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| The Renting Homes Bill aims to reform and simplify the social and private rental market in Wales, but it's not without controversy. (Pic : Getty Images via BBC Wales) |
The Bill follows a 2013 white paper (Renting Homes White Paper). The paper outlined changes after serious reservations were raised by the Law Commission and housing organisations, who said the current rental market is confusing. Meanwhile, many owner-occupiers were dissatisfied with renting.
The overriding aim of the Bill is to simplify the Welsh rental market by reducing the current six types of contract to just two; but there are plenty of other measures in there as well, aimed at reforming what's becoming an important part of the housing market as people are priced out of home ownership.
What does the Renting Homes Bill propose?
I thought the Planning Bill and Future Generations Bill were bad....
Maybe I was having an off day, but this is the first time a law's beaten me. Although the underlying principles are simple enough, the Bill consolidates several pieces of rent law and was difficult to get through due to the sheer amount of legalese and technical terms.
The Bill (pdf) and the explanatory memorandum (pdf) were, at points, so difficult to follow it was hard to give a detailed outline. So I'll simplify things, based partly on the white paper.
Landlords & Contracts
The Bill :
- Defines two types of landlord :
- Community landlords (housing associations, local authorities, registered social landlords, housing co-ops etc.)
- Private landlords (all those that aren't community landlords)
- Defines two types of rental contract :
- Secure contracts (which replace assured and secure tenancies)
- Standard contracts (which replace introductory, assured short hold, demoted and other private tenancies)
- Will mean community landlords will (generally) offer secure contracts. Private landlords will offer standard contracts unless they become landlord to someone who was already on a secure contract.
- Will ensure all contracts are written.
- Means all current rental contracts will automatically convert to the appropriate type (secure or standard) by a defined date - should the Bill be passed by the Assembly.
Renting Procedures & Grounds for Eviction
The Bill :
- Modifies and simplifies the arrangements for ending a contract, with clearer grounds for doing so and clearer notice periods.
- Clarifies the grounds for eviction (repossession by private landlords) to, amongst others things : breach of contract, serious rent arrears, due notice by the landlord or cases where the tenant has given appropriate notice. Controversially, landlords will retain the right to issue a "no fault eviction".
- Abolishes "Ground 8" in Schedule 2 of the Housing Act 1988 where housing associations can start eviction proceedings if someone hasn't paid their rent for two months. All those on secure contracts, as outlined in the Bill, will no longer be under threat of eviction if they run up short-term rent arrears.
- Abolishes the "six month moratorium". This means courts will be able grant private landlords an eviction notice within the first six months of a tenancy.
Landlords' Rights & Responsibilities
The Bill :
- Speeds up the process by which landlords can re-let a property that's been abandoned by tenants (with some protections in place for the contract-holder).
- Specifies that landlords' repair and maintenance obligations must be included in the rent contract. All contracts will have to have clauses guaranteeing, on the landlord's behalf, that any rented accommodation will be fit for human habitation, ensuring there are none of the 29 most serious hazards present in any property they let (which includes mold, damp, asbestos, lead, falling hazards etc.).
- Means the grounds for a "no fault" eviction will be clearly defined in order to clamp down on "retaliatory evictions", where tenants are evicted on no fault grounds because landlords have failed to keep up maintenance and the tenants have complained.
Tenants' Rights & Responsibilities
The Bill :
- Will mean one member of a joint contract can leave a property without it affecting the other contract-holder. The aim is to protect victims of domestic violence and not collectively punish families where one member has, for example, been targeted for eviction due to anti-social behaviour.
- Will mean secure contract holders can take in lodgers; however lodgers won't have any rights to remain in the property if the contract-holder dies or is evicted. Sub-occupancy arrangements can also be included as an additional contract term - with the landlord's agreement.
- Will ensure "prohibited conduct" clauses are included in every rental agreement setting out the poor behaviour by tenants which could lead to eviction. This includes : nuisance behaviour to other tenants, neighbours or the landlord (including domestic abuse), using a property for criminal purposes or inciting someone to behave as described. If eviction notices are issued for breaches of this kind, eviction procedures can start the same day.
- Will grant 16 and 17 year olds the right to hold a tenancy (the current age limit is 18). This is particularly important for children leaving care.
- Establishes a legal framework for supported housing, where people who live in supported housing for more than six months (which is rare) will be entitled to a supported standard contract. These will have the same legal status as a standard contract – though landlords will have the power to ask the contract-holder leave for up to 48 hours at a time, as well as the right to move the tenant to another part of a building.
How much will it cost?
The Welsh Government drafted three options. The first is do nothing. The second would be to encourage best practice amongst landlords, but without legislative measures. The third, and their preferred option, is a new legislative framework and consolidation of all current measures relating to the rental sector.
The explanatory memorandum states from the outset that, "such a significant piece of legislation needs to be backed up investment in action to oversee the preparation for change". The costs of raising awareness of changes to the law will total £180,000 over five years, while the cost of training would be £50,000.
Cost of evaluating the effectiveness of the law after it's passed will be £50,000 over three years, while the costs on policy and legal staffing to ensure the law is implemented properly is expected to be £885,000 over the four years after the Bill achieves Royal Assent.
The total cost to the Welsh Government is therefore expected to be £1.15million between 2015-16 and 2019-20.
In terms of landlords, they'll have costs relating to familiarising themselves with the changes to the law and converting existing tenancies to the two contract types.
It's expected to take the 90,000 private landlords in Wales one day of training to become familiar with the law changes at £96 per head – a total cost of £7.7million. Meanwhile, based on a budget of £3.77 per privately rented household (of which there are an estimated 130,000 in Wales), the change of contracts is expected to cost private landlords £609,000. On top of this, the requirement to give every tenant a written contract (for those who don't currently have a written contract) will be around £9,000 per year for three years. Legal advice relating to this is expected to cost £2.4million.
So the total cost to private landlords between 2015-16 and 2019-20 is estimated to be £10.72million.
Most of the costs for community landlords relate to familiarisation with the new law, which is expected to have a one off cost in 2016-17 of just over £600,000. The cost to third sector bodies – like the Citizens Advice Bureau – is expected to be £68,000, while the costs facing legal professionals in order to familiarise themselves with the changes to the law is £346,000.
Adding all this together, the total cost of the Bill, if enacted, will be around £12.9million. However, the total annual cost of dealing with poorly administered rental accommodation in Wales is estimated to be around £168million.
A simple solution to difficult problems?
The
reforms outlined in the Bill are almost, down to a letter, exactly
what was outlined in the white paper (with a few exemptions). Most of
them are common sense and long overdue, and – despite what I've
said about the language of the Bill itself – it should be easier for
landlords and tenants to understand.
Removing the "six month moratorium" has proven particularly controversial as it's claimed by housing experts and charities that it'll lead to greater insecurity in the private rental market.
The Welsh Government and private landlords argue it'll provide greater flexibility and enable people to rent on a short-term contract (i.e. moving for temporary work, education courses) when they otherwise wouldn't be able to. I can see that argument rumbling on and on.
I'd imagine most people will welcome the new clauses relating to tenants' behaviour.
I live near an estate which was built in the early 1990s. It was initially occupied by young families who were living away from home for the first time and subsequently behaved however they pleased. Crime – especially drug-related crime and assaults - rose significantly and there are parts of the neighbourhood you couldn't (and still can't) go through at night.
Things have calmed down a lot since then, but stricter rules might discourage a minority of tenants from being a law unto themselves. It's an image that dogs the sector and provokes strong local opposition to social housing developments whenever they're proposed, even though they're desperately needed. Politicians and charity bosses can wring their hands and call people snobs, but most of them have never lived cheek by jowl with the problems they've helped to create and sustain.
The most important provisions relate to providing a clearer outline of what landlords are responsible for, and having that all down in writing. This could go some way to clamping down on so-called "slumlords" , and other dodgy practices, especially when combined with the licensing arrangements passed in the Housing Act 2014.
The Welsh Government drafted three options. The first is do nothing. The second would be to encourage best practice amongst landlords, but without legislative measures. The third, and their preferred option, is a new legislative framework and consolidation of all current measures relating to the rental sector.
The explanatory memorandum states from the outset that, "such a significant piece of legislation needs to be backed up investment in action to oversee the preparation for change". The costs of raising awareness of changes to the law will total £180,000 over five years, while the cost of training would be £50,000.
Cost of evaluating the effectiveness of the law after it's passed will be £50,000 over three years, while the costs on policy and legal staffing to ensure the law is implemented properly is expected to be £885,000 over the four years after the Bill achieves Royal Assent.
The total cost to the Welsh Government is therefore expected to be £1.15million between 2015-16 and 2019-20.
In terms of landlords, they'll have costs relating to familiarising themselves with the changes to the law and converting existing tenancies to the two contract types.
It's expected to take the 90,000 private landlords in Wales one day of training to become familiar with the law changes at £96 per head – a total cost of £7.7million. Meanwhile, based on a budget of £3.77 per privately rented household (of which there are an estimated 130,000 in Wales), the change of contracts is expected to cost private landlords £609,000. On top of this, the requirement to give every tenant a written contract (for those who don't currently have a written contract) will be around £9,000 per year for three years. Legal advice relating to this is expected to cost £2.4million.
So the total cost to private landlords between 2015-16 and 2019-20 is estimated to be £10.72million.
Most of the costs for community landlords relate to familiarisation with the new law, which is expected to have a one off cost in 2016-17 of just over £600,000. The cost to third sector bodies – like the Citizens Advice Bureau – is expected to be £68,000, while the costs facing legal professionals in order to familiarise themselves with the changes to the law is £346,000.
Adding all this together, the total cost of the Bill, if enacted, will be around £12.9million. However, the total annual cost of dealing with poorly administered rental accommodation in Wales is estimated to be around £168million.
A simple solution to difficult problems?
 |
| Stricter rules on tenant and landlord behaviour might go some way to stem opposition to social housing developments and HMOs - but the rules have to be enforced. (Pic : Wales Online) |
Removing the "six month moratorium" has proven particularly controversial as it's claimed by housing experts and charities that it'll lead to greater insecurity in the private rental market.
The Welsh Government and private landlords argue it'll provide greater flexibility and enable people to rent on a short-term contract (i.e. moving for temporary work, education courses) when they otherwise wouldn't be able to. I can see that argument rumbling on and on.
I'd imagine most people will welcome the new clauses relating to tenants' behaviour.
I live near an estate which was built in the early 1990s. It was initially occupied by young families who were living away from home for the first time and subsequently behaved however they pleased. Crime – especially drug-related crime and assaults - rose significantly and there are parts of the neighbourhood you couldn't (and still can't) go through at night.
Things have calmed down a lot since then, but stricter rules might discourage a minority of tenants from being a law unto themselves. It's an image that dogs the sector and provokes strong local opposition to social housing developments whenever they're proposed, even though they're desperately needed. Politicians and charity bosses can wring their hands and call people snobs, but most of them have never lived cheek by jowl with the problems they've helped to create and sustain.
The most important provisions relate to providing a clearer outline of what landlords are responsible for, and having that all down in writing. This could go some way to clamping down on so-called "slumlords" , and other dodgy practices, especially when combined with the licensing arrangements passed in the Housing Act 2014.
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