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Landlords in Wales have been waiting for the outcome of a consultation proposing to increase the length of notice required for a no-reason notice served in respect of a periodic converted contract.
It would be helpful for subscribers to read this article in full because vital information is at the bottom.
A periodic assured shorthold tenancy that converts on 1 December 2022 to a standard periodic occupation contract currently retains two months' notice.
Julie James, Minister for Climate Change, has announced that the notice will remain at two months during the first six months from 1 December 2022 and, from 1 June 2023, reverts to six months' notice.
This announcement is made even though the "vast majority" of "over 90%" of respondents to the consultation "were against extending six-month notice periods to existing tenancies".
Julie James goes on to say:
The proposed extension of the six-month no-fault notice period was always going to generate highly contrasting views. Whilst noting the views of those landlords and agents that responded, I have decided that the societal and individual benefits accruing from the extension outweigh the negative impact on individual landlords, particularly in view of shorter notice periods of one month or less applying where there is a breach of contract. At the same time, I am also mindful that landlords will not have had an opportunity to take the proposal into account in agreeing new contracts prior to the announcement of the consultation. Notwithstanding the calls from tenant representatives to introduce the extended no-fault notice period as soon as possible, I believe it is appropriate to allow landlords more time to plan than applying the change from 1 December would allow.
The statement continues:
I have decided to proceed with applying the extension from 1 June 2023. I believe this achieves a reasonable balance between the rights of tenants and those of landlords.
This is a little misleading because the changes in the draft regulations commence at 11 pm on 30 November 2022, so it doesn't give landlords "time to plan"!
This makes everything more confusing because the term regarding notice periods has to contain two lengths of notice - on or before 31 May 2023 and on or after 1 June 2023.
We advised landlords to wait before issuing renewals before 1 December to make conversion much easier, and you're good to go for those waiting!
Our written statement of occupation contract has been updated, but with a couple of disclaimers:
First, the regulations bringing in the change are in draft form. We have changed the contract based on those regulations, which could change, although we believe this is unlikely.
Second, the term containing the length of notice is a "fundamental term", meaning it cannot be modified. There is only space for one length of notice (e.g. two months or six months), but we've had to change the term to include the two lengths based on the date the notice is given. This is not ideal, given it is a legislated term which should not be modified. However, we can't find any other way to achieve the legislated aim.
The first step is to consult this article, which aims to assist in deciding which occupation contract to use and when to issue the written statement.
Suppose you have already begun issuing the new contracts to make conversion easier. Unfortunately, a written statement of variation must be issued within 14 days of 1 December (but not before the 1st). We will produce a form changing the old term to the new version, which you can send simultaneously as you send the signed copy of the written statement.
We sent an email the other day after a customer had found an issue with the occupation contracts, which we immediately fixed. From discussions with subscribers since that email, it looks like a small number of contract types were affected.
However, it is worth checking if you have started sending the new style contracts before today (11 November 2022) and have not already spoken with us. The quickest check is to look for clauses 78 - 80 in the periodic contract (or potential periodic terms for fixed-term contracts) (the clause numbers vary depending on selections made). The clause refers to the length of notice that needs to be given and, in some cases, may have been blank. You're fine if your contract has some number text (two or six months).
If you've been testing but have not yet sent the contract, go to Tenancy Builder, edit the contract, and click save and build on the last page. That will download the latest version.
I thank all subscribers who have contacted us about issues or improvement suggestions. If you don't tell us, we don't know!
In addition to the fix above, plus the change after the new rules, the current version has had a few other tweaks and modifications but nothing substantial. If you've already sent it and the notice length term is okay, you wouldn't update for the small changes.
They include grammar tweaks, clarification about persons acting on behalf of the landlord and a change to the utility terms allowing greater flexibility in adding your terms.
We plan to make further changes to the utility terms, which will take a little time to implement.
Finally, we know some customers were experiencing an issue with the country changing in Tenancy Builder, which would cause the agreement to hang in progress. We are sorry for the trouble. Thanks to a very patient customer late yesterday and much testing to recreate the issue, we have finally found the bug. The new code has been pushed to the live servers, and we are confident this is fixed.
Please see this article about when to give the new occupation contracts.