Landlords, did you meet the 31st May 2023 deadline? Here are the penalties if you didn’t.
A crucial aspect of the Renting Homes (Wales) Act 2016 was the requirement for landlords to give their contract-holder(s) a Written Statement where the tenancy transitioned from an AST (Assured Shorthold Tenancy) to an Occupation Contract when the legislation kicked in on 1st December 2022. The Act allowed landlords a period of six months to give it, meaning their deadline was 31st May 2023.
If you missed this deadline, your contract-holders are entitled to a significant financial sum in compensation if/when they realise. Not only that, but you’re restricted from issuing a possession notice, and any sale of the property may get delayed. If you still haven’t given the Written Statement, we strongly recommend you do so now.
The consequences of missing the deadline
1. Contract-holders are entitled to up to 2 months’ rent in compensation (more if the omission is proved to have been deliberate).
Contract-holders are legally entitled claim compensation from their landlord for every day the Written Statement was late. The compensation is equivalent to a day’s rent, up to a maximum of two months. For example, if you provided the Written Statement a month-and-a-half after the deadline (i.e. mid-July 2023), the contract-holder could claim the equivalent of 1.5 months’ rent in compensation. Furthermore, if a landlord's non-compliance is found to be intentional, contract-holders can apply for additional compensation on top.
2. Until you’ve given the Written Statement, you can’t serve a contract-holder with a notice to leave. Even once you’ve given it, you have to wait SIX MONTHS before serving the notice because of the lateness.
A Section 173 notice is a notice to the contract-holder, advising them that they have six months to move out. If you failed to provide a Written Statement by the 31st May 2023 deadline, you’ll be prevented from issuing this notice for six months. This six-month period begins on the day the written statement is provided to the contract-holder. So if you’re still yet to serve your Written Statement, you’ll be waiting at least 12 months before regaining possession (the 6 months’ notice contract-holders are now legally entitled to + the 6 month restriction because of lateness).
3. If/when you choose to sell the property, there could be significant delays.
During the course of selling a property with an occupant in situ, solicitors will require a copy of the Written Statement that was given. Our Sales Team have already encountered numerous instances of sellers not having provided it to their contract-holders, leading to significant delays in the sale process. The process takes long enough as it is, so if you’re thinking of selling any time soon, we highly recommend getting the Written Statement drawn up and issued now, in order to avoid any delays.
What to do if you’ve not yet issued a Written Statement
Firstly, do it now: do not delay. Preparing the Written Statement requires landlords to perform a ‘contrast and compare’ exercise, which means looking through the original Tenancy Agreement that was signed and determining which clauses are completely incompatible with the new legislation, which can remain with changes, and which are totally unaffected. It’s a minefield, so we strongly recommend reading Welsh Gov’s ‘Creating a converted occupation contract: guidance for landlords’.
Gain peace of mind with CPS Homes
As ever, we ensured the clients for whom we manage properties were legally-covered in plenty of time before the May deadline. All of our managed clients benefit from a comprehensive service and, amongst other things, we will:
- Work with you to put efficient processes in place well in advance of key dates for new legislation and regulations, ensuring you and your properties are compliant, safe and legal.
- Save you the cost of a Rent Smart Wales landlord licence and the hassle of ongoing training.
- Maximise your rental income by ensuring the property is always achieving its full potential.
- Provide you with your own representative within our Lettings and Accounts departments.
- Produce a FREE professional walkthrough video tour and photography as part of our standard marketing package.
- Place you on our VIP Investor list where you'll get priority access to pre-market investment properties before they're listed online.
- Provide you with peace of mind via our Client Money Protection (CMP) policy, professional indemnity insurance, and redress scheme membership.
To discuss CPS Homes taking over management of your property, contact our Senior Property Investment & Market Advisor, Rhys Owen, today via rhys.owen@cpshomes.co.uk or 02920 668585.
The information contained within this article was correct at the date of publishing and is not guaranteed to remain correct in the present day.
