Section A - Introduction
The Housing (Wales) Act 2014 imposes additional legal obligations on landlords who have rental property in Wales and has been enforceable since 23 November 2016. This can be seen as part of the Welsh Assembly’s drive to increase protection for tenants and ensure that those engaged in activities relating to the tenancy are “fit and proper”. This Focus Note considers the application of the Rent Smart Wales scheme (the Scheme) to Methodist property in Wales.
TMCP is the legal owner of Methodist Model Trust property (holding the property on trust for the local Managing Trustees as custodian trustee) and has fulfilled the requirements under the Scheme to register as Landlord and apply for a Landlord's licence. However, Managing Trustees are treated for the purposes of the Scheme as connected persons, or the "hands of the trust". Managing Trustees must undergo approved training before carrying out any property “letting or management” activities. This does not place any additional requirements on the Managing Trustees because in their role as charity trustees they are already responsible for the day to day management of the charity, including its assets.
For comprehensive guidance on the Scheme in general, please visit Rent Smart Wales’ own website; https://www.rentsmart.gov.wales/en/. This Focus Note provides Managing Trustees with a summary of the key requirements. It also focuses on how these apply to Methodist Model Trust property given the way that such property is held by TMCP on trust for local churches, Circuits and in rare cases the Districts and the essential role that Managing Trustees play in managing the property. Further, this Focus Note sets out the steps the Managing Trustees will need to take to ensure that they are acting in compliance with the Scheme now that the requirements are enforceable.
Section B - Registration as Landlord
TMCP has registered as Landlord as it is TMCP who is the legal owner of the property. It is very important that local Managing Trustees do not register themselves or attempt to register TMCP as Landlord.
The register includes details of the Model Trust properties currently let out on assured shorthold tenancies (ASTs) (or otherwise let for income) and those who carry out “letting and management” work for such properties including any letting agents. Going forward TMCP will need Managing Trustees to provide details of any new properties that are let out and to notify TMCP of any changes that need to be made to the information held. Please complete the Rent Smart Wales Property Information Form available on TMCP's website to notify TMCP of any changes.
If the Managing Trustees let out any properties that are NOT held on the Model Trusts then please contact TMCP with details of the trusts on which the properties are held so that TMCP Legal can provide guidance.
PLEASE NOTE: Rent Smart Wales has confirmed that registration is not required for Manses occupied by ministers or others under service occupancy type arrangements. If the position changes TMCP will notify Managing Trustees. Please do not include details of such properties on the Rent Smart Wales Property Information Form.
Section C - Landlord’s Licence
TMCP has obtained a Landlord's licence and is licensed for letting and managing activities (see Section D1) as landlord. This means that Managing Trustees do not need to apply (or pay) for individual Landlord licences. However, all Managing Trustees involved in “letting or management work” do require training. Please refer to Section D1 for details of what activities constitute “letting and management”.
The conditions attached to a licence include keeping the information on the register up-to-date, abiding by the Rent Smart Wales Code of Practice, generally not instructing an unlicensed agent to carry out letting or management work and ensuring that those Managing Trustees involved in such work are suitably trained. Managing Trustees MUST notify TMCP immediately if the details provided previously in a Rent Smart Wales Property Information Form change. Managing Trustees also need to ensure that they comply with the Code to ensure that the Landlord’s licence is not revoked.
Section D – Training
D1 - What is “letting and management work”?
Managing Trustees are seen as connected persons or “the arms of the trust”. This means that they must complete an approved training course before carrying out any of the “letting” or “property management” activities set out under sections 6(2) and 7(2) of the Housing (Wales) Act 2014.
The definition of such activities in the legislation is extremely wide. Managing Trustees will require training if they do anything from making arrangements to access the dwelling (e.g. to arrange for a quinquennial inspection, repairs or maintenance to be carried out) to being the principal point of contact for the tenant, collecting rent or preparing the tenancy agreement or inventory. It would be very difficult for Managing Trustees to have any involvement with a tenancy (or tenant) without undergoing training.
Rent Smart Wales provide full guidance as to what constitutes “letting and management” work or activities on its website. Please refer to the FAQs .
D2 - Who should attend the required training?
It is recommended that at least two of the Managing Trustees responsible for a residential property (that is let out) need to fulfill the training requirements whether or not an agent is appointed. The reasons for this are discussed in Section D4 of this Focus Note. Each managing trustee body that lets residential property in Wales will be anxious to keep the position under review and decide who will be carrying out “letting” or “property management” activities for each rental property on behalf of the managing trustee body. Please ensure that Managing Trustees only start to carry out “letting” or “property management” activities after completing the required training and notifying TMCP of their contact details and training as discussed in Section E of this Focus Note “Keeping TMCP up-to-date”.
Managing Trustees who have not completed the Rent Smart Wales approved training or failed to notify TMCP or both of those things must ensure that they do not contact the tenant or otherwise carry out any “letting” or “property management” activities themselves.
Section D3 - What training do the Managing Trustees carrying out “letting” and “property management” activities need to complete?
To help Managing Trustees satisfy the training requirement on introduction of the Scheme, TMCP arranged and financed training sessions tailored specifically for Methodist Managing Trustees. Going forward, managing trustee bodies will need to make their own arrangements for Managing Trustees to complete the training requirements using the many training courses provided and/ or approved by Rent Smart Wales. The Rent Smart Wales website provides details of the courses that are available. Managing Trustees can find guidance on the steps to be taken to book training and notify TMCP in the Schedule to this Focus Note.
Section D4 - Why do local Managing Trustees need to attend Rent Smart Wales approved training sessions?
Even if the Managing Trustees have an appointed letting agent dealing with the tenancy on their behalf, it is important that as prudent charity trustees, the local Managing Trustees have knowledge of the requirements of the Scheme so that they can properly oversee management of the property and make decisions.
Ultimately the Managing Trustees are responsible as charity trustees for the management of the property and need to ensure that the property is managed correctly. Part of this responsibility would be to ensure that an agent appointed by the managing trustee body to look after the property is doing its job properly. The training should help Managing Trustees to know what questions to ask their agent and how to check that the agent is fulfilling the Rent Smart Wales’ Scheme requirements. Some examples of the importance of Managing Trustees having training are set out below:
(1) The agent may find that it is unable to act for the Managing Trustees for some reason and unless there are local Managing Trustees who can help the tenant, the Managing Trustees could be in a situation where nobody can deal with a tenancy. The Managing Trustees would be in breach of the Housing (Wales) Act 2014 if they deal with the tenant/tenancy without having completed the training. It could also lead to the Landlord’s licence being revoked. The Managing Trustees would subsequently lose the tenancy and the ability to receive an income from the letting.
(2) The agent could ask the Managing Trustees to make decisions as “Landlord”. To consider a tenant’s request properly, the Managing Trustees need to know what responsibilities they have as Landlord under the Scheme. If a tenant asks the agent whether the Managing Trustees will agree to install a handrail on a steep staircase, the Managing Trustees need to know what issues to draw to the managing trustee body’s (i.e. the Circuit Meeting) attention so that they can consider the request properly.
In short it is not possible for charity trustees to delegate all their responsibilities to a third party letting agent, however involved an agent may be with the letting and management of the property on behalf of the managing trustee body.
Please ensure that at least two local Managing Trustees fulfil the training requirements and notify TMCP that they are acting to enable the Managing Trustees to demonstrate proper fulfilment of their responsibilities as charity trustees.
- Keep TMCP up-to-date – Managing Trustees must notify TMCP of any changes that need to be made to the register as soon as possible whether it is a new property that needs to be added or a change to the information already held. Changes include when different or additional Managing Trustees take on responsibility for rental property. Please notify TMCP by completing and returning a signed copy of the Rent Smart Wales Property Information Form. The information held by Rent Smart Wales must be kept up-to-date. This is an ongoing requirement.
- Carry out “letting or management” activities in accordance with the Scheme – Managing Trustees need to ensure those who carry out “letting or management” activities only do so if they have first completed the Rent Smart Wales approved training (and notified TMCP so that their status as a connected person is reflected on the register). Managing Trustees also need to familiarise themselves with and adhere to the code of practice for licensed landlords and agents.
- Fulfil responsibilities as charity trustees and managing trustees - Managing Trustees need to bear in mind that ultimately TMCP is only the Custodian Trustee and responsibility for day to day control and management of property lies in the hands of the Managing Trustees. It is the Managing Trustees who are responsible for compliance with the Housing (Wales) Act 2014 and other statutory and common law requirements relating to tenancies. TMCP Legal will however be there to offer guidance and assistance to Managing Trustees and their agents/solicitors.
- Fulfil charity law and Methodist law, policy and best practice requirements before entering into any new residential tenancies - Contact TMCP before entering into any residential tenancies so that TMCP can provide guidance on the charity law and Methodist law and policy requirements that must be fulfilled before the tenancy is entered into. TMCP Legal will then be able to help Managing Trustees and their agents to fulfil these requirements.
Steps to be taken by Managing Trustees before carrying out “letting and management” activities
Before carrying out any “letting or management” activities, Managing Trustees must undergo approved training and notify TMCP so that their status as a connected person can be added to the register kept by Rent Smart Wales.
Managing Trustees can take the following steps to fulfil Rent Smart Wales' training requirements and notify TMCP:
Step 1. Create an online account with Rent Smart Wales direct. Please use this link.
All Managing Trustees need to do is create an account so that Rent Smart Wales can record their training. Managing Trustees should not proceed to register as landlord or apply for a licence as TMCP is responsible for this.
Step 2. Book a training session.
It is strongly recommended that Managing Trustees attend face-to-face training wherever possible as these courses are more beneficial in the long term. However, it is also possible to complete the training online. Please note that it is the Rent Smart Wales Online Landlord Course that is required. Rent Smart Wales do NOT accept completion of the free course; “Part 1 of the Housing (Wales) Act 2014: An Overview (for landlords and agents who require a top up)” as fulfilling the training requirements or even allow this to count towards the required training.
Step 3. Attend the training.
Before attending the training please ask TMCP Legal to provide a copy of the “Supplementary Rent Smart Wales Training Notes” that have been produced and are available on request. This guidance should be read alongside the general Rent Smart Wales Training Notes that course attendees will be given when they attend Rent Smart Wales Training Sessions whether online or in person. These notes help to clarify where the obligations on Methodist Managing Trustees are different to that of private landlords. (Please note in particular the requirements in terms of who applies for the Landlord’s registration and licence (TMCP) and the requirements under charity law and Methodist law, policy and best practice in terms of entering into tenancy agreements, responsibility for managing the tenancy and litigation).
General guidance on granting leases of residential properties is available on the Residential Tenancies page of the TMCP website.
Please bear in mind that as well as attending the training session, whether online or in person, Managing Trustees need to pass a short multiple choice test. Rent Smart Wales will then send successful attendees a certificate to confirm that the training requirements have been fulfilled.
Step 4. Notify TMCP so that TMCP can update the register held by Rent Smart Wales.
Managing Trustees can notify TMCP using the Rent Smart Wales Property Information Form. The form asks for a name, which properties the Managing Trustee accepts responsibility for, the reference number of the account created with Rent Smart Wales (in step 1) and the course attended. The account reference number is the #P1-000-***** number.
TMCP will update the register following receipt of the completed Rent Smart Wales Property Information Form to add the Managing Trustee as a connected person.
Step 5. Confirmation to Rent Smart Wales of willingness to act
The final step is that Rent Smart Wales will email the individual to check that they are prepared to be “connected” and accept responsibility for the property before completing the update. Please look out for this and ensure that confirmation is provided so that the registration can be updated and the Managing Trustees' fulfillment of their responsibilities as charity trustees reflected on the register.
Please note that this document is to provide guidance and assistance to Managing Trustees and their professional advisers. This guidance note is general in nature, may not reflect all recent legal developments and may not apply to the specific facts and circumstances of any particular matter.
Also note that nothing within the documents and guidance notes provided by TMCP nor any receipt or use of such information, should be construed or relied on as advertising or soliciting to provide any legal services. Nor does it create any solicitor-client relationship or provide any legal representation, advice or opinion whatsoever on behalf of TMCP or its employees.
Accordingly, neither TMCP nor its employees accept any responsibility for use of this document or action taken as a result of information provided in it.
Please remember that Managing Trustees need to take advice that is specific to the situation at hand. This document is not legal advice and is no substitute for such advice from Managing Trustees' own legal advisers.
Please feel free to contact the legal team at TMCP if you would like any further guidance on the Methodist and Charity law considerations.