In September a new law came into force in Wales that banned fees being charged when prospective tenants apply for a property to rent.
This includes fees for references or to prepare the Tenancy Agreement. The Welsh Government’s Renting Homes (Wales) Bill covers Wales, while the Tenant Fees Act, a similar regulation, came into force on 1 June in England.
No fees for references or tenancy preparation
“We implemented the changes across all of our offices in June to ensure clarity across our Mid Wales and Shropshire offices. As an Agency, we no longer charge tenants any fees for referencing or for preparing the Tenancy Agreement,” said Andrew Turner, a Partner at Morris, Marshall and Poole with Norman Lloyd.
“Concerns were initially raised within the industry that, due to there being no payment by the applicant, there would be no commitment which could result in multiple applications and subsequent withdrawals prior to contract.
“So far, this has not been our experience but is something which requires monitoring at the start of the application process. Tenants are still required to pay a tenancy deposit in addition to the rent at the start of tenancy, although changes in England means that the deposit is now limited to the equivalent of five weeks rent.”
So what do the regulations mean?
In England the Tenant Fees Act came into force on 1 June 2019. The Renting Homes (Wales) Bill came into force on 1 September 2019.
They are two different Acts with much the same laws.
As a result, in England, let only landlords and letting agents must only
• Charge tenancy deposits exceeding the equivalent of five week’s rent unless the rent exceeds £50,000 at which it is capped at six weeks rent
• Request holding deposits capped at no more than one week’s rent
• charge for a change to a tenancy capped to £50 unless additional costs were incurred and can be demonstrated
What can you charge?
• The only payments a landlord or lettings agent can charge to tenants for new contracts are:
• A refundable tenancy deposit capped at no more than five weeks rent (where the total annual rent is less than £50,000)
• A refundable holding deposit (to reserve a property) capped at no more than one week’s rent
• Payments for utilities, communication services, TV licence and Council Tax
• A default fee for late payment of rent and replacement of a lost key/security device giving access to the housing, where required under a tenancy agreement
In Wales the Act:
• Bans landlords from charging tenants for an accompanied viewing, receiving an inventory, signing a contract, exit fees or renewing a tenancy
• Only allow landlords and letting agents to charge fees relating to specific items such as Council Tax, holding deposits, utilities and television licence
• Limit the level of security deposits
• Create a cap for holding deposits of one week’s rent
Fixed penalty notices of up to £1,000 can be made against anyone requesting a banned payment.
Rent Smart Wales licences could also not be renewed or granted.
What should you do?
If you are a private residential landlord we can work with you by managing your properties. We have fully trained and professional letting specialists who are Rent Smart Wales trained and registered.
We manage properties for hundreds of let only landlords throughout Powys, Ceredigion, Shropshire and Gwynedd, providing a professional and efficient service.
Call our lettings team on 01686 626160 for more information or visit one of our high street offices at Newtown, Llanidloes, Rhayader, Machynlleth, Aberystwyth, Tywyn, Welshpool, Oswestry or Bishop’s Castle.