The Welsh Exodus Continues

We have had an ongoing series of posts about moving to Wales and at NL towers we have discussed whether we should be seeking advertising from the Welsh tourism authority! Before that comment causes a deluge of emails from unlikely legal service providers seeking to advertise, that was a joke and we do not accept advertising.

More usefully (and returning to housing matters), the Law Commission has published an update to its 2006 report, Renting Homes. The original report recommended a wholesale reform of residential tenancies, in both the social and private sector. Unfortunately, the ideas contained in it received short shrift from central government and that might have been the death of the entire project. However, devolution was also occurring at the same time and the new governments appearing in Wales and Northern Ireland both showed interest in the report. The Law Commission has therefore been asked to update the original report by the Welsh Assembly as part of its plans to reform tenancies in Wales.

The Outlines
The most important change proposed by the reports is the total sweeping away of the range of tenancies created by the Housing Act 1988 and the Housing Act 1985. Rent Act 1977 tenancies and Agricultural tenancies are exempt. The removed tenancy types will be replaced by just two types of tenancy. The standard contract which is similar to an Assured Shorthold tenancy and a the secure contract which is a sort of hybrid between the current Assured and Secure tenancies. There will also be freely available model tenancy agreements with some wording compulsory in them so that tenants have a clear explanation of their rights and obligations.

The Tenancies
One of the most interesting things about the new tenancies is that they are not as restricted in terms of who can grant them. This holds out the possibility of larger private landlords seeking to take on housing associations and other social providers by offering secure contract tenancies, presumably at a premium. The standard contract is also slightly surprising in that it offers a slightly more limited form of security for tenants in that (unlike the AST) there is no equivalent to the de facto six months security of tenure found in an AST. A standard contract tenant only has the security given by the contract itself with the additional provision that the landlord must give two months notice before they can terminate the tenancy. This apparent reduction in security has attracted criticism but the Law Commission does not accept this believing that the market will largely regulate this issue. I am less sure and I fear a race to the bottom with a growth of very short term initial tenancies in some market sectors.

Tenancy Terms
This is one of the most interesting areas, but also the one in which the answers will be the latest to come. The Law Commission has sought to separate tenancy terms into four categories:

  1. Key terms- those terms which are unique to the contract and set out the property address, rent and so on;
  2. Fundamental terms- these are the important terms which deal with core rights and obligations such as reapirs;
  3. Supplementary terms- these are further important terms which deal with the practical issues which make things work such as rent payment provisions and notice; and
  4. Additional terms- these are the terms which are specific to the agreement but which do not fall into other areas. This might include such things as break clauses or pets.

Key, fundamental, and supplementary terms will have to be in every contract and fundamental and supplementary terms will be subject to regulations which will set compulsory wording from which there will be very little permitted variation. The quality of these provisions will depend entirely on the quality of the regulations and the wording chosen. I would expect a great deal of panic around this wording and its incorporation in agreements and a certain amount of litigation over alternative forms of wording and their precise meaning.

Other Provisions
There will be a replacement of the repairing obligations contained in s11, Landlord & Tenant Act 1985 and the Scottish model appears to be an attractive one here. Scotland also seems to be attractive in terms of a landlord registration scheme. A change that has attracted more reporting, albeit misguided, is the removal of the mandatory ground for possession for two months of rent arrears. However, contrary to some alarmist reports this only applies to secure tenancies and will not therefore affect most private landlords. Finally, there will be an incorporation of the Unfair Terms in Consumer Contract Regulations into all tenancies and for all tenants which is intended to regulate the worst excesses of the market. How this will actually play out is uncertain. I personally have real doubts about this. The UTCCR are generally very badly understood by most lawyers and too often lead to a petty analysis of where the clause was in the agreement and the font size as opposed to a consideration of the respective obligations of the clause itself. There has also been a history of confused and inconsistent decisions, especially in the lower courts.

The Future
This process has a long way to run. The Welsh Assembly is looking to bring forward a draft bill in 2015 so nothing is going to change tomorrow. Even then there will be a lot of secondary legislation to sort out details and it is unlikely that the changes will actually come into force until 2016. After that there will, no doubt, be a healthy dollop of litigation before things settle down.

A Separate Jurisdiction
The Welsh Government has generally not been keen to push the concept of a separate legal jurisdiction for Wales, at least not yet! However, this process certainly moves toward a separate jurisdiction in substantial areas. How far it will go precisely depends to what extent the proposals actually replace all areas of relevant legislation. For example, will there be an attempt to overwrite parts of the Housing Act 2004 and replace the tenancy deposit protection or HMO legislation. It does not appear so but anything is possible!

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About

David is a solicitor specialising in landlord and tenant matters with Anthony Gold Solicitors. He particularly specialises in newer legislation and has written widely on the Housing Act 2004.

4 Comments

  1. Rudy
    Posted 15/04/2013 at 9:32 am | link to comment

    I read the proposals with interest. The Commission seems to have missed an opportunity to suggest a supporting legal framework for long term tenancies, which could be especially useful in the private sector or in mixed developments. It might need financial incentives for landlords, but could give tenants who can’t buy or obtain a secure contract some security of tenure in retirement or for child rearing. Instead, what is proposed about standard contracts will rely again on the good faith of private landlords, and their knowledge of the law. Time and again experience shows practitioners that many do not have either. There’s lots more to think about – not least the extension of such proposals to England – but that’s a start.

    • David Smith
      Posted 15/04/2013 at 3:39 pm | link to comment

      I agree that there is almost as much interest as the bits which have been left out as those which are left in. I am not sure how the system will handle the transfer from long lease to assured which will now presumably become long lease to secure?

  2. JamieT
    Posted 15/04/2013 at 2:28 pm | link to comment

    Are the current offerings of Assured and Assured Shorthold Tenancies insufficient in some way? I don’t see what benefits these ‘new’ tenacy types really bring over the exisitng ones. Will it really be worth all this effort and cost?

    I would strongly disagree with you on the landlord registration scheme in Sctoland being ‘attractive’. It’s a ridiculous system if you have properties in multiple authorities. If you really must have landlord registration (I’m not convinced there is a significant benefit), then at least make it a system administered centrally. Having to register in each authority is a duplication of effort and cost.

    • David Smith
      Posted 15/04/2013 at 3:43 pm | link to comment

      There are lots of gaps in the current Assured/AST regime which the new process is intended to close. However, the cost/benefit analysis is certainly one which will be debated for some time.
      I think I may have been unclear on landlord registration. I was not suggesting that I found it attractive but rather that the Welsh legislators appeared to. I however do think that landlord registration is a good thing as long as it leads to some useful enforcement process.

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  1. By Ben Reeve Lewis Friday newsround #103 on 19/04/2013 at 7:56 am

    [...] Smith at Nearly Legal reported on an interesting development in Wales…..again.  Not content with tinkering away with [...]

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