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Hitting everyone where it hurts

08 July 2019

If you are in the property industry it cannot have escaped you that the Tenant Fees Act 2019 has recently come into force, permitting letting agents and landlords to only charge fees relating to rent, security deposits, holding deposits or when a contract is breached by a tenant. Read More...

Propertymark responds to default fees consultation

Monday 08 July 2019

The Welsh Government is currently consulting on what should be allowed as a default fee and what information tenants should be provided with before paying a holding deposit under the incoming fee ban.

The Renting Homes (Fee etc.) (Wales) Act 2019 comes into force on 1 September 2019, the legislation will ban most fees charged to tenants in the private rented sector in Wales.

Within the Act is a power for the Welsh Government to specify default fees and limits and also what prescribed information will be provided to tenants before the letting agent or landlord takes a holding deposit.

Propertymark has responded to the consultation making it clear that the fees charged by letting agents reflect genuine work involved. The consultation is still open and will close on 19 July 2019.

What should be included as a default fee?

Lost and replacement keys

We made it clear that lost and replacement keys should incur a default fee charge. This must include the costs of replacing locks, locksmith call outs, HMO key replacement and other security devices. We stated that it should not be limited to the cost of a single key replacement, as the cost depends on the circumstance of the tenant. Therefore, the charge to the tenant should reflect the reasonable costs incurred.

Surrender of Tenancy

Since the legislation was introduced, to avoid a ‘PPI moment’ for the industry, Propertymark has called for clarification on charging tenants for a Surrender of Tenancy where a tenant has broken the terms of their tenancy agreement and wants to leave it early, this should incur a cost. In our response, we highlighted the time spent by agents in sourcing a new tenant, preparing a new inventory, reference new prospective tenants and remarket the property.  We think that the tenant should be liable for the rent remaining in their tenancy or up to the point when a new tenant takes over the agreement. In addition to remaining rent, the tenant should also pay for the tenancy set-up fees as outlined in the agent’s landlord fee schedule.

Change of Sharer

We stated that a Change of Sharer should be included as a default payment under the legislation. A similar level of work is involved under this circumstance as when a tenant leaves their agreement early. The charge for this should reflect the reasonable costs incurred when drafting a new agreement, protecting the deposit, conducting an inventory and referencing the new tenants. We have consistently asked the Welsh Government for clarification on this, as we believe if agents cannot charge for this, an unintended consequence will be an increased risk of unauthorised tenant changeovers.

We also specified that the following circumstances should be included as a default fee under the Act:

  • Repairs arising from damage by the tenant
  • Missed appointment
  • Emergency or out of hours call out
  • Late rent and bounced transactions
  • Variation of Tenancy
  • Contractual Damages

What information should be provided to prospective tenants?

To help tenants make an informed decision before signing and entering into a tenancy agreement, we think they should be provided with the following before paying a holding deposit.

  • Basic information and contact details of all parties involved
  • Length and type of tenancy, including the move in date
  • Rent payable under the tenancy
  • The tenancy deposit payable
  • Guarantor requirements
  • Details of when the holding deposit must be refunded
  • Details of how the holding deposit will be used if the tenancy goes ahead, including how it will be protected
  • Details of what will happen after the holding deposit is paid, and what checks will be undertaken by the agent or landlord
  • A clearly stated draft tenancy agreement

In providing the prospective tenant with a draft tenancy agreement, the document must be clearly watermarked as a drafted copy. Providing a draft agreement before the tenant decides to enter into it will give them an opportunity to negotiate clauses and will also limit wasted time and resource for the agent and landlord, should the tenant choose not to go forward with the tenancy.

Read our full response

Propertymark resources

Ahead of the legislation coming into force, Propertymark will be hosting two Welsh Fees Ban and AML Roadshows. These are free of charge for members.

Looking to attend? For South Wales on 7 August 2019, find out more here. For North Wales on 8 August 2019, read more here.

You can watch recordings of all of our webinars including the Renting Homes (Fees etc.) (Wales) Act 2019 where David Cox, ARLA Propertymark Chief Executive and Emily Carter, Policy and Campaigns Officer gave an update around the Welsh tenant fees ban.

Propertymark is in the process of creating a suite of resources to aid members operating in Wales in tackling the legislation when it comes into force.