Does the tenancy deposit schemes apply in Wales?

Latest on deposit schemes that apply in Wales

Does the tenancy deposit schemes apply in Wales? Following the implementation of significant changes in Wales to housing law, many landlords have been left with many question marks as they begin to relearn their legal obligations and the new terminology.

One issue in particular that many landlords have been enquiring with our legal team about is whether the tenancy deposit scheme requirements apply to the new type of contracts in Wales.

Assured Shorthold Tenancy Agreements were replaced on 01 December 2022 with ‘Standard Contracts’ in Wales under the Renting Homes (Wales) Act 2016 (“the 2016 Act”).

Chapter 4 of the Housing Act 2004 states that the tenancy deposit scheme requirements only apply to assured shorthold tenancy agreements. Because landlords, understandably, don’t want to spend days reading the thousands of new pieces of legislation, they’ve been contacting firms like us to get answers.

The 2016 Act provides (at section 45) that tenancy deposit schemes apply to all Occupation Contracts in Wales.

But what is an occupation contract?

Under the 2016 Act, the term occupation contract refers to both a secure contract (usually used by community landlords) and standard contracts (usually used by private landlords).

There are then two types of standard contracts, a standard fixed-term contract and a periodical standard contract.

Each kind of contract gives different rights and responsibilities to both the landlord and the contract holder (tenant).

The Deposit Scheme Legislation in Wales

The requirements under 2016 are, in effect, the same as what they were under the Housing Act 2004 previously. Under the 2016 Act, landlords must:

1. Protect the tenancy deposit with a government-authorised scheme within 30 days of receiving the tenancy deposit.
2. Provide the required information to the tenant (and any third party that paid the tenancy deposit) within 30 days of the tenancy deposit having been paid.

The ‘required information’ is defined as information that may be prescribed by law which relates to the tenancy deposit scheme. This means that a law would be made setting out what the ‘required information’ must include.

The Renting Homes (Deposit Schemes) (Required Information) (Wales) Regulations 2022 sets out what the required information is in Regulation 3.

The 2016 Act provides (at Schedule 5 of the Act) that where the landlord has failed to comply with the tenancy deposit scheme requirements, the following consequences will apply:

1. The contract-holder can apply to the Court to ask the Court to order that the person holding the tenancy deposit repays it in full to the contract holder.
2. The contract-holder can apply to the Court to ask the Court to order the person holding the tenancy deposit to pay the tenancy deposit into a custodial tenancy deposit scheme.
3. The contract-holder can apply to the Court to seek an order that the landlord pays the contract-holder 1-3 times the value of the tenancy deposit as a penalty for failing to comply with the tenancy deposit scheme.
4. The landlord cannot serve a no-fault eviction under a notice under s.173 of s.186 of the 2016 Act.

In order to lift the resection on serving a no-fault eviction notice where the tenancy deposit scheme requirements have not been met, the landlord would need to return the tenancy deposit to the person that paid the tenancy deposit.

So, does the tenancy deposit scheme apply in Wales? – Yes, it does, and landlords should ensure they comply with the tenancy deposit scheme requirements to prevent facing a penalty and restrictions on eviction.

Quick Terminology Guide

For the avoidance of any doubt, the new law in Wales was not simply a changing of terminology but changed to legal notices, contracts, rights and obligations of landlords and occupants, which came with changes to terminology.

This guide aims to help private landlords understand the new terminology better and quicker and find the relevant forms they may need. It should be noted that where a prescribed form is available, the landlord must use that prescribed form for it to have an effect.

Author: Mr Sasha Charles (Landlord Advice UK)