The Welsh Government has rejected a proposal requiring landlords to provide two months’ rent as ‘compensation’ to tenants upon serving a Section 173 possession notice.

The S173 is similar to an S21 in England.

The proposal, which suggested that tenants could retain the last two months’ rent as compensation, raised significant concern within the sector – particularly that it could deter future investment into the buy to let and Build To Rent sectors.

The National Residential Landlords Association says that in rejecting it, the Welsh Government has recognised the need to balance tenant protections with landlords’ rights – helping to maintain sector stability and ensuring landlords can continue to act lawfully without fear of arbitrary financial penalties.

The NRLA warns that an approach of this kind is also likely to have had unintended consequences – disrupting housing benefit payments and disproportionately favouring tenants with greater financial resources, while putting low-income renters at a further disadvantage in an already constrained housing market.

Association chief executive Ben Beadle says: “We welcome the Welsh Government’s common sense decision to drop proposals that would have imposed arbitrary compensation payments on landlords using legitimate grounds for possession. 

“Confidence in the Welsh private rented sector has been knocked significantly in recent years, but the decision to reject this measure outright is step in the right direction. I am delighted that our concerns have been listened to.”

You can read the Welsh Government’s response to the recommendation in full here.