The High Court has ruled in favour of housing associations in a case with millions of pounds in rental payments potentially at stake.
The judgment came in the second stage of a test case brought in the aftermath of implementation of the Renting Homes (Wales) Act. This concerned regulations introduced in 2017 that introduced a requirement for landlords to provide electrical condition reports (ECRs) to contract holders (tenants) by mid-December 2023.
In a judgment following the first stage of the case in November 2024, the High Court ruled that failure to give the reports to their tenants (as opposed to have them available) meant the properties were unfit for human habitation and that contract holders were ‘not required to pay rent’. Around £60 million in rent was said to be at stake across five housing associations.
The second case involved counter-claims to the original case, with landlords and tenants as both claimants and defendants and the Welsh Government intervening. The counter-claims included the vital question of whether tenants who had already paid their rent could reclaim it. This turned on whether the rent was paid because of a mistake of law.
The High Court heard evidence that an earlier version of the regulations only required associations to have an ECR but the final version provided that they must ensure that the contract holder is given a copy.
In a judgment last week the judges said that: ‘What is in retrospect unfortunate is that there was no flagging up of the change in wording from the consultation regulations of 2017 upon which much time and attention had previously been focussed by landlords like the claimants. The claimants did not blame the Welsh Government. They acknowledged, in their evidence, that they made a mistake because of a misunderstanding for which they took the whole responsibility. But it was in our judgment an understandable mistake. It was picked up very swiftly and, once picked up, corrected immediately and without any prompting from any defendant.’
The court found that none of the rent counter-claimed was paid as a result of a mistake of law. This meant that all the other counter-claims failed, including whether the landlords were ‘unjustly enriched’ as a result of the mistake and whether their human rights were breached.
The ruling concludes: ‘For these reasons, primarily because the mistake in this case was not causative of the defendants’ payment of rent when it was not required to be paid, but also because it is not unjust for the claimants to retain such rent, and also because we should not grant restitution when the contract subsists and no damage has been sustained even assuming a breach of contract, the counterclaims of all three defendants fail and are dismissed.’
An appeal in the first case is still outstanding and was due to be heard early next year but there is speculation that it may be withdrawn.
A Welsh Government spokesperson said: ‘We welcome the reassurance and clarity for both contract-holders and landlords provided by the Court’s judgements.
‘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.’