A Landlords Guide To Rent Smart Wales, Registration And Licensing

The requirement for landlords to register and obtain a licence in Wales commenced on 23 November 2016. 

Cardiff City Council operates and enforces the registration and licensing under Rent Smart Wales. 

There was a 12-month period starting 23 November 2015 for landlords to register and apply for their licence.

Domestic Tenancy

The registration and licensing requirements apply where a dwelling in Wales is being offered for let or is subject to a ‘domestic tenancy’. 

A ‘domestic tenancy’ is an assured shorthold tenancy, an occupation contract or a regulated tenancy under the Rent Act 1977. 

The provisions do not apply if you rent to lodgers.

Immediate Landlord

A landlord is defined as the ‘immediate landlord’ and does not necessarily mean the “owner” of a property (in most cases, the landlord will also be the owner). 

A landlord could also be somebody named on the contract and perhaps has an entitlement to possession some other way, for example, by subletting from a superior landlord. 

When we refer to ‘landlord’ throughout, we mean the ‘immediate landlord’ as defined above unless we say otherwise.

Registration

Registration should not be confused with licensing under the Act. 

Registration is entirely separate and only applies to landlords. 

A landlord of a dwelling which is being offered to let or is subject to a ‘domestic tenancy’ needs to be registered. 

If the landlord lives outside Wales and lets a property in Wales, the landlord must also register. 

Any number of properties (including just one) will trigger the requirement to register. 

It might be advisable that all owners register even if they are not necessarily named on the contract. This will allow greater flexibility without having to make changes to the registration in the future. 

Further, this would stop any arguments regarding serving a section 173 notice because service is prohibited unless the landlord is registered. 

If a property has been recently purchased to rent, registration must be done within 28 days from when the property has been assigned to the landlord. 

Registration continues indefinitely (subject to changes and revocation etc.), but a fee may be charged after five years and, after that, every five years.

Exemption To Registration

Suppose a property has been purchased with an existing tenant, and the owner does not intend to continue renting to the tenant and intends to occupy the property as their home. In that case, the owner does not need to register. 

This is subject to the landlord taking steps to recover possession within 28 days from when it was assigned to them and as long as they continue to diligently pursue the recovery of possession. 

Advice may need to be sought for this type of situation because failing to register can have severe consequences for seeking possession.

How To Register

Registration is via Rent Smart Wales, and an online form is available for completion. 

For the cost, please see here.

Duty To Update

A landlord must notify Rent Smart Wales within 28 days of the following changes:

• any change in any of the contact information provided (including name, address, telephone and e-mail)
  • the appointment of a letting or managing agent and if any previous ones supplied have ceased to be appointed
  • any assignment of the landlord’s interest in the rental property

It is essential to highlight that if a landlord changes a letting or managing agent, this is a notifiable change and must be made within 28 days of the appointment.

Revocation Of Registration

Rent Smart Wales may revoke the registration of any landlord who:

• provides false or misleading information
  • fails to provide details of any changes
  • fails to pay any fee charged

Licensing

Any landlord or agent who performs lettings or property management activities on a ‘domestic tenancy’ must have a licence. 

All licences will need to be applied for through Rent Smart Wales. 

All licences will involve some training (for which see later). 

Licensing does not replace HMO licenses, which will continue to be required as appropriate in addition to the provisions outlined here. A licence lasts for five years, after which it will require renewal.

When A Landlord Licence Is Required

A landlord will need a licence in addition to registration if the landlord is to carry out any one or more lettings activities which are:

• arranging or conducting viewings with prospective tenants;
  • gathering evidence to establish the suitability of prospective tenants (for example, by confirming character references, undertaking credit checks or interviewing a prospective tenant);
  • preparing or arranging the preparation of a tenancy agreement;
  • preparing or arranging the preparation of an inventory for the dwelling or schedule of conditions for the dwelling.

Further, a landlord will need a licence if the landlord is to carry out any property management activities. 

Those activities are:

• collecting rent;
  • being the principal point of contact for the tenant about matters arising under the tenancy;
  • making arrangements with a person to carry out repairs or maintenance;
  • making arrangements with a tenant or occupier of the dwelling to secure access to the dwelling for any purpose;
  • checking the contents or condition of the dwelling or arranging for them to be checked;
  • serving notice to terminate a tenancy.

As a starting point, all named landlord’s on an occupation contract will require a licence because they will be a designated contact for the tenancy and may need to serve a notice to terminate the tenancy in the future.

Lettings or property management activities do not include anything done by the landlord, which is arranging for an authorised agent to do something on the landlord’s behalf. 

Where a landlord never does any one or more of these activities and instead uses a licensed letting agent, the landlord will not require a licence. 

A licence is required only by ‘self letting or managing landlords’. 

It cannot be stressed enough that where a landlord uses a licensed agent, that landlord must not undertake any of those activities themselves without first obtaining a licence. 

For example, if a landlord wishes to make arrangements with a person to carry out repairs or maintenance at a time whilst the dwelling is subject to a domestic tenancy, a licence will first be required. Otherwise, it will be an offence. 

It’s acceptable for the landlord to arrange with a licensed agent to get the repair or maintenance done. 

It seems the landlord should be able to carry out the physical repair or maintenance themselves (subject to any law governing the repair or maintenance) because the restriction defined in property management activities is for making arrangements with a person to carry out the repair or maintenance. In this case, the agent must arrange access with the tenant. 

It’s okay for an unlicensed landlord to make arrangements for repairs and maintenance when the tenancy has ended without a licence because the dwelling will not then be subject to a domestic tenancy. 

However, despite the tenancy being at an end, the landlord must not check the contents or condition of the dwelling, or arrange for them to be checked, for any purpose connected with the previous tenancy without a licence. 

A similar provision applies to agents, the effect being that only a licensed landlord or agent will ever be able to determine the return of a deposit after the end of a tenancy (or a specialist inventory clerk that does not need a licence – see later). 

Landlords might be well advised to obtain a licence even if they use a managing agent. 

This would allow the landlord freedom of carrying out letting or property management activities, including checking the property’s condition at the end of any domestic tenancy or arranging for repairs and maintenance during the tenancy. 

If a property was recently purchased to rent, a licence must be applied for within 28 days from when the property was assigned to the landlord.

Exemption

Suppose a property has been purchased with an existing tenant, and the owner does not intend to continue renting to the tenant and intends to occupy the property as their home. In that case, the owner does not need a licence if they take steps to recover possession within 28 days from when it was assigned to them and as long as they continue to pursue the recovery of possession diligently. 

As with registration, advice should be sought in this situation because failure to have a licence could seriously affect possession. Passing property management (including serving possession notices) to a licensed agent might be a better solution.

Staff Or Apprentices Of Landlord (Connected Person)

Any person on a contract of service (employed by the landlord) or on an apprenticeship with the landlord does not need to obtain a licence. Such a person is known as a “connected person”. 

The landlord’s staff or apprentices will need to complete the training as a condition of any licence granted.

Landlord Must Not Appoint An Unlicensed Agent

A landlord must not appoint or continue to allow a person to let or manage a property who does not hold a licence. The test is whether the landlord should know that the person does not have a licence, so a landlord must check with the public register before the appointment. 

This particular offence is a criminal offence, carries an unlimited fine, rent stopping and rent repayment orders are possible, and the fixed penalty notice is not an option!

Obtaining A Licence

An application for a licence for landlords is made to Rent Smart Wales and can be done online. 

Please see here for the cost.

Fit And Proper Person

For a landlord or agent to be granted a licence, they must be a “fit and proper person”. 

Various things are considered, including any previous convictions or a failure to comply with some housing-related law (for example, a breach of an HMO licence).

Requirements Concerning Training

It will be a condition of all licences that training be completed by the applicant landlord and their connected persons (staff or apprentices). 

Training is available through Rent Smart Wales and other companies offering training that has been approved via Rent Smart Wales. 

Training can be obtained here. 

The training is based upon the training that used to be provided for Landlord Accreditation Wales. 

Landlords undertaking training for the first time will need to complete a landlord module. 

A ‘connected person’ (persons employed by the landlord or undergoing an apprenticeship) doing any one or more of the following activities will also need to complete the landlord module (but won’t need a licence): 

Lettings activities 

• arranging or conducting viewings with prospective tenants; 
• gathering evidence to establish the suitability of prospective tenants (for example, by confirming character references, undertaking credit checks or interviewing a prospective tenant);
• preparing or arranging the preparation of a tenancy agreement;
• preparing or arranging the preparation of an inventory for the dwelling or schedule of conditions for the dwelling. 

Property management activities 

• collecting rent;
• being the principal point of contact for the tenant about matters arising under the tenancy;
• making arrangements with a person to carry out repairs or maintenance;
• making arrangements with a tenant or occupier of the dwelling to secure access to the dwelling for any purpose;
• checking the contents or condition of the dwelling or arranging for them to be checked;
• serving notice to terminate a tenancy. 

In addition to attending or completing the course, both landlords and staff will need to pass a test relating to the content of the course.

Licence Conditions And Code Of Practice

Any licence granted will be subject to a condition that the statutory code of practice must be complied with. 

The code of practice should be consulted for full details, but examples include:

• all statements made about a property, whether spoken, in pictures or writing, must be correct and not misleading
  • the prospective tenant’s consent must be sought before seeking a reference or carrying out a credit check
  • during negotiations, the potential tenant must be provided with clear information on terms of the tenancy, length of the fixed term, costs and fees, deposit amount, the sum payable on signing, and guarantor requirements
  • potential tenants must be allowed to read a draft or sample tenancy agreement before signing their tenancy agreement
  • deductions from a tenancy deposit must not be made without suffering actual losses, and evidence must be provided to support claims

Update Information About Licence Holder

The licence holder must notify any changes within 28 days, which include changes to:

• contact details of the licence holder
  • change in connected person(s)
  • any change that may affect the “fit and proper person” test

Revocation Of Licence

A licence may be revoked if:

• the licence holder has breached a condition of the licence;
  • the authority is no longer satisfied that the licence holder is a fit and proper person;
  • the licence holder has failed to update information;
  • the licence holder and the licensing authority have agreed that the licence should be revoked.

Expiry And Renewals

A licence expires at the end of 5 years, but a licence holder may apply for renewal 84 days before the expiry date. 

Where an application to renew is made, the licence does not expire until the application is decided. 

A licence expires if the licence holder dies or, in the case of a body corporate, is dissolved.

Appeals

An applicant may appeal certain decisions made by a licensing authority in respect of a licence, namely:

• granting a licence subject to a condition (but there is no appeal against the code of practice);
  • refusing an application for a licence;
  • amending a licence;
  • revoking a licence.

An appeal to the Residential Property Tribunal must be made within 28 days, beginning with the date the applicant was notified of the decision.

Enforcement, Penalties And Restrictions

Breaching any of the several requirements under the Act is, in the main, a criminal offence and a licensing authority or local housing authority have powers of prosecution. Further, some severe penalties and restrictions also apply for breaches. 

A contract will remain valid and enforceable even if any one of the several requirements under the Act are not complied with (except for rent which has been ordered to be stopped or repaid or the inability to serve a notice).

Fixed Penalty Notices

For the majority (but not all) of the offences, Rent Smart Wales or a local authority may offer the person who allegedly committed one of the offences the opportunity to discharge any liability to conviction by payment of a fixed penalty. If the person pays the fixed penalty within 21 days, the person will not be convicted of the offence. 

Depending on the offence, the fixed penalty amount will be either £150.00 or £250.00.

Rent Repayment Or Rent Stopping Orders

Where a landlord carries out property management activities or appoints an unlicensed agent, Rent Smart Wales (or local housing authority) may apply to the Residential Property Tribunal for a rent-stopping order. 

The person alleged to have committed the offence does not have to have been charged or convicted of an offence for a rent-stopping order to be made. 

The effect of a rent stopping order is to stop, for a period, any rent payable by a tenant. Legally the tenant will be considered to have paid this rent, and no rent arrears claim could be made. 

A rent repayment order works similarly but applies to periodic payments of rent that have already been paid to a person during a period when some breach of the legislation had occurred. 

In addition to Rent Smart Wales or a local authority applying for a rent repayment order, a tenant may also apply.

Section 173 Notice

No section 173 notice may be given if:

• the landlord is not registered, or
  • the landlord is not licensed and has not appointed a licensed person to carry out all property management work in respect of the dwelling on the landlord’s behalf.

This does not apply for 28 days, beginning with the day on which the landlord’s interest in the dwelling is assigned to the landlord. A fully paid and completed licence application should be sufficient to serve a notice. 

Register Of Private Rented Housing

Rent Smart Wales will hold and manage a register of all registered and licensed landlords and agents. 

The information will be public, although only certain elements can be accessed, so the address of a private landlord wouldn’t be disclosed, for example. 

If a prospective tenant wishes to check a landlord or agent, or a landlord wishes to check an agent has a licence, a request will need to be made to Rent Smart Wales.

Useful links

Rent Smart Training 

Rent Smart Wales 

Check to see if you need a landlord licence by answering questions.