Converted Contracts

Under the Renting Homes (Wales) Act 2016 (“the Act”), most existing tenancies will be converted to occupation contracts, including all assured shorthold tenancies.

To establish which tenancies or licenses are converted, it is to be determined what the tenancy would be at the start of the Act had it been granted on that day.

The tenancy does not end due to conversion (section 239(3)).

The tenancy terms continue to apply to the converted contract to the extent that they can comply with the new rules.

Tenancies automatically converted

The following tenancies will be automatically converted (not an exhaustive list):

• assured and assured shorthold tenancy (except moveable structure, e.g. caravan)
• resident landlord (separate dwelling in converted building – not lodger)
• the dwelling consists of licensed premises
• high rateable value or low rent
• rent over £100k per annum.

See the table at the bottom for more detail on converted contracts.

Tenancies not automatically converted except for notice

For certain tenancies that aren’t converted, a notice can be served at any time before two months from the start of the Act, informing the tenant (contract-holder) that the tenancy or licence will be/is an occupation contract (schedule 12(2)(3) + (4)). 

The tenancies to which this applies include:

• company letting
• no rent (or other consideration) is payable
• holiday letting
• shared accommodation (lodger)

Rights and obligations relating to converted contracts

Most rules outlined in this handbook apply to the converted contract. But, some of the duties have extended timeframes allowing extra time for compliance. 

The responsibilities with extended time are:

• you must give a written statement to contract-holders within six months of conversion.
• you must install a smoke alarm on each storey connected to the mains and interlinked within 12 months (but the duty to have a CO alarm applies immediately)
• an electrical safety inspection report must be given to the contract-holder within 12 months.

Other differences exist between a converted contract and a new occupation contract granted from the start of the Act.

Specific notice lengths

For new occupation contracts, a no-reason notice during the fixed term is unavailable (except a break clause in some instances), and notice during periodic is six months. However, for a converted contract, the lengths of notice are changed:

• if the converted contract is fixed-term, you can serve two months’ no-reason notice during the fixed term after six months from the original occupation
• if the converted contract is fixed-term on commencement and then goes periodic after, six months' notice is required
• if the converted fixed-term contract includes a landlord’s break clause, you can give two months’ notice, but it may not be delivered until after the first four months of occupation (and it must follow the requirements of the clause)
• where the tenancy was an assured shorthold tenancy before conversion, two months’ notice is retained and can be served during periodic (after four months of occupation) - note: at the time of writing, there is a consultation seeking to increase this from two to six months notice
• grounds 1, 2, 5 and 7 of Schedule 2 Housing Act 1988 are available for a converted contract that was an assured shorthold (or assured) tenancy immediately before the conversion
• if the converted contract was an assured tenancy (but not an assured shorthold), the no-reason notice or break clause is unavailable.

Other differences

The handbook content will try to outline differences for a converted contract in each relevant section, but some other differences include:

• the written statement of the contract will require several modifications specifically for a converted contract (and the model contracts under the legislation do not contain some required terms)
• you may not vary a converted contract before the contract-holder has been given a written statement of the contract
• previous variations of rent apply to a converted contract as if they were made under the Act (so if the rent was increased under an assured shorthold tenancy, it could not be raised again for a further 12 months since that increase)
• a contract-holder is subject to the same liability for waste regarding the dwelling as they were subject to immediately before the conversion
• the rule of law under which a tenant has an implied duty to use premises in a tenant-like manner applies to a contract-holder under a converted contract as it applied to them immediately before the conversion
• if the converted contract was an assured or assured shorthold tenancy, there is a deemed supplementary term (see later) that at least one contract-holder must occupy the dwelling as their only or principal home.

Tenancies and conversion