Written Statements – The Full Story !

Ok, so there is a massive amount of confusion about written statements and what is required.

So, apologies for the long post, but I hope this is going to clarify what this is all about and the options that each landlord has to do.

The New Legislation Requirements for Written Statements

The much-awaited Renting Homes Wales Act came into force on 1 December 2022. This brought about the biggest changes in decades to the way property is rented in Wales, and removed many terms from the law that we know and understand well, such as tenants, tenancy agreements, section 21 and section 8.

In the past it was possible, if not advisable, to move a tenant into a property on a handshake, with no written tenancy agreement.

The new legislation makes it a legal requirement to issue contract holders (what we used to know as tenants) with a written statement of the terms of their occupation contract. This can be either in hard, paper copy, or by email.

Landlords are required to issue contract holders with this written statement within 14 days of their occupation of the property, or within 14 days of a change in their terms of occupation, such as a renewed occupation contract.

What is a Written Statement ? Is it different from an Occupation Contract ?

I know this causes massive confusion amongst landlords and to be fair it is not very clear.

Think about it like this, when someone rents a property an occupation contract is automatically created, it is not something physical, but a legal contract has been entered into. The new legislation defines many of the terms of this new contractual arrangement, but you can also add additional clauses into the occupation contract.

The written statement is just the physical or electronic documentation of that occupation contract. For new occupation contracts this written statement needs to be issued within 14 days of occupation. The reality is though that most landlords will issue and sign the written statement before the contract holder moves in so that you are sure you agree to all of the terms of the occupation contract.

I think where a lot of the confusion over this terminology has come is due to transitioning tenancies, ones that were in existence before 1 December 2022. For these tenancies, the new legislation automatically turned them into occupation contracts on 1 December. These are what are called converted occupation contracts.

Because the new legislation changed many of the clauses that existed in transitioning tenancies, there is a requirement that landlords issue the tenants, now the contract holders, with a written statement of their converted occupation contract terms.

This is what the Written Statement is for transitioning tenancies, not a new contract.

How to do a Written Statement

Your tenancy agreements were automatically converted into occupation contracts by the new legislation on 1 December 2022, and lots of new clauses were entered into that occupation contract by the legislation.

The written statement for these converted occupation contracts is a result of merging your previous tenancy and the new occupation contract terms. You cannot use the opportunity to insert new clauses into the occupation contract, apart from those defined by law.

Here is how you do this complicated merger:

• Take your tenancy agreement and your written statement template (ideally a combined fixed term and periodic written statement)
• Use the written statement as the starting point
• Insert key terms – property details, landlord information and contact details, contract holder information, original tenancy start date, rent as of 1 December 2022, rental period, payment date, duration of any fixed term of the tenancy remaining, deposit details
• Look through each of the tenancy terms
• Are any tenancy terms incompatible with fundamental terms in the written statement? If so, then ignore these terms of the tenancy
• Of the remaining tenancy terms, are any incompatible with supplementary terms in the written statement? If so, then remove this supplementary term from the written statement and replace it with the term from the tenancy
• Finally, any remaining tenancy terms form part of the occupation contract as additional terms and should be included as such in the written statement

You have now got your written statement. Congratulations ! You deserve a stiff drink after that !

Now you need to serve it to your contract holders, as well as the RHW02 form, before the end of May and make sure you have proof that it has been served.

Your 3 Options for the Written Statements

1. Do Nothing

Unlikely as it seems, there are some who have buried their head in the sand in the belief that if they ignore it long enough it will go away.

It won’t, and you may find yourself in some deep trouble if you do this. It is not too late to fix this though, but time is running out.

2. Avoid By Issuing a New Contract

Many landlords and agents thought that doing the written statement process above, especially if they had a lot of properties to deal with, was far too complicated and time consuming.

They believed, as did many others, that if they issued a new/replacement occupation contract starting after 1 December 2022 then as this new contact would end the previous arrangements, they would avoid having to issue a written statement for the converted occupation contract.

However, the Welsh Government recently issued clarification that this was not the case.

Let’s take an example to clarify. In this example, you issued a replacement/substitute occupation contract on 1 April 2023 for a tenancy that was converted on 1 December 2022. Let’s also assume that you issued and signed the written statement of this occupation contract (i.e. the paper or email contract) with the contract holders before 1 April, as you would expect.

The clarification from the Welsh Government means that even though you issued a written statement for the new occupation contract on 1 April 2023, you still need to issue another written statement for the converted occupation contract to cover the period 1 December 2022 to 1 April 2023.

This has caught a lot of landlords out. They issued a replacement occupation contract and now have to go and issue a written statement too. Many will not realise that this is the case and come 1 June will be in breach of the new legislation, which could have serious consequences for them.

3. Issue a Written Statement for the Converted Occupation Contract

This meets your legal obligations and must be done before the end of May 2023. If you do this then nothing else needs doing.

Does the Contract Holder Have to Sign the Written Statement ?

The short answer is no. You are not asking for their agreement to the written statement. The contract holders do not need to have read the written statement or to have understood it.

The written statement is about the facts of their occupation of your property as of 1 December 2022. These facts, the terms of their occupation, were changed by the new law and the written statement merely informs them of the changes made by the law, outlining their new occupation terms.

You just need to have served this written statement to contract holders, and as ever when you are required to do something you should really have a way to prove that this requirement has been met.

More and more these days landlords need to document, document, document. If ever an issue goes to court, you need to be able to prove you have met your obligations.

However, while a signature on the written statement from your contract holder is not required, it is a good thing to have as a landlord as it definitely shows they have received it. You can either have the written statement signed in hard copy or electronically, either one is equal proof of receipt.

What if the Fixed Term Ends After 1 December 2022 ?

If your tenancy was periodic on 1 December 2022 then once you have sent your written statement, hopefully before the end of May deadline, then there is nothing more you need to do. The contract holders can remain on a periodic basis indefinitely.

However, if your tenancy was on a fixed term on 1 December 2022, then at some point thereafter it will move out of the fixed term and onto a periodic basis.

Exactly what you have to do when this happens will depend on which written statement template you have used.

Welsh Government Templates

If you have used the Welsh Government templates, then they have one written statement template for the fixed term occupation contract and a different written statement template for the periodic occupation contract.

You should have used a fixed term template when you issued your written statement for the converted contract, because the statement is meant to reflect the converted occupation contract terms on 1 December 2022 and this was in the fixed term.

The new legislation sees the transition from fixed to periodic terms of the occupation contract as a change in contract, requiring that you issue a new written statement of the now periodic occupation contract terms.

Let’s take two situations to explain this, one with the fixed term ending before May 31 2023 and one with the fixed term ending on 1 August 2023:

• A tenancy with a fixed term ending on 1 April 2023
  • A fixed term written statement needs issuing for the converted occupation contract terms that came into effect on 1 December 2022. You have until 31 May 2023 to issue this written statement
  • As the terms of the occupation contract changed on 1 April 2023, you also need to issue a written statement for the periodic occupation contract coming into effect on 1 April 2023. You have until 14 Jun to issue this periodic written statement
• A tenancy with a fixed term ending on 1 August 2023
  • A fixed term written statement needs issuing for the converted occupation contract terms that came into effect on 1 December 2022. You have until 31 May 2023 to issue this written statement
  • As the terms of the occupation contract changed on 1 August 2023, you also need to issue a written statement for the periodic occupation contract coming into effect on 1 August 2023. You have 14 days from the start of this periodic occupation contract to issue this written statement i.e. until 15 August 2023

If you fail to issue the new written statement for the periodic occupation contract then you are in breach of the new legislation.

Templates Which Include Fixed and Periodic Terms

Most good templates will include the terms applicable to fixed term occupation contracts and periodic occupation contracts within the same written statement. This is certainly the case for Training for Professionals and the NRLA template occupation contracts, and I am sure other professional landlord organisations.

What this means is that when you serve one of these written statement templates, which you will need to do before the end of May 2023, the contract holder has already been informed of the terms applicable to the fixed term and the terms applicable to the periodic term of their occupation.

Nothing more needs to be done, although if you want to be completely safe then you can issue a notification when the occupation contract changes to a periodic basis that from that point periodic terms in the occupation contract are applicable.

Consequences of Not Doing a Written Statement

For those with their head in the sand hoping it will all go away, the new legislation has a lot more teeth than before and there are serious consequences for not meeting the legal requirement to serve a written statement.

Failure to serve a written statement gives the contract holder the right to claim compensation equal to a day’s rent for every day the written statement is late. The maximum compensation that can be claimed for this is 2 month’s rent in compensation. The contract holder can withhold this compensation from the rent paid.

If you serve a written statement, but it is incomplete or incorrect then the same compensation can be claimed by the contract holder, up to 2 month’s rent.

Furthermore, you cannot serve section 173 notice (no fault eviction) if you have been required to serve a written statement by a date which has now passed, and you have not served the written statement.

You also cannot serve section 173 notice within 6 months of serving a written statement after its required service date. So, if you were required to serve a written statement by the end of May 2023, and did not serve it until 10 June 2022, you could not then serve a valid section 173 notice until 10 December 2023.

So, there are real consequences, financial and otherwise, for not meeting your obligation to serve contract holders with the necessary written statements.

Amendments to the Renting Homes Wales Act

You may have seen that the Welsh Government issued some new draft amendments to the Renting Homes Wales Act at the end of April. There has been much speculation that these changes mean we need to re-issue any written statements again and that a further written statement now needs to be issued by 15 June.

Neither of these is correct. In fact, the changes published are very minor and help clarify a grey area in the previous legislation ensuring a common sense interpretation of this grey area.

The issue that this amendment resolved could be summed up as follows:

1. Tenancies which existed on 30 November 2022 are automatically converted into occupation contracts on 1 December, these are called converted occupation contracts
2. Written statements for occupation contracts need to be issued within 14 days of occupation, except for converted occupation contracts which need to be issued by 31 May 2023
3. Where a converted contract moves from fixed term to periodic term a new written statement needs to be provided
4. Consider a converted fixed term contract that ends its fixed term on 1 September 2023. Neither contract holder or landlord serves notice to end the occupation so on 1 September the occupation becomes periodic
5. A new written statement needs to be issued, but according to point 2 above this needs to have been served before the end of May. But we only knew as September approached that the occupation contract was going to move to a periodic basis. So, it was impossible to comply with the legislation and as of 1 September 2023 you are immediately in breach, with all the consequences this entails.

The amendment clarifies the following:

• Where a substitute contract comes into existence after the end of May 2023, the landlord has 14 days from the start of that substitute contract to serve the written statement
• Where a substitute contract comes into existence before the end of May 2023, the landlord has until 15 June 2023 to serve the written statement
• Where, under a converted occupation contract, there has been a change in the identity of the contract holder a written statement needs to be served by 15 June 2023, or within 14 days of the date the landlord became aware of the change in contract holder, whichever is later

There has been some disagreement on whether these amendments, which came into force on 1 June 2023, required further written statements to be issued. The NRLA has stated they do not believe that they do. I disagree with the NRLA on this though and believe that as this amendment changes fundamental provisions relating to the serving of written statements under periodic terms, then it does require either a new full written statement of the terms of the occupation contract to be issued for converted contracts or for a statement of variation to be issued. I am not alone in this belief, with Training for Professionals (the company that does training for Rent Smart Wales) telling all who have issued universal written statements to issue a statement of variation to show the terms that have been changed.

To be honest it just makes sense to do it. The statement of variation is simple to issue and it just means that if you have to take a possession process to court then there is no question about whether you have issued the necessary written statement.

Can Homelink Help You With Your Written Statements ?

I hope that this explains nearly all the questions you might have about written statements.

As you can see the written statements that need completing before the end of May 2023 for converted occupation contracts are not a simple thing to put together, and many landlord are struggling with this process.

However, at Homelink we have found a written statement template that makes the process more manageable and uses a Universal Written Statement template which works with any previous tenancy agreement.

After having looked at this for some time I concluded that this is the best way of generating the required written statements in a way that avoids mistakes in the statement. This Universal Written Statement has been developed by the people who deliver training for Rent Smart Wales, so they are the leaders in understanding the legislation and if anyone is going to get this right it is them.

If you would like to have Homelink use this written statement template for you, taking all of the stress out of this process, then submit an enquiry here and we will let you know how it works and what we would need from you - https://link.agent-online.co.uk/widget/form/EHgKGmcmGSiSNZz7IlBF.