The changing face of landlord and tenant law in Wales

Wales has not only taken its own path over the Covid-19 pandemic, but its legislation for landlords and tenants is also steadily diverging from that of England. For those with property on both sides of the border, either residential or commercial, it is worth considering this divergence as the property market hopefully begins to emerge from stagnation.

Residential landlords

The creation of the Rent Smart Wales authority introduced by the Housing (Wales) Act 2014 requires all private owners of residential property (which includes ‘mixed use properties’) to register as a landlord, having completed a course demonstrating that they are aware of their obligations under the legislation.

This is mandatory and applies even if you engage an agent to manage the property. Landlords (and their agents) can be checked via a public register. Failure to register a property when it has been let can attract significant penalties and is a criminal offence. In addition, until registered, landlords would not be able to serve valid section 21 notices to bring a tenancy to an end and regain possession of their property.

Residential tenants’ entitlement

All prospective tenants of residential properties, since 13 December last year, must be provided with the following (in writing) before a holding deposit is paid:

• Amount of holding deposit
• Identify the dwelling in respect of which the deposit is paid
• Name, address, telephone number and any email address of the landlord (and if instructed, the letting agent)
• Nature and duration of the contract
• Proposed occupation date
• Amount of rent or other consideration
• Rental period
• Any proposed additional contract terms or proposed modifications or exclusions to fundamental or supplementary terms
• Amount of any security deposit
• Whether a guarantor is required and, if so, any relevant conditions
• Reference checks the landlord (or letting agent) will undertake.

More changes are to come under the Renting Homes (Wales) Act 2016, which has not yet been enacted – it will make sweeping changes to housing law and practice in Wales and will apply with immediate effect, not only to future tenancies, but also to the vast majority of existing residential tenancies and licences.

Whilst the general intention of the Act is to simplify the existing law and letting process and to provide a clear legal framework, there are currently key differences in the grounds for re-possession – landlords and receivers should take note especially.

Taking possession

The Act does not include two of the grounds for possession that exist in the current legislation for both England and Wales (the Housing Act 1988); the first is the ability of a lender to step in and obtain vacant possession if a landlord has fallen into mortgage arrears and the second applies when a tenant is eight or more weeks in arrears.

Fees and taxes

Letting fees for prospective tenants have now been banned in both England and Wales (any letting costs must now be met by the landlord), but English property owners still face Stamp Duty Land Tax (SDLT), whereas Land Transaction Tax has replaced SDLT in Wales.

There are now differences in respect of the amount of duty payable, and also subtle differences in respect of the reliefs available to those either buying property or taking on a commercial lease of a property in Wales.