Renting Homes (Wales) Act 2016 - Converting AST Contracts to Occupation Contracts from 1st December 2022

One of the major changes is the overhaul of the long-used Assured Shorthold Tenancy (AST) contract and the introduction of Standard Occupation Contracts for new tenancies from 1st December 2022. Here is what is involved.

Our team have been working hard all year to prepare for the new Renting Homes (Wales) Act 2016 legislation, which comes into force on 1st December 2022. One of the major changes is the overhaul of the long-used Assured Shorthold Tenancy (AST) contract and the introduction of Standard Occupation Contracts for new tenancies from 1st December 2022.

For those Let Only Landlords without an agent, who may be self-managing a rental property or portfolio, it is important to take great care to ensure your own contracts are up to date by the deadlines prescribed.

What happens to new tenancies, created on or after 1st December 2022?

Available to use are template Model Written Statements (MWS) that have been issued by the Welsh Government as a guide:

MWS for standard fixed term contracts
MWS for periodic contracts

The Model Written Statements incorporate the terms that are applicable to each type of contract. This is intended to encourage consistency in the way that written statements are drafted and provides written statements that are compliant with the legal requirements of the 2016 Act. Although, Landlords must provide contract-holders with written statements, they do not have to use the Model Written Statements.

Default terms have been set out within the Act, which include Key Matters, Fundamental Terms, Supplementary Terms and Additional Terms. It is important that you familiarise yourselves with exactly what these terms mean.

Contract holders must be issued with a written statement within 14 days of moving in. Failure to provide this in 14 days or providing an incorrect/incomplete statement can result in penalties.

What happens to the tenancies that are already in place by 1st December 2022?

All existing tenancies will automatically 'convert' to occupation contracts on 1st December 2022. However, there is more to it than that. Landlords (or their helpful agent) will need to serve on their tenant a "conversion" contract within six months of 1st December 2022. Essentially, this is a hybrid occupation contract, which can contain provisions from the existing AST agreement as long as they are compatible with the fundamental terms required to be included in the new Standard Occupation Contract.

So, what do we mean by this? Well, the Landlord (or their helpful agent) will need to look at the existing tenancy agreements and perform a detailed compare and contrast exercise, reviewing all of the terms in the current tenancy against those in the Model Written Statement.

1. Any existing terms which are incompatible with the fundamental terms in the MWS should be removed and the Fundamental Terms should take precedence.
2. Consider carefully whether any existing terms are incompatible with the Supplementary Terms outlined in the MWS. In this instance, if they are, the Supplementary Terms can be removed, and the existing terms kept in and take precedence.
3. Finally, assess whether any remaining terms (neither supplementary nor fundamental) still need to be included and, if so, they should be added as Additional Terms.

Further guidance for landlords on converting contracts is available from the Welsh Government website.

Let Bay help with the transition.

As experienced letting agents, we have helped our landlords comply with a multitude of regulation changes over the last twenty years, taking the hassle out of what can be an onerous process.

Our team are up to speed with The Renting Homes (Wales) 2016 Act and are helping prepare landlords for the changes ahead by:

• Working with our landlords in advance of the keys implementation dates to put efficient processes in place to ensure their properties are compliant, safe and legal.
• Saving out landlords the cost of a Rent Smart Wales landlord licence and the hassle of ongoing training through our fully managed service.
• Provide out landlords with their own dedicated Property Manager as a point of contact
• Producing a walkthrough video tour and high-level photography as part of our standard marketing package.
• Providing our landlords with peace of mind through our Propertymark membership, Client Money Protection (CMP) policy, professional indemnity insurance, and redress scheme membership.