GUIDE TO REGISTRATION AND LICENSING IN WALES
When it comes into force the Housing (Wales) Act introduces major changes to the private rented sector in Wales:
- Compulsory registration by landlords for their privately rented properties.
- Only licensed landlords or agents can market or let rental properties or manage them.
- A landlord can choose not to licence but must then employ a licensed agent to arrange a letting or to manage a privately rented property.
- A landlord must not employ an unlicensed agent.
- The Code of Practice and licence conditions will say how a property is to be let or managed.
The system provides for the registration of properties and personal licensing for those who let or manage these properties. It is not a system of property licensing as such. HMO licensing and selective licensing, both of which are property licensing, will continue to operate alongside the new regime.
These property registration and licensing requirements only apply to properties located in Wales.
When is the start date for registration, licensing and enforcement?
The Bill received Royal Assent and became an Act on 17 September 2014, but the provisions concerning the Private Rented Sector will commence over the course of 2015-2016.
Registration and licensing of landlords and agents began on November 23, 2015. However, landlords and agents will have a one year grace period to register and obtain a licence. Enforcement of the scheme will commence on or around November 23, 2016.
What do landlords need to do?
Once the legislation is effective landlords MUST :
- register all their rental properties (unless an exception applies)
- decide whether or not they want to be licensed
- apply for a licence by November 23, 2016 if they intend to let or manage their properties themselves
- still apply for a licence if they intend to instruct an agent for certain purposes (e.g. lettings) but carry out other things themselves (e.g. management)
Landlords MUST NOT :
- Use an unlicensed agent to let or manage their properties. This prohibition is wide ranging and extends to "informal" agents if they are not licensed.
Carry out any of the following activities themselves without being licensed -
Lettings Activities Management Activities arrange a viewing with a tenant collect rent conduct a viewing with a tenant act as the tenant's principal point of contact collect evidence about the tenant's suitability arrange for repairs / maintenance to be carried out obtain a reference or confirm one arranging with a tenant / occupier for access to the property undertake a credit check checking the contents or furniture in a property* interview a prospective tenant check the property condition* prepare a tenancy agreement arranging for someone else to check the contents/condition of the property* arrange for someone to prepare a tenancy agreement serve a notice to end a tenancy
NB * This cannot be done even after the tenancy has ended.
In these situations all an unlicensed landlord can do legally is to arrange for a licensed agent to act (or a solicitor in the case of preparing a tenancy agreement or serving a notice to end a tenancy).
Landlords should consider applying for a licence unless they intend to be passive investors leaving everything to their agent (who must be licensed). This is so even if they instruct an agent because there is a danger of being drawn into the letting or management of the property.
Who is an agent?
"Agent" is shorthand for a person acting on behalf of the landlord. It includes anyone who is doing something for a landlord; as well as firms who are letting and managing agents. The person does not have to be paid and there is no need for a contract with the landlord. It includes anyone who is self-employed or a contractor. It extends to informal arrangements. The landlord's own employees (or apprentices) are not agents for these purposes, but for this exception to operate there must be a contract of employment in place.
What must an agent do?
An "Agent" must be licensed to carry out lettings work or property management work (unless an exception applies)
What are agents not allowed to do?
An "Agent" must NOT do anything which is lettings work unless licensed. This means anything which is done in respect of instructions received from a landlord who is seeking to find a tenant for a rental property and having found a tenant to grant him/her a tenancy (unless an exception applies). This is a much wider definition than the prohibited list of letting activities which an unlicensed landlord cannot carry out himself/herself. They also cannot carry out management work unless licensed. This means not carrying out any of the activities listed under the heading "Management Activities" (unless an exception applies).
Which tenancies are affected?
The legislation covers tenancies of dwellings let in the private rented sector in Wales under assured tenancies, including assured shortholds, and tenancies which are regulated under the Rent Acts. There is power for the Welsh Ministers to add other categories. Properties which are subject to registration or licensing are referred to as "domestic tenancies."
Which landlord is responsible?
A landlord who is responsible for compliance is the immediate landlord under the tenancy.
Who is responsible for licencing and enforcement?
Cardiff City Council will be the licensing authority for the whole of Wales, via Rent Smart Wales. See: www.rentsmart.gov.wales/en/.
Local housing authorities will operate as enforcing authorities alongside the licensing authority.
There are powers for the licensing authority and local housing authorities to exchange information. Local authorities cannot take enforcement action without the permission of the licensing authority.