Section 123 Renting Homes Wales Act: How Rent Variation Works

The Statutory Foundation

Section 123 of the Renting Homes (Wales) Act 2016 is the statutory mechanism for varying rent on a periodic standard occupation contract. Since the Act came into force on 1 December 2022, Section 13 of the Housing Act 1988 has not been the rent-variation route for Welsh occupation contracts. A private landlord making a unilateral statutory rent variation must use Section 123; the landlord and contract-holder may also agree a rent variation in writing.

Section 123 is classified as a fundamental term. That gives it a special status: it cannot be omitted from the written statement, and any contractual clause that attempts to override it (permitting more frequent increases or shorter notice, for example) is legally ineffective.

If the landlord and contract-holder agree a rent variation in writing instead, the landlord must provide a written statement of variation within 14 days of it taking effect.

How the Provision Operates

The landlord serves Form RHW12 — the prescribed notice of variation of rent — on the contract-holder. The notice must specify the current rent, the proposed new rent, and the date from which the new rent takes effect.

Three statutory preconditions apply:

• Prescribed form — The notice must be on Form RHW12 or a document "substantially to the same effect" under S.I. 2022/244. A letter or generic template is valid only if it meets that standard.
• Two months' notice — The effective date must be after two full calendar months have elapsed from when the notice is deemed served under Section 237.
• 12-month interval — The effective date must fall at least 12 months after the last rent variation took effect. For a brand-new contract with no previous increase, the 12-month clock starts at the occupation date.

If any precondition is not met, the notice is void. The contract-holder can continue paying the existing rent and no arrears accrue.

Converted Contracts vs Newly Granted Contracts

The Act draws a hard line between two categories of periodic standard contract, and the distinction matters for what happens after you serve Form RHW12.

Newly granted contracts — created on or after 1 December 2022. The contract-holder has no statutory right to challenge the proposed rent before a tribunal. The new figure takes effect automatically on the specified date, provided the notice is procedurally valid.

Converted contracts — ASTs that existed before 1 December 2022 and converted automatically on that date. Contract-holders retain a residual right under Schedule 12, paragraph 15 to refer the proposed rent to the Rent Assessment Committee using Form RAC4. The committee conducts an independent market-rent valuation and can set the rent lower, equal to or higher than the landlord's proposed figure.

This distinction is the single most important classification a Welsh landlord must make before serving a rent increase notice.

What Section 123 Does Not Cover

Section 123 applies only to periodic standard contracts. It does not operate during a fixed term — any rent adjustment during a fixed-term contract must come from an express contractual rent-review clause in the written statement. Once the fixed term expires and the contract becomes periodic under Section 184, Section 123 takes over.

Secure contracts (issued by community landlords) are governed by Section 104, not Section 123.

Initial rent setting on a genuinely new contract with a new contract-holder is outside Section 123 altogether — initial rent is freely negotiated.

The Wales Rent Increase Guide walks through the entire Section 123 process: contract classification, date calculations, the Form RHW12 walkthrough and the Rent Assessment Committee referral pathway.

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