Update on the Renting Homes Bill

Simon WhiteHousing Policy DivisionWelsh Governmentrentinghomes@wales.gsi.gov.uk

www.wales.gov.uk/rentinghomes

Overview:• The Welsh Government’s aim: ‘a flexible, efficient and

responsive housing system that helps people to meet their housing needs’

• What I’m going to cover:

The current picture and problemsCalls for reformRenting Homes White PaperResponses to specific aspects of the proposals

Currently:• 1 in 3 households rent; private renting increasing• Tenants are less happy than owner-occupiers• Two types of renting – long-term and short-term• Many different tenancy types causes problems:

× Confusion surrounding licences and tenancies× Knowing what tenancy exists× Tenancy agreements difficult to understand× Lack of clarity leads to disputes× Absent joint tenants× Domestic abuse and relationship breakdown under joint

tenancies× Renting by 16 and 17 year olds

Calls for reform:• 1996 - Lord Chief Justice Woolf: “reform of the substantive

law on housing could do more than anything else to reduce cost and delay .. the main source of difficulty is the complexity

of the substantive law itself.” Access to Justice

• 2000 - Nick Madge, Circuit Judge: “Housing law has become an impenetrable forest. […] There are few paths through the forest, known only to the most skilful lawyers. Some who enter the forest escape with scratches and torn clothes. Many become hopelessly lost.” The Times, 25/07/2000

• 2009 – Lord Justice Jackson “simplifying substantive housing law would considerably reduce the costs of litigation in that area and improve access to justice”. Review of Civil Litigation Costs

Renting Homes White Paper:• Based on Law Commission’s 2006 ‘Renting Homes’ report • Single legal framework for social and private renting• Enables ‘single social tenancy’ for Wales• Clarity on rights and responsibilities through written contracts• Model contracts freely available to all• Secure Contract: high level of security protected by law;

replaces Secure and Assured Tenancies; can also be used by private landlords.

• Standard Contract: low level of security under law; greater security can be agreed through fixed terms; replaces Assured Shorthold, Introductory and Demoted Tenancies; provides greater flexibility for short-term renting

• A legal basis for supported housing

Overview of White Paper responses:

173 responses broken down as follows:• Local Authorities 26 (15%)• Housing Associations 33 (19%)• Private landlords / Letting Agents 30 (17%)• Voluntary organisations 21 (12%)• Other organisations 36 (21%)• Tenants / Individuals 27

(16%)

Overall level of agreement / disagreementQuestion

Yes (%)

No (%)

Number of responses*

Do you support our proposals for changing the legal framework for renting a home?

95 5 110

Do you agree that the secure contract should be based on the current local authority secure tenancy?

90 10 81

Do you agree that the standard contract should be based on the current assured shorthold tenancy?

91 9 100

Do you support the proposals in relation to each of the following issues:

a) Addressing the anti-social behaviour of some households

95 5 96

b) Dealing with domestic abuse 90 10 97

c) A more flexible approach to joint tenancies 94 6 94

d) Abandonment of the property by a tenant 97 3 93 e) Renting by young people 75 25 83

f) Standardising succession rights 92 8 85

g) Standardising eviction for rent arrears 75 25 84

h) Requiring landlords to ensure there are no Category 1 hazards under the Housing Health & Safety Rating System

91 9 96

i) Abolishing the six-month moratorium on ‘no fault’ evictions

84 16 82

j) Establishing a legal framework for supported housing

90 10 71

k) Bringing housing association Rent Act tenancies within the Renting Homes framework

88 12 69

General comments:• ‘The current complexity of tenancy agreements and the

general confusion PRS tenants experience needs to be simplified.’ Private rented sector tenant

• ‘The proposed simplification of contracts in relation to a tenancy to bring clarity to the renting process for all is welcomed.’ National Landlords Association

• ‘The introduction of a consistency of tenure is necessary to grip the issue of housing and the many pitfalls associated with rogue landlords and difficult tenants. The "Prohibited Conduct" definition is particularly useful and police officers will benefit from the standardisation in tenancy law in order to resolve disputes.’ Dyfed Powys Police

Secure contract based on the current local authority secure tenancy:

• 90% support for basing the secure contract on the local authority secure tenancy

• Support for the principle of private landlords being able, but not obliged, to use a secure contract

• Housing associations support the ability to vary contracts on the same basis as currently applies to local authorities

Standard contract based on the current assured shorthold tenancy:

• 91% support for basing the standard contract on the assured shorthold tenancy

• “Having one standard agreement based on the current shorthold tenancy will assist the Council in giving consistent and correct advice and assistance to potential tenants. Private landlords, particularly those with little experience of the market, will benefit from having access to standardised free agreements.’ Powys County Council

• PRS sector views differed regarding the requirement for a written contract.

All-Wales ‘Prohibited Conduct’ term:• 95% support for a statutory ‘prohibited conduct’ term

addressing housing-related anti-social behaviour were strongly supported

• All-Wales Anti-Social Behaviour Group proposed amendments to help ensure a more joined-up approach between the police and landlords

• ‘A tightly structured discretionary route, ensuring proportionality is addressed at an early stage, also appears to be a positive approach to resolving anti-social behaviour quickly and effectively.’ Merthyr Valley Homes

Dealing with domestic abuse:• 90% support for the approach proposed

• ‘As a MARAC chair the proposals in respect of families where there is a joint tenancy, which could lead to the offending party only being evicted, is long overdue. This issue has regularly been the topic of debate within the MARACs I have chaired and has led to a great deal of frustration by agencies working in the Domestic Abuse arena.’ Dyfed Powys Police

• Suggestions were made for the definition of abuse to include psychological, sexual, financial and emotional abuse.

More flexibility around joint tenancies:• 94% support having a more flexible approach• ‘We support the provisions to overcome the current

draconian position whereby notice from one joint tenant, without knowledge or consent by the other, ends the joint tenancy.’ Shelter Cymru

• ‘The paper presents a much clearer approach to joint tenancies and reflects changing relationships in society, allowing a tenant to be removed without having to start a new tenancy.’ Cartrefi Conwy

• Concerns expressed regarding: addressing arrears; continuity of SPOs; and landlord’s consent to add tenant

• Residential Landlords Association argued that, if principal earner leaves, landlord should be entitled to possession on expectation that the remaining tenant would be unable to pay the rent

Renting by young people:• 75% supported the proposal

• The proposal may help to address the fact that this age group are particularly vulnerable in terms of a lack of accommodation options, but that there would need to be clear accompanying guidance - Children’s Commissioner for Wales

• Some raised concerns regarding the appropriateness of 16 and 17 year olds renting

• Other concerns included: risk of statutory bodies avoiding responsibilities; encouraging disownment; potential problems in recovering debt from someone under the age of 18

Abandonment• 97% welcomed the proposed clarification

• ‘The proposals on abandonment are very helpful. The ability for landlords to recover possession of a property more quickly, without the need to apply to court, will ensure that rent losses can be minimized, and housing stock can be used more effectively to the benefit of those in housing need.’ United Welsh Housing Association

• Need for clear guidance on the form of investigations to be carried out to confirm abandonment

Standardising eviction for serious rent arrears – abolishing ‘Ground 8’:• Applies to secure contract only• 75% in favour of standardisation• Most housing associations favoured retention

• ‘While Ground 8 has only ever been used as a last resort, more RSLs have said that they will look to use Ground 8 in anticipation that tenants hit by the bedroom tax, who are unwilling to move, are likely to very quickly accrue high levels of arrears.’ Community Housing Cymru

• Council of Mortgage Lenders also wished to see Ground 8 retained for reasons of financial viability

• Structured discretion will apply – general circumstances and those specific to the contract-holder, landlord and others

Requiring landlords to ensure there are no HHSRS Category 1 hazards:• 91% supported the proposal (including majority of private

landlords)

• ‘Category 1 hazards are those leading to death or chronic illness and no reasonable landlord would contemplate allowing such hazards on their premises.’ Private landlord

• However, concerns raised included: complexity of HHSRS making it difficult to place a contractual obligation on the landlord; actions of tenants can also cause a Category 1 hazard; private landlords not having the level of expertise needed to assess hazards; and increased burden on local authorities. Alternative approach proposed.

Removing the six-month moratorium on ‘no fault’ possession orders:• 84% in favour of abolishing the moratorium

• Comments in support included: the current law being confusing; the moratorium having little practical effect anyway; and that its removal would make it easier for high risk groups to secure accommodation in the private sector

• Some respondents concerned about reducing security of tenure

• Concerns also raised regarding increase in retaliatory eviction – propose to address this

A legal basis for supported housing:• 90% support for the proposals

• Broad recognition of the benefits of creating a legal framework that recognises the needs of the sector

• Concerns relating to: entitlement to a supported standard contract after four months; conversion to a secure contract after two years; and longer period sought for ‘temporary exclusion’ (though concerns also raised regarding possibility of abuse)

• Continuing to engage with the sector to refine the proposals

• Any reduction in the rights of occupiers needs clear justification

Thank you – any questions?

Simon WhiteHousing Policy DivisionWelsh Governmentrentinghomes@wales.gsi.gov.uk

www.wales.gov.uk/rentinghomes

Renting HomesIllustrative Model Contract

What might the new contract look like?

Simon WhiteHousing Policy DivisionWelsh Governmentrentinghomes@wales.gsi.gov.uk

www.wales.gov.uk/rentinghomes

Two types of contract

Terms in the contract• Key Matters – e.g. names of landlord and contract-holder;

address of premises; rent; rental period; deposit scheme; landlord licence number.

• Fundamental terms – the essential rights and obligations, including the prohibited conduct term. Most can be left out or varied if this benefits the tenant.

• Supplementary terms - deal with other practical matters which do not require the same degree of legislative backing.

• Additional terms - any other express terms, e.g. pets

Model Contracts• Essential that landlords have easy access to contracts that

comply with the law.

• Welsh Government will produce model contracts for use by landlords. These will include all relevant fundamental and supplementary terms.

• A ‘Key Matters’ template for setting out details specific to the let, e.g. landlord and tenant details, address and rent, plus any additional terms.

• Landlords will be able to produce their own versions - but the models will be freely available to download.

• So what might they look like…..

Key Matters Document

Model Contract Document

Model Contract Summary

Example of Easy Read Guide

Key Matters Document+

Model Contract=

‘The Contract’

Implementation• Model contracts freely available in advance to help prepare• All existing tenancies would automatically convert to the

appropriate new contract on a set date – arrears transfer too• New contracts could then be issued at suitable point, e.g. in

private sector when one tenancy ends and another starts• Continued engagement with stakeholders to minimise

administrative burden• Guidance for landlords and tenants to assist in the change

• Long timescale to enable full stakeholder engagement• Draft Bill considered by Assembly in 2015• New scheme operational in 2017?

Thank you – any questions?

Simon WhiteHousing Policy DivisionWelsh Governmentrentinghomes@wales.gsi.gov.uk

www.wales.gov.uk/rentinghomes