Commentary on Sections Schedule 3 - Amendment of Renting Homes (Wales) Act 2016: restrictions on terminating contracts.
87.Section 177A - which will be inserted into the 2016 Act by paragraph 2 – relates to notices given to contract-holders by landlords seeking possession of dwellings subject to periodic standard occupation contracts. A possession notice of this kind would be given by a landlord under section 173 of the 2016 Act (Landlord’s notice).
88.Sections 186A, 186B and 186C – which will be inserted into the 2016 Act by paragraph 4(1) – relate to notices given by a landlord to end a fixed term standard contract. A possession notice of this kind would be given by a landlord under section 186 of the 2016 Act (Landlord’s notice in connection with end of term).
89.Section 198A – which will be inserted into the 2016 Act by paragraph 5 – relates to the use by a landlord of a notice under section 194 of the 2016 Act (Landlord’s break clause) where a landlord is seeking possession of the dwelling subject to a fixed term standard occupation contract. A contract incorporating a landlord’s break clause would allow a landlord to give notice to end the contract before the end of the fixed term.
90.New sections 177A, 186A to 186C and 198A will be fundamental provisions incorporated, by virtue of the 2016 Act, into the type of standard occupation contracts to which they relate.
91.So in relation to a periodic standard contract which incorporates section 173 of the 2016 Act, the contract would have to incorporate section 177A, unless the parties, in accordance with section 20 of the 2016 Act, agreed otherwise.
92.For a fixed term contract which incorporates section 186, the contract would have to incorporate sections 186A and 186C, unless the parties, in accordance with section 20 of the 2016 Act, agreed otherwise. The position in respect of section 186B is different in that the section must be incorporated into a fixed term contract, and must be incorporated without modification.
93.In relation to a fixed term contract incorporating a landlord’s break clause, section 198A would be incorporated into the contract; but again, this would be subject to any contrary agreement between the parties, in accordance with section 20 of the 2016 Act.
94.The restrictions being imposed by sections 177A, 186C and 198A would apply in both of the following cases, cases which would involve circumstances in which a landlord was acting contrary to certain provisions of this Act.
95.The first case is one in which, contrary to section 2(1) of the Act, the landlord has required a prohibited payment to be made in connection with the contract; in consequence, a payment has been made (whether to the landlord or another person); and the payment in question has not been repaid.
96.The second case is one in which a holding deposit paid to the landlord in relation to the contract has not been repaid, and the failure to repay is not authorised by Schedule 2 to the Act (although the general rule is that holding deposits will have to be repaid, Schedule 2 specifies limited circumstances in which a landlord is permitted to keep a holding deposit).
97.For the purposes of sections 177A, 186C and 198A, if all or part of an amount of a prohibited payment or holding deposit has been applied towards rent under the contract or towards a security deposit (or both kinds of payment) the amount so applied is treated as having been repaid.
98.So, for example, a landlord who had withheld the amount of a holding deposit, contrary to Schedule 2 to the Act, would not be prevented by section 177A(1) from giving a contract-holder a section 173 notice in relation to a periodic standard contract, if the total amount had been applied towards the first payment of the contract-holder’s rent under the contract.
99.Paragraphs 3, 4(2), (3), (4) and paragraphs 6 and 7 of Schedule 3 make minor amendments to the 2016 Act in consequence of, or otherwise in connection with, new sections 177A, 186A to 186C and 198A.