The High Court has determined that the new Welsh housing legislation means that a failure to provide a copy of the Electrical Condition Report is fatal to the recovery of rent until such time as the report is provided.
On 8 November 2024, the Divisional High Court of Wales considered the test case, of Coastal Housing Group Ltd & Ors v Mitchell & Ors, which was brought by four Welsh Registered Social Landlords.
This case concerned a landlord's obligation to provide contract-holders (formerly known as tenants) with Electrical Condition Reports (ECR)and the wider regulatory regime under the Renting Homes (Wales) Act 2016 for Electrical Condition Reports and fitness for human habitation.
The law in Wales is as follows:
- Landlords must provide contract-holders with a copy of the most recent ECR within 14 days of them taking occupation;
- A failure to provide the ECR in the required time means the property is deemed unfit for human habitation during the period of non-compliance (Regulation 6 The Renting Homes (Fitness for Human Habitation) (Wales) Regulations 2022);
- Landlords must ensure a property is for human habitation (section 91 Renting Homes (Wales) Act 2016); and
- The sanction for a property being unfit for human habitation is that the contract-holder can withhold rent during the period of non-compliance (Regulation 11).
In the case in question, the landlords had obtained the ECRs but had not provided the contract-holders with a copy by the due date. Interestingly, the contract-holders had not in fact withheld rent.
The Court was asked to consider whether having an ECR which showed the property was fit for human habitation, meant there was no breach of Regulation 6 notwithstanding that a copy had not been provided to the contract-holders.
The Court held the landlords' failures to provide the contract-holders with a copy of the ECRs by the due dates did breach Regulation 6. This meant the properties were unfit for habitation and the tenants were entitled to withhold rent until such time as the ECRs are provided.
The Court went on to explain that the rent which was not legally due during the period of non-compliance does not become due and owing once the breach is remedied by provision of the ECR to the contract-holder. This means that a failure to provide the ECR within 14 days of occupation will leave Welsh landlords with a potential income shortfall that cannot be retrospectively remedied.
Although the Court held that the rent was not legally due, they declined to rule on whether paid rent could therefore be recovered by the contract-holders from their landlord.
Read the full judgment here.
Although this case and the underlying legislation only applies to Wales, the decision is clear that rent is not payable if a landlord does not provide the contract-holder with an Electrical Condition Report within 14 days of occupation, until such time as the report is provided. As this cannot be later recovered by providing a copy of the report, landlords who fail to comply will be left with a potential shortfall in rental income. This is a particularly draconian consequence for landlords given that the rent would otherwise be contractually due and the contract-holder in those circumstances obtains the windfall of rent-free occupation irrespective of whether the electricity system is compliant.
It seems inevitable that the landlords involved in this case will pursue an appeal, given the potentially severe financial consequences. Welsh landlords will need to urgently review their regulatory compliance and ensure that they have failsafe processes in place to ensure that Electrical Condition Reports are provided within 14 days to contract-holders in line with regulatory obligations.
