation contract which detail the circumstances under which the deposit may be retained by the landlord, and
   7. Confirmation in the form of a certificate signed by the landlord that:
      1. The information in the required information is accurate to the best of the landlords knowledge and belief, and
      2. The landlord has given the contract-holder the opportunity to sign any document containing the required information.

What are the consequences for failing to comply with the deposit requirements?

Landlords are not able to serve valid no-fault notices (RHW16 Notices for periodic occupation contracts) or a break notices, to terminate occupation contracts if they have failed to comply with the deposit requirements. In the event of non-compliance, the deposit must be returned to the contract-holder in full, or with agreed deductions before a valid no-fault notice can be served.

Contract-holders are also able to seek compensation from landlords of between 1-3 times the value of the deposit for failure to comply with either or both of the relevant requirements.

Suggested action

Before serving a no-fault notice or break clause, landlords must ensure they have complied with the deposit requirements. Landlords in Wales will also be aware that other pre-conditions must also be satisfied before serving these notices.

Whether you’re looking to serve a notice, or need assistance issuing a possession claim, don’t hesitate to contact our dedicated Landlord and Tenant team on 0333 014 4455 or via email at [email protected].