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Welsh tenants entitled to withhold rent after landmark safety court ruling
Welsh tenants who do not receive safety reports are entitled to withhold their rent, judges have ruled in a landmark case that could affect the entire housing sector.
The High Court in Cardiff concluded that four housing associations had made their homes unfit for human habitation by failing to provide tenants with an electrical condition report (ECR) for their home.
Consequently, under the Renting Homes (Fitness for Human Habitation) (Wales) Regulations 2022, tenants who know they have not been given a report are entitled to withhold their rent.
The decision is a major blow for Coastal Housing Group, Tai Calon Community Housing, Valleys to Coast Housing and Bron Afon Community Housing, which brought the legal action against consenting tenants as a test case.
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The landlords fear that their non-compliance could open the door to a bill of tens of millions of pounds if tenants are entitled to demand a refund for rent they had already paid. A further hearing in the New Year will determine whether tenants are entitled to their money back.
Lawyers have suggested that there could be widespread failure by Welsh landlords to comply with ECR requirements across both the social and private sectors.
In court, the housing associations argued that despite failing to provide their tenants with physical confirmation of ECRs, their properties were still fit for habitation so rent was payable.
However, in their judgement on Friday 8 November, Justice Griffiths and Judge Jarman sided with the tenants on all the issues in the claim but one, for which they said lacked evidence.
The Welsh government also intervened in the case since it revolved around its recent legislation. It sided with the tenants for most of the issues.
The tenants are now bringing a series of counterclaims, which will be decided in the New Year. These will address what happens to rent they have already paid during the period the judges ruled their homes were uninhabitable.
The value of the counterclaims varies from £1,500 to £3,000 per tenant, which if multiplied across the sector could result in a multimillion-pound bill for landlords.
The tenants want the rent to be paid back to them. In defence, two other housing associations, Wales and West and Trivallis, are claiming that the Welsh government’s legislation is not fit for purpose and breaches the European Convention on Human Rights.
The court will hand down orders in the next few days. These will set out the timetable for counterclaims, while the housing associations have asked for permission to appeal Friday’s ruling.
“As soon as we have this understanding, we will continue to work with Welsh government to understand next steps.
“We appreciate the court’s view on provision of reports and recognise that tenants need this information to know that they are safe – which is why, as soon as the issue came to light, the housing associations worked to rectify it.
“For reassurance, however, these homes were and continue to be safe to live in – it was only a lack of paperwork that made them technically ‘unfit for human habitation’ under the law. We take matters of safety and fitness very seriously, and abide by the high standards set by Welsh government and the regulator.”
A Welsh government spokesperson said: “We thank the court for their judgement and will be considering this ruling in depth.
“We take this matter very seriously and will continue to work closely with stakeholders to help protect the interests of landlords and contract-holders in Wales.”
Matt Dicks, director of the Chartered Institute of Housing Cymru, said: “This is an in-depth and very complicated judgement from the high court, so it’s important that we take time to absorb and fully reflect on the details, and any implications for our members and the tenants they serve.”
Hearings for the case took place at the Business and Property Court in Cardiff in July. Justin Bates of Landmark Chambers, who acted on behalf of the landlords, said: “Can a rational legislature really have intended that consequence? We say the answer is no.”
Tenants must be given an electrical installation condition report (EICR) within 14 days of the occupation date.
The Renting Homes (Wales) Act was passed in 2016 and came into force in December 2022, which brought about a significant shake-up of housing law in Wales. Crucially, the act gives tenants new rights to challenge their landlords – even the right to withhold rent – if promises to rectify maintenance issues go unfulfilled.
Landlords must now ensure homes are fit for human habitation from the date the tenant moves in and for the duration of the contract, under sections 91 and 94 of the act.
Requirements include carrying out an electrical safety test at least once every five years, reduced from 10 years, as well as installing smoke alarms and carbon monoxide alarms where there are gas or oil appliances.
The focus is largely on converted contracts – where residents were already tenants of a social landlord when the act came into force and electrical safety tests had already taken place. For these tenants, there was a year’s grace period, meaning questions around non-compliance arise from December 2023 onwards.
In the private rented sector, it is less likely that the certification existed, which means that new certificates would have had to be issued.
Mr Bates pointed out that for his clients, most tenants had inspections completed and an ECR has now been provided.
Ranjit Bhose of Cornerstone Barristers, who acted on behalf of the tenants, said that the housing sector in Wales should accept the consequences set out in the legislation.
He said: “I’m not suggesting they don’t take their obligations seriously. But they are subject to legislation where there are bad landlords so they have to take the rough with the smooth.
“The adverse effect of non-compliance is also remediable by the landlord in a matter of days… [It is] only where a landlord fails or chooses not to comply, or not to rectify non-compliance over a long period of time, that higher adverse financial costs mount up.”
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