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Rent costs hit record high - 2019 trends

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Welsh Government issues fee ban guidelines

Monday 19 August 2019

Guidance for the Renting Homes (Fees Etc.) (Wales) Act 2019 has been issued for landlords and letting agents. The guidelines explain what payments and fees may or may not be taken when setting up and amending a tenancy, and the consequences of taking prohibited payments.

The fee ban – requiring that tenants are not obliged to make payments outside of those specified in the Act – comes into force on 1 September 2019. Any payment a tenant is required to pay, unless permitted by the Act, is banned and is a ‘prohibited payment’. Landlords and agents cannot require the grant of a loan to them or require a person to enter into a contract for services with them as a condition of a tenancy.   

Guidance for the Renting Homes (Fees Etc.) (Wales) Act 2019 has been issued for landlords and letting agents. The guidelines explain what payments and fees may or may not be taken when setting up and amending a tenancy, and the consequences of taking prohibited payments.
The fee ban – requiring that tenants are not obliged to make payments outside  those specified in the Act – comes into force on 1 September 2019. Any payment a tenant is required to pay, unless permitted by the Act, is banned and is a ‘prohibited payment’. Landlords and agents cannot require the grant of a loan to them or require a person to enter into a contract for services with them as a condition of a tenancy. 

Key issues clarified in the guidance include:
  • Tenancy agreements - The ban on fees only applies to tenancy agreements signed on or after 1 September 2019. For tenancies signed before 1 September 2019 the Act will apply when the term of that tenancy agreement has finished, and a new tenancy agreement is signed.
  • Security Deposits - There is currently no limit placed on an amount of deposit landlord or agents in Wales can take. This contrasts to the Tenant Fees Act in England where deposits are capped at no more than five weeks’ rent where the annual rent is less than £50,000, or six weeks’ rent where the total annual rent is £50,000 or above.
  • Holding Deposits – A landlord or agent may not ask for a Holding Deposit of more than one week’s rent. ARLA Propertymark sought clarification for its members on whether taking a rent or a deposit in advance will break Holding Deposit rules under the Act, it has now been clarified in the guidance that providing the tenant is made fully aware of any payment in advance that this will not break the Holding Deposit requirements.
  • Payments in default – Under the ban a payment in default is a payment required by the landlord or agent arising from a breach of the tenancy agreement by the tenant. Examples include: Missed appointments; avoidable or purposeful damage to property; replacement keys; or emergency/out of hours call-out fees.
  • Changes to a tenancy agreement - If either the landlord or tenant wish to change a tenancy agreement, a fee cannot be charged for the amendment. 
  • Surrender of Tenancy - Where a tenant wants to leave a Fixed-Term tenancy early, the landlord or agent is fully within their rights to expect to be paid for the entirety of the tenancy. The Act does not prohibit any agreement that a landlord and tenant may reach should the tenant wish to leave the tenancy early. 

Potential future changes

The legislation allows Welsh Ministers, should they wish to do so, to make regulations to prescribe a list of payments in default which would be Permitted Payments under the Act, as well as a limit on the amount that is permitted.
Welsh Ministers also have the power to make regulations which may set out a list of the information that must be provided to a tenant before a Holding Deposit can be taken.
The Welsh Government has consulted on these two issues and is due to provide a response to the consultation in September. Depending on the outcome of the consultation any changes are not likely to come in until later in the year or early next year.
Through the Renting Homes (Fees Etc.) (Wales) Act, the Welsh Government also has the power, should it wish to use it in the future, to limit the level of Security Deposits.

Guidance

The full guidance notes are available on the GOV.Wales website 

Tenant Fees Toolkit Wales

ARLA Propertymark is producing a Toolkit of resources to help members in Wales with the ban and this will available as soon as possible.

Legal help

ARLA Propertymark membership give you access to a legal helpline. Log into the membership area to find out more. 

 

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