Hot on the heels of the English legislation the Tenant Fees Act 2019, is the arrival of the Welsh equivalent - the Renting Homes (Fees etc.) (Wales) Act 2019. The National Assembly and Welsh Ministers  have mirrored some of the changes introduced by the English ban, but there are some important differences. There are also powers under the Act to produce further Regulations, which have not yet happened. Similarly, to the English Act, the Welsh ban makes it an offence for a landlord or agent to require a tenant to make any payment unless permitted by the Act. Any payments not permitted are banned and prohibited payments. Landlords and agents also can’t 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 the tenancy. In other words, any payments after 1 September 2019 in respect of tenancy agreements, check out fees, admin fees, inventory fees etc ALL BANNED!

The Government has released a guide to assist with the ban and we advise you to read and follow the guidance:

https://gov.wales/sites/default/files/publications/2019-08/letting-fees-guidance-for-landlords-andletting-agents_0.pdf

When does the Act apply?

The ban affects all new tenancies and renewals in Wales entered into on or after 1 September 2019. Any tenancy agreement entered into before 1 September 2019, the Act does not apply. There are no transitional provisions as set out in the English Act, but it is our view the ban is likely to apply to statutory periodic tenancies commencing on or after 1 September 2019.

What does it apply to?

The Act will apply to all assured shorthold tenancies. Once the Renting Homes (Wales) Act commences (it is expected to be before May 2021), it will also apply to “standard occupation contracts”. 

It does not apply to non-housing act tenancies. Note the English Act applies to licences, but Welsh Act

does not.

What is a standard occupation contract?

In Wales, ASTs will be replaced by a standard occupation contract when the Renting Homes (Wales) Act 2016 is brought into force. This is expected to be before May 2021. For the time being Regulation has stipulated that references to a standard occupation contract are to be read as references to an assured shorthold tenancy. References to a contract-holder are to be read as references to a tenant under an AST.

Tenancy agreements

The Welsh Act does not allow charges for any changes to the tenancy agreement.

The English Act makes provisions for a fee of £50 to be charged for an amendment to the tenancy agreement, such as adding more conditions to the agreement. The Welsh Act does not allow any fees to be charged if either party wants to amend the agreement.

The Act does not prohibit any agreement that a landlord and tenant may reach should the tenant wish

to leave the tenancy early.

Is there a cap on security deposits?

In contrast to the English ban, there is currently no limit on the amount of security deposit that can be taken. If a limit is introduced, then any amount above that limit will be regarded as a prohibited payment. This prescribed limit is to be made by regulations, which have not yet been published. 

Holding deposit

Like English law there is a cap on the holding deposit which can only be a maximum of 1 weeks’ rent. The deposit must also be repaid to the tenant within 15 calendar days of payment, unless extended in writing by agreement of both parties.

If the agreement is entered into then the deposit must be repaid to the tenant within 7 calendar days, unless it is offset against rent or a security deposit. If the agreement is not entered into then the deposit must be repaid within 7 days of the deadline for the agreement.

Repayment in full is not required if: -

• the tenant decides not to proceed;

• the tenant fails the right to rent checks;

What payments are permitted?

The permitted payments are:

• money payable by a landlord to a letting agent in respect of lettings work or property

management work carried out by the agent on behalf of the landlord;

• rent;

• security deposits;

• holding deposits (capped at one weeks rent);

• default fees;

• payments in respect of council tax;

• payments in respect of utilities;

• payments in respect of a television licence;

• payments in respect of communication services.

Any payments not on this list are prohibited payments and must not be charged to the tenant.

What are default fees?

Default fees are currently limited to reasonable costs for breaches of the tenancy agreement such as late payment of rent. They must be outlined in the tenancy agreement. There is the power for the Welsh Government to specify default fees and what amount they are limited to. It intends to create a list of default payments by regulations which are permitted to be charged. The consultation closed on 19 July 2019 and the responses are currently being reviewed.

Enforcement

If a tenant is charged a prohibited fee it must be refunded immediately. An agent or landlord can receive a £1000 fixed penalty notice for every breach. Any prosecution or penalty is reportable to Rent Smart Wales and so this may lead to a landlord or agent losing their authorisation. Furthermore, a landlord will be unable to issue a section 21 Notice if a landlord has taken a prohibited payment or a This guide is to provide general information and a general understanding of the law, not to provide specific legal advice nor does it create a client relationship.

How can we help?

At Woodstock, we are firmly of the view that agents need to be bold and realise the importance of their role. We certainly know the difficulties landlords can get into if the agent isn’t on top of their game. We are fortunate at Woodstock to work with a large number of top-quality agents and landlords and look forward to helping them deal with these new changes.

We specialise in residential landlord and tenant law acting for landlords across the whole of England and Wales, which allows us to keep our finger on the pulse and stay abreast of any changes in the law and any issues that may be bubbling across the judicial network.

If you need assistance with amending your tenancy agreement or processes to take account of the tenant fee ban, please contact us today. We are a friendly bunch. 

Hwyl fawr am nawr!