Why Wales works better for landlords: Rent payment rights compared
A special look at rent-in-advance, rent increases and bidding wars under Welsh law vs England’s upcoming Renters’ Rights Bill.
Welcome back to our landlord blog series, where we compare key differences between the private rental laws in Wales and those soon to be introduced in England.
In our first edition, we explored possession rights. With England’s Renters’ Rights Bill due to receive Royal Assent this summer and begin rolling out from October, the rules around rent payments are set for a major overhaul over the border. In this edition, we compare three key areas where Welsh landlords retain flexibility that English landlords will soon lose:
1. Rent in advance
England (post-Bill):
- Strict ban on demanding, encouraging or accepting any rent before the tenancy agreement is signed.
- Once the contract is in place, landlords may request up to one month’s rent in advance of move-in.
- After that, rent payments can only cover the immediate rental period and cannot exceed one month at a time.
- Risk: It’s an opportunity for fraudsters. Once a tenancy is signed, landlords must legally permit tenants to move in on the specified date – even if no rent has been paid – forcing landlords to pursue the full eviction process to regain possession.
Wales:
- No restrictions on taking rent before a tenancy is entered into.
- Landlords commonly take several months’ rent upfront from tenants unable to meet affordability thresholds (e.g. self-employed with irregular income, those with a poor credit score, or overseas tenants with a lack of UK credit history).
- Advance payments can help otherwise hard-to-place tenants secure a home, rather than blocking the deal.
Key takeaway: Welsh landlords can continue to secure their rental income upfront, while English landlords will face heightened financial risk.
2. Increasing the rent
England (post-Bill):
- Rent-increase clauses included in tenancy agreements are banned. All rent increases – even those that may have previously been done by agreement or informally – must be done by serving the statutory rent increase notice.
- The notice can’t be served more than once per year, and tenants must be given at least two months’ notice of an increase (up from one month).
- Tenants can challenge any increase – above or below market rate – at the First-Tier Tribunal for free, with no screening or fee. The Tribunal will cap the new rent at the lower of the landlord’s proposed amount or the current market rent.
- Rent increases cannot go ahead until the Tribunal has reached a decision (whereas today they typically backdate increases and can even raise rents above the landlord’s proposal). This means tenants could postpone an increase for several months at no cost to themselves – so we expect many more to contest any rise, even those below market rate. A mere 10% challenge rate would overwhelm the Tribunal.
Wales:
- Rent increase clauses in occupation contracts remain valid.
- If your contract lacks a clause, you must serve a formal notice at least two months in advance, and rent may only be increased once a year (the same as what England is going for).
- Most importantly, tenants cannot challenge a rent increase unless the tenancy was an Assured Shorthold Tenancy before it changed to an Occupation Contract on 1st December 2022. As time goes on, these tenancies are becoming less and less common, so it’s rare for any tenant to be able to challenge a rent increase.
Key takeaway: Welsh landlords can raise rents without it being challenged or delayed, whereas English landlords have to overcome many hurdles.
3. Bidding wars
England (post-Bill):
- A ban on encouraging, demanding or accepting any offers above the listed rental price – even if prospective tenants volunteer them.
- Local authorities can impose civil penalties up to £7,000 per breach, retaining those funds for further enforcement.
- A strong incentive for councils to clamp down, and a significant deterrent to landlords seeking to maximise rental return.
Wales:
- An open market: landlords and agents may invite and accept offers over the advertised rent.
- We rarely agree lets above the asking price – our deep market knowledge lets us set rents that reflect demand without resorting to bidding wars.
- Such wars wouldn’t be necessary if more homes were available, but Government red tape is driving landlords to sell up, shrinking supply further and exacerbating demand pressures.
Key takeaway: Welsh landlords retain freedom to harness market demand. English landlords will be legally barred from accepting over-market offers.
As you can see, in the coming months Wales will continue to offer landlords far greater autonomy over rent payment terms, rent increases and competitive lettings.
Next month, we’ll dive into another major difference for landlords.
In the meantime, if you’re considering expanding or rebalancing your portfolio in light of these changes, our local experts are here to help. Call us on 02920 668585 for a no-obligation chat.
The information contained within this article was correct at the date of publishing and is not guaranteed to remain correct in the present day.
