High Court rules in favour of Welsh landlords in landmark test case

Earlier sessions heard Ranjit Bhose of Cornerstone Barristers, acting on behalf of the tenants, saying that his clients “made the payments through a mistake on their part” and did not realise rent was not payable.

None of the defendants knew rent was not payable because they had not received an ECR for their properties by 15 December 2023, he said.

The certificates are required to be given to residents within 14 days of occupation under the Renting Homes (Wales) Act 2016, which came into force in December 2022.

Converted contracts – for residents who were already tenants of a social landlord when the act came into force – were affected from 1 December 2023.

If landlords had been required to pay back rent to tenants for the period in which the certificates were not issued, it could have cost the sector tens of millions of pounds.

An appeal of this decision is due to be heard in February. But ahead of this, the landlords selected test cases for counterclaims to determine whether the ruling meant tenants were entitled to claim rent back.

Their case hinged on whether the rent had been paid by the tenants because of a “mistake of law”, this being that none of them knew that because they had not received an ECR, and therefore were not required to pay rent.

The court had previously heard from a barrister acting on behalf of three social landlords who argued that Welsh government guidance did not make a change in duty for landlords to provide ECRs to tenants clear.

Another Welsh landlord had told the court it failed to provide electrical reports to tenants after “misunderstanding” its legal requirements.

In the new ruling, the judge found that the tenants would in fact have paid their rent anyway, even had they known their legal right not to, because they would have felt that an error had occurred.

“We therefore conclude that none of the rent counterclaimed in this case was paid as a result of a mistake. That is, in itself, fatal to all the counterclaims,” the judges said.

They also ruled the landlords had not been “unjustly enriched” by receiving rent, given the tenants received “exactly the housing” that they were expecting. 

“The defendants did not care about physical receipt of the ECR although they would no doubt care about the electrics being safe (which they were).

“They only became aware of the non-provision issue when the landlords themselves became aware of it and set about putting the position right. If the defendants are allowed to reclaim the rent in full, despite not having suffered any loss, it is they and not the landlords who will be unjustly enriched.”

A spokesperson for Community Housing Cymru, which represents Welsh housing associations, said: “We are grateful to the High Court for providing important clarification on these issues, and all parties involved in bringing and exploring this test case.

“For reassurance, however, housing association homes were and continue to be safe to live in – this was a point of legal technicality. Housing associations take matters of safety and fitness very seriously, and abide by the high standards set by Welsh government and the regulator.”

The Welsh government said: “We welcome the reassurance and clarity for both contract-holders and landlords provided by the Court’s judgments.

“As there is currently an ongoing appeal in relation to this case, it would not be appropriate for the Welsh government to comment further at this stage.”