We have also produced a guide especially for agents here.
From 23 November 2015, the registration and licensing provisions in Wales commence with a 12 month grace period for landlords and agents to comply. The registration and licensing is operated and enforced by Cardiff City Council under the name of Rent Smart Wales.
After the 12 month period, it will become an offence to operate without registration or licence.
1. 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 under the Housing Act 1988 (the most common type of tenancy which applies to most rented property in Wales) or a regulated tenancy under the Rent Act 1977. The provisions do not apply if you rent to lodgers or if the tenancy cannot be an assured shorthold tenancy for example if the letting is to a company or the dwelling is not going to be the tenants only or principal home.
It should be noted that there are powers under the Housing (Wales) Act 2014 to introduce other types of lettings that are to be regarded as a domestic tenancy upon regulations being made.
2. Immediate Landlord
Landlord is defined as the ‘immediate landlord’ and does not necessarily mean the “owner” of a property (although in most cases the landlord will also be the owner). A landlord could also be somebody who is named on the tenancy agreement 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.
3. 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 of 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 is our view (but not yet confirmed by Rent Smart Wales), if two people own a property (a couple for example) but only one person is named on the tenancy agreement, only that one person needs to be registered. This is because of the definition of landlord being the ‘immediate landlord’. Of course if the other person of the couple are named as landlord on some other tenancy, they will need their own registration. If both owners are named on the tenancy, one can be nominated as the lead landlord, register and add other names to the registration.
Even in a situation where only one is named on a tenancy, it is nonetheless advised to name all owners on the registration. This would cover any situation in the future without having to make changes to the registration.
If a property has been recently purchased with an intention to rent it out, registration must be done within 28 days from when the property has been assigned to the landlord.
3.1 Exemption To Registration
If a property has been purchased with an existing tenant in place and the owner does not intend to continue renting to the tenant and intends to occupy the property as their home, 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 serious consequences on seeking possession.
3.2 How To Register
Registration is via Rent Smart Wales and an online form will be available for completion. The fee is yet to be announced.
The information required includes contact details of the landlord, date of birth and details of all properties for which they are the landlord (not necessarily for which they own). The details of any letting or managing agent appointed by the landlord (if any) must also be provided.
3.3 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 lettings 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 important 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.
3.4 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
4. Licensing
Any landlord or agent who performs lettings or property management activities on a ‘domestic tenancy’ must have a licence when enforcement of the Rent Smart Wales provisions start (23 November 2016).
All licences will need to be applied for through Rent Smart Wales and applications can be started from 23 November 2015. All licences will involve some training (for which see later).
Licensing does not replace HMO licenses and those will continue to be required as appropriate in addition to the provisions outlined here.
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 for the purpose of establishing 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 condition for the dwelling.
Further, a landlord will need a licence if the landlord is to carry out any one or more property management activities. Those activities are:
collecting rent;
being the principal point of contact for the tenant in relation to 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.
Lettings or property management activities does 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 only therefore required 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 though.
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 though.
It’s okay for an unlicensed landlord to make arrangements for repairs and maintenance when the tenancy has come to an end without a licence because the dwelling will not at that time 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 for 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 to check the condition of the property at the end of any domestic tenancy or arranging for repairs and maintenance during the tenancy.
If a property has been recently purchased with an intention to rent it out, a licence must be applied for within 28 days from when the property has been assigned to the landlord.
4.1 Exemption
If a property has been purchased with an existing tenant in place and the owner does not intend to continue renting to the tenant and intends to occupy the property as their home, 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 diligently pursue the recovery of possession”. As with registration, advice should be sought in this situation because failure to have a licence could seriously affect possession. It might be a better solution to pass management of the property (including serving possession notices) to a licensed agent.
4.2 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.
5. 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 hold a licence so a landlord must check with the public register before 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!
6. Time Away (Holiday Or Hospital)
A problem arises for self managing landlords if they wish to take time off or are forced to by hospital treatment. This is because of the strict requirement not to employ an unlicensed agent.
Take an example of a couple owning a property, (“A” and “B”). Only A is the landlord as per the tenancy agreement. Only A has a licence because only A carries out any lettings or management activities. B has nothing to do with the day to day running of the property other than being a joint owner. A is rushed to hospital and will be out of action for 2 weeks. During hospital, the tenant rings and B answers the phone. The boiler is broken so B arranges with a gas engineer to attend the property and B arranges with the tenant access. Because B does not have a licence, B has committed a criminal offence because B has:
made arrangements with a person to carry out repairs or maintenance; and
made arrangements with a tenant or occupier of the dwelling to secure access to the dwelling for any purpose;
This is clearly a potential problem for all self-managing landlords.
One solution would be for both A and B to obtain a licence. However, this might not be cost effective because B would require an agent licence as B is not the landlord (A must have a landlord licence). If both A and B were named on the tenancy, then both A and B would be able to obtain a landlord licence.
Another way round this is to utilise the “connected persons” provisions briefly discussed earlier.
Assuming B is not the landlord as per the example, B is a person acting on instructions of a landlord (and so an agent). An agent requires a licence if they carry out lettings work or property management work. However, lettings work or property management work does not include:
doing things under a contract of service or apprenticeship with a landlord; 1
A contract of service is a legal term for people working for the landlord (staff) and are known in the legislation as a “connected person” 2. All connected persons must be notified in any application for a licence and it will be a condition of any licence that connected persons complete the training requirements.
As a result, all A needs to do is to apply for a licence and nominate B as a connected person. B will then be required to complete the training but won’t need a licence because anything done will effectively be done on behalf of the landlord.
The same could be true for holiday periods. A family member could be nominated as a connected person, complete the training and would be able to temporarily look after the property whilst away. Connected persons can be added to or removed from a licence throughout the five years lifespan.
A person doing things under a contract of service with a landlord does not have to be on any written contract of employment.
Another example worthy of note: “C” and “D” are landlord friends. Both C and D have a landlord licence in their own right and manage their own properties. C asks D to look after C’s properties whilst away on holiday for two weeks. D would have to refuse because D does not have an agent licence – only a landlord licence. However, this is easily fixed because C could add D as a connected person to C’s licence. D would not need to do the training again because it would have already been done for D’s licence.
We have tried to get confirmation from Rent Smart Wales about what can be done in the above examples but have not yet received a reply (other than to say legal advice is being sought). Therefore, this part is theory only and subject to change as we read and absorb more of the legislation.
7. Obtaining A Licence
An application for a licence for landlords will be made to Rent Smart Wales. The fee is to be confirmed.
The information required will include:
contact information
details of any licences, voluntary accreditation or registration held or refused in the rest of the U.K.
a declaration of any convictions or court orders
details of any connected persons (persons employed or on apprenticeship)
7.1 Fit And Proper Person
In order 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 a HMO licence).
7.2 Requirements In Relation To 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 will be available both through Rent Smart Wales and other companies offering training that have been approved via Rent Smart Wales. The Guild of Residential Landlords has applied to be an approved trainer. Training will be available as face to face training or online. The cost of training will be payable in addition to the licence fee depending on which provider the landlord chooses.
The training will be based upon the training provided for Landlord Accreditation Wales. Rent Smart Wales has announced that existing accredited landlords “will have less to do” although it is unclear as to quite what that means at this stage.
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 for the purpose of establishing 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 condition for the dwelling.
Property management activities
* collecting rent;
* being the principal point of contact for the tenant in relation to 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.
7.2 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 in 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 fixed term, costs and fees, deposit amount, sum payable on signing, and guarantor requirements
potential tenants must be given the opportunity to read a draft or sample tenancy agreement prior to 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
7.3 Update Information About Licence Holder
The licence holder must notify any changes within 28 days which include changes to:
contact details of licence holder
change in connected person(s)
any change that may affect the “fit and proper person” test
7.4 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.
7.5 Expiry And Renewals
A licence expires at the end of 5 years but a licence holder may apply for a renewal during the period of 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.
7.6 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 is to the Residential Property Tribunal and must be made within 28 days beginning with the date the applicant was notified of the decision.
8. 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, there are severe penalties and restrictions that also apply for breaches.
A tenancy 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 section 21 notice).
8.1 Fixed Penalty Notices
For the majority (but not all) of the offences, Rent Smart Wales or a local authority may offer the person who has allegedly committed one of the offences the opportunity of discharging any liability to conviction by payment of a fixed penalty.
If the person pays the fixed penalty within the period of 21 days, the person will not be convicted of the offence.
The amount of the fixed penalty will be either £150.00 or £250.00 depending on the offence.
8.2 Rent Repayment Or Rent Stopping Orders
Where a landlord carries out property management activities or a landlord appoints an unlicensed agent, Rent Smart Wales (or local housing authority) may make an application to the Residential Property Tribunal for a rent stopping order.
The person who is 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 in a similar way 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.
8.3 Section 21 Notice
No section 21 notice may be given if:
the landlord is not registered, or
the landlord is not licensed and the landlord has not appointed a person who is licensed to carry out all property management work in respect of the dwelling on the landlord’s behalf.
This does not apply for the period of 28 days beginning with the day on which the landlord’s interest in the dwelling is assigned to the landlord.
It’s interesting to note the wording carefully here. There is technically no requirement under the act to appoint an agent. The offence is to carry out letting or property management activities without a licence (which includes collecting rent). A landlord could lawfully appoint a licensed agent for just let only (letting work) but still be restricted from serving a section 21 notice because nobody is appointed for property management work.
Of course, an unlicensed landlord could not collect the rent without committing an offence but in theory, the landlord could appoint one licensed agent to only collect the rent and appoint another agent to only make arrangements with a person for repairs and maintenance. However, this would still have the effect that no section 21 notice could be served because the requirement is that the landlord appoints an agent to “carry out ALL property management work in respect of the dwelling on the landlord’s behalf“.
9. 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.
section 10(4)(a) Housing (Wales) Act 2014 and section 12(3)(a) Housing (Wales) Act 2014 ↩
Regulations 2 The Regulation of Private Rented Housing (Information, Periods and Fees for Registration and Licensing) (Wales) Regulations 2015 ↩