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Question

Changing the Rent (Wales) | During the Tenancy (Wales) | Wales

Variation of Rent under Section 104 of the Renting Homes (Wales) Act 2016?

18 Mar 2022 | 5 comments

Does the wording of S104 of the Renting Homes (Wales) Act 2016 mean that:
a. it is possible to vary the rent within 2 months of the start of the tenancy?
b. it is not possible to reduce the rent within 12 months a previous rent variation?
Both a. and b. seem a bit odd or am I misreading the text?
https://www.legislation.gov.uk/anaw/2016/1/section/104

Answer

5 Comments

  1. guildy

    A rent variation is only available during a periodic contract, so if there’s a fixed term, the rent cannot be varied during the term.

    But, once periodic, the first one can be varied anytime on two months’ notice and after 12 months from the last variation.

    If it’s an existing tenancy (converted), any rent variation done before conversion is included in the 12 months (so if it was varied in June 2022 before conversion, it can’t be varied until June 2023).

    As a minor point, the legislation you linked was for a secure tenancy (local authority), but it’s similar wording and this is the private landlord one.

  2. dasuzu

    Thanks, and yes I spotted soon after that I should have referenced S123 for private landlord contracts – though the wording is almost identical. Does that mean that if you provided an initial fixed term contract of 1 or 2 months the rent could be increased as early as 3 or 4 months into the contract if it rolled into a standard periodic contract?

    This would seem strange and to actually potentially weaken a tenant’s position compared to current law – at least in relation to contractual periodic tenancies (not statutory periodic tenancies). As I understand it from reading the Shelter website, under current law a S13 notice to increase rent can not be used within the first 52 weeks of a contractual periodic tenancy – the 52 weeks including the initial fixed term (s.13(2)(b)(ii) Housing Act 1988)

    https://england.shelter.org.uk/professional_resources/legal/costs_of_renting/rents_and_rent_increases/rents_and_rent_increases_for_assured_and_assured_shorthold_tenancies#reference-9

  3. guildy

    Although we agree with what you say, we believe that, in reality, this isn’t going to be an issue. Most landlords won’t increase the rent for the first 4 or 5 years, especially with a suitable tenant, fearing they might leave. A landlord raising the rent after a couple of months will not last long in this business. Once they’ve pulled the trigger for the first increase, they are locked into the 12 monthly variations, so only the first one is the issue. We guess that the Welsh Government shares this view that it’s unlikely for a landlord to vary the rent soon into a periodic contract.

  4. dasuzu

    Under normal circumstances I would agree and avoid, if possible, raising rents. In fact, I have hardly ever increased rents in the past 23 years. However, we are now facing extraordinary inflationary pressures, rising interest rates, absurd government tax policies for landlords, and increased materials, fuel and labour costs. Rents have jumped dramatically so there is a large discrepancy in many cases between rent received and market rents.

    There seems to be a huge shortage of rental accommodation. I mainly let rooms in shared houses in Cardiff and many overseas students are now in hotels and very expensive Airbnb struggling to find a room and very distressed by it. When a room does come up in one of my shared houses my phone won’t stop ringing with people desperate for a room almost begging me. I then find the new tenant to be paying significantly more than the other housemates staying on.

    So I have taken the decision to raise rents – though still keeping them below market rents – and so far the majority of my tenants have been very understanding, even told me they were expecting it and thanked me for raising the rent sympathetically as friends’ of theirs have been treated far more bluntly. My tenants are VERY aware how little accommodation is out there and I think the majority of them will stay on as the raised rents are still below current market rates. If any do choose to move out, their rooms will be taken very quickly and at a higher rent than the increased rent I have offered them.

    The Conservative government, with their Summer Budget 2015, wanted to deter landlords from investing so a new generation could get on the property ladder and be more likely as property owners to vote Conservative – and that was the reasoning behind the decision to not allow landlords to deduct their mortgage interest payments. There now seems to be a massive shortage of rental accommodation and landlords do not seem to be stepping in to fill the gap so I guess they succeeded. Taxes are higher and obtaining a buy to let mortgage now is harder as the lender will consequently stress test the mortgage offer more stringently making it harder to justify the loan.

    We will wait to see the impact of the Renting Homes (Wales) Act 2016 – but it is worth remembering that the whole Buy to Let mortgage industry started after the introduction of the S21 notice in Housing Act 1988 which will soon be removed in Wales. As mortgage companies get nervous of the increased Welsh tenant/contract -holder rights I can see Welsh landlords soon facing higher mortgage costs and fewer products being available to them.

  5. guildy

    We agree that now is a time to be increasing rents, and we were meant not after 2 or 3 months from first moving in.

    Section 21 isn’t being abolished in Wales; that’s just England.

    The new rules introduce an equivalent under section 173, albeit permanently at six months notice.

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