The Renting Homes (Fees Etc.) (Wales) Act 2019 comes into effect in Wales on 1st September 2019. Here's your guide to the new legislation and its application. For more information, please refer to the official guidance at gov.wales. It's important to note that this article isn't exhaustive and doesn't constitute legal advice.
There are differences in the Welsh and English legislation banning tenant fees. Check out our guide on the English Tenant Fees Act here.
The Act comes into force on 1st September 2019 and applies to all standard occupation contracts and assured shorthold tenancies in Wales from this date. The Act will only apply to tenancy agreements that entered into before 1st September 2019 once they are renewed.
The Act makes it an offence for a letting agent or landlord to charge tenants fees or require a loan in consideration of the grant, renewal or continuance of a standard occupation contract or assured shorthold tenancy.
Permitted payments are:
- a refundable tenancy deposit
- a refundable and capped holding deposit
- default payments
- payments for early termination of the tenancy
- payments for utilities, communication services and council tax.
After 1st September 2019, letting agents and landlords cannot require tenants to make any payments in relation to tenancy agreements, including - but not limited to - check-in or check-out fees, administration fees, inventory fees and guarantor fees.
Payments for change of sharer or amendments to a tenancy agreement are also banned.
The amount of rent charged must be the same across similar periods (e.g. months). If the amount of rent charged in one period is greater than the amount charged in another period of the same length, the difference would be considered a prohibited payment.
Permitted variations are allowed where there is an agreement with the tenant, if there is a term in the contract that allows for a variation or as a result of other legislation.
There is currently no limit placed on the amount of tenancy deposit that can be taken.
Holding deposits are capped at one week’s rent, which is based on the total agreed rent for the property.
Holding deposits must be repaid to the tenant within 15 calendar days of payment, known as the “deadline for agreement”. The deadline for agreement can be extended with the agreement of both parties in writing.
If both parties agree to enter into a tenancy, the holding deposit must be repaid to the tenant within seven calendar days of that agreement. If both parties decide not to enter into a tenancy, then the holding deposit must be repaid within seven days of the deadline for agreement, whether that is 15 days from receipt of the holding deposit or another date as agreed in writing.
The letting agent or landlord could retain the holding deposit if the tenant provides false or misleading information at the time of applying for a tenancy; if the tenant chooses not to enter a tenancy agreement; or the tenant fails to take reasonable steps to enter a tenancy agreement.
Payment for ending a tenancy agreement early
If a tenant wants to leave their fixed-term tenancy early, letting agents or landlords can expect to be paid for the entirety of the tenancy or come to an agreement where the tenant pays a lesser amount to cover the void period while a new tenant is found.
Default payments can be charged by the letting agent or landlord if the tenant breaches the tenancy agreement.
However, there must be a specific term in the tenancy agreement that they have breached. If a letting agent or landlord tried to charge a default payment for a term that was not set out in the tenancy agreement, this payment would be prohibited.
The Welsh Ministers could prescribe a list of permitted default payments in the future, and limits on what can be charged for default payments.
Letting agents can receive referral fees from third-party providers, but it must be made clear to the tenant that they are not obliged to enter into any specific contract for services.
Goodlord will be adapting our platform to ensure Welsh agents can be confident they’re compliant with the changes on 1st September 2019. Find out more here.