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Welsh Assembly debates ban on tenant fees

Thursday 08 November 2018

On 7 November Labour’s Rebecca Evans AM, Housing and Regeneration Minister, responded to recommendations from the Equality, Local Governments and Communities Committee on the Renting Homes (Fees etc.) (Wales) Bill.

In its current form, the Renting Homes (Fees etc.) (Wales) Bill, if passed will ban most fees that letting agents currently charge to tenants. This includes the administration involved in creating or renewing a tenancy, conducting property viewings and reference checks.

Committee recommendations

The Minister first acknowledged the 15 recommendations from the cross-party Equalities and Local Government Committee.

Evans agreed with recommendation three, that Rent Smart Wales should have enforcement powers alongside Local Authorities but noted that she would bring forward an amendment at Stage Three as opposed to the suggested Stage Two so that all details of this arrangement can be fully considered.

The Minister agreed to bring forward an amendment at Stage Two, to allow agents and landlords to charge tenants for utilities, television licences, Council Tax and Green Deal payments. All of which were noticeably vacant from the Bill when it was first introduced, and we called for the inclusion of in our written comments to the Committee.

Recommendation six was agreed by the Minister in principle. This recommends that the Welsh Government brings forward amendments at Stage Two to make exit fees at the end of an occupation contract a prohibited payment. Rebecca Evans said she would be writing to the Committee to explore further options in addressing this issue.

Rebecca Evans agreed to amendment eight, which was opposed by two members of the Committee itself. An amendment will be brought forward by the Government in Stage Two to omit paragraph 7 of Schedule 2. This would have allowed letting agents and landlords to keep a holding deposit where a tenant did not pass a Right to Rent Check. The Minister argued that as Right to rent was not yet operable in Wales, there was no need for it to be in legislation – she also stated that when and if it comes into force in Wales, the UK Government could amend the legislation to include this.

The Minister agreed to recommendation nine, taking it further by announcing she would bring forward an amendment at Stage Two to restrict landlords and agents from issuing a Section 21 notice where they have charged a prohibited payment and not yet returned it, but also if they have not paid back the holding deposit.

The Equalities and Local Government Committee recommended that the Welsh Government bring forward amendments at Stage 2 to increase the levels of fixed penalties. The Minister agreed with the recommendation agreed and said that Fixed Penalty Notices should increase from the £500 originally proposed, to £1,000.

ARLA Propertymark had argued for Fixed Penalty Notices with a minimum of £5,000, something that gained support from John Griffiths AM, who cited ARLA Propertymark in his argument. It's worth noting that the Constitutional Committee also believes there should be higher levels of Fixed Penalty Notices.

David Melding AM argued that Fixed Penalty Notices need to go much further than purely covering costs and should be of such significance that they act as a deterrent. 

In regards to giving thought to taking a banded/tiered approach to the levels of penalties, Evans said that the Welsh Government will write to the Committee when officials have concluded their work.

The Welsh Government also accepted the Committee's view that the impact of the new legislation should be kept under review to see how if affects the student rental market. 

What is an occupation contract?

The Renting Homes (Wales) Act 2016 once introduced, will replace all current tenancies and licences with two types of occupation contract. A secure contract, modelled on secure tenancies issued by local authorities and a standard contract, which is modelled on assured shorthold tenancies in the private rented sector.

What's next - Stage Two

Stage Two is the second part of the legislative process in the Welsh Assembly. This is where AMs can table amendments to the proposed Bill. The amendments are then debated and voted on by a committee, before the Bill moves on to Stage Three.

Following the debate on the Renting Homes (Fees etc.) (Wales) Bill, ARLA Propertymark Chief Executive, David Cox commented:

“A ban on fees will have a significant impact on the private rented sector. The Committee has listened om the issue of payments of utilities, but further consideration is needed around charges for change of sharer and surrender of tenancy.

“Furthermore, reference checks must be exempt as referencing is really important when you’re setting up a tenancy agreement and the risk is that without any means through which to cover the cost of this process, the most vulnerable tenants will find it very difficult to secure suitable rental accommodation.

“The Committee’s report sheds light on a number of unintended consequences and the Welsh Assembly must now consider minimising the effects of the legislation on agents, landlords and tenants. We look forward to working with the Welsh Assembly on the Committee stages.”

What are we doing for you?

ARLA Propertymark has created a Campaign Toolkit to mobilise members. This includes a template letter to contact the local Assembly Member, talking points and a briefing paper, summarising the key arguments.

In the Members’ Area, members can access the Renting Homes (Fees etc.) (Wales) Bill Fact Sheet, which covers the legislation in more detail.