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Buying a rented property in Wales does not end the existing occupation contract. The buyer becomes the landlord on completion and takes the property subject to that contract. Existing arrears need particular attention because buying the property does not necessarily transfer the debt.
The sale does not require the contract-holder to sign a new occupation contract. The existing contract continues on its current terms, including any valid variations and arrangements that were agreed with the seller.
Before exchange, the buyer should obtain the written statement and any later variations, inspect the rent account and check the seller's compliance file. That file should include safety records, repair history, licensing information and evidence that required documents were given to the contract-holder.
The parties should also agree how the deposit will be transferred and dealt with under the relevant protection scheme. The buyer needs a clear handover of the rent ledger, deposit records, keys and contact details on completion.
The buyer should confirm who occupies the property, the contract type, rent, payment dates and whether any side agreements exist. Compare the ledger with bank records rather than relying on a single balance supplied by the seller.
Any arrears need particular attention. Record the amount due at completion, the periods to which it relates, payments or credits already allowed and any dispute raised by the contract-holder. The sale documents should then say who owns that debt, who may recover it and how any later payment will be allocated.
Under section 39 of the Renting Homes (Wales) Act 2016, the buyer must give the contract-holder form RHW3 within 14 days of becoming the landlord. It identifies the new landlord and gives an address to which the contract-holder may send documents.
A separate section 3 Landlord and Tenant Act 1985 notice is also required where that section applies. It must give written notice of the assignment and the new landlord's name and address by the statutory deadline. One document may satisfy both duties if it contains the correct information and address, but the requirements should be checked separately. See the Guild's landlord name and address guidance for more detail.
A buyer should not assume that arrears which fell due before completion pass automatically with the property. The transfer of the property and landlord's reversion is different from the transfer of an accrued debt.
The contract and transfer documents should deal expressly with those arrears. They should identify the debt, state whether it is assigned to the buyer and explain who keeps any money recovered later. The buyer should maintain separate pre-completion and post-completion entries so that the source of the balance remains clear.
For a legal assignment under section 136 of the Law of Property Act 1925, there must be an absolute assignment in writing signed by the seller, not merely a charge, followed by express written notice to the contract-holder. Without that documentation, ownership and enforcement of the old debt may be contested.
Section 181 and section 187 of the Renting Homes (Wales) Act 2016 cover serious rent arrears under periodic and fixed term standard contracts. Neither section says that the arrears must have accrued while the current landlord owned the property.
The Guild's cautious view is that arrears expressly assigned to the buyer under the same continuing occupation contract can count when the buyer serves form RHW20, provided the buyer can prove both entitlement to the debt and the rent ledger. There is no directly on-point reported Welsh case or Welsh Government guidance confirming that conclusion. A buyer intending to rely on inherited arrears for possession should take advice before serving notice.
For weekly, fortnightly or four-weekly rent, at least eight weeks' rent must be unpaid. For monthly rent, at least two months' rent must be unpaid. The threshold must be met both when RHW20 is given and when the court hears the claim. If those conditions are proved, section 216 says the court must make a possession order, subject to any available defence based on the contract-holder's Convention rights.
RHW23 is a separate route based on breach of contract. For an ordinary rent breach, section 157 and section 159 require one month's notice before proceedings, and the court may order possession only if it considers that reasonable. For general arrears management and debt recovery, see preventing, controlling and recovering rent arrears.