We're sharing a significant update from the Welsh Government that will be of particular interest to landlords across Wales. A recent proposal regarding tenant compensation for no-fault evictions has been rejected, bringing clarity to a key recommendation.

The Proposal: Recommendation 6

Within The Senedd’s Housing & Local Government Select Committee Report, Recommendation 6 stated the following:

"The Welsh Government should explore the feasibility of enabling tenants who are subject to no-fault evictions to retain the last two months’ rent of their tenancy as compensation for the financial and wellbeing impact of a forced move, and write to us by April 2025 to set out its conclusions"

Had this recommendation been agreed upon, it would have required landlords to compensate contract holders served with a RHW 16 (6 months eviction notice) with two months' rent.

The Good News for Landlords

In positive news for landlords operating within Wales, this proposal has been officially rejected by the Welsh Government.

Reasons for the Rejection

The Welsh Government rejected the proposal for several key reasons, highlighting a pragmatic approach to the potential implications:

• Potential to undermine the policy objective of a 6-month notice period: Concerns that compensation could inadvertently lead to an increased risk of homelessness by creating unintended consequences.
• Increased rent costs for all tenants: A recognition that such a measure could lead to landlords passing on costs, resulting in higher rents across the private rented sector.
• Mortgage/Lending rules and potential impacts on the supply of PRS properties: Acknowledgment of the potential negative effects on mortgage and lending criteria, which could reduce the overall supply of rental properties.
• Implications for low-income tenants in receipt of benefits: Consideration of how such a policy might disproportionately affect vulnerable tenants.
• Existing support for those struggling to pay additional rent or a deposit: The government noted that mechanisms are already in place to assist tenants facing financial difficulties during a move.

This decision provides welcome certainty for landlords regarding financial obligations related to no-fault evictions in Wales.

The full Welsh Government recommendation and their detailed response can be found here.