The Renting Homes (Fees etc.) (Wales) Act 2019 (‘the Act’) came into force on 01 September 2019 and applies to Wales only. The aim of the Act is to reduce the “hidden” costs that a tenant can face at the start of their tenancy.
This Act is similar to the Tenant Fees Act 2019 (which affects England only), but there are key differences. Landlords and/or agents that have properties in both England and Wales must make sure that they are aware of both acts and that they comply with the regimes in their respective countries. The Act has less detail than the Tenant Fees Act 2019, with provisions granting ministers to make further regulations in the future.
Residential landlords and letting agents in Wales must ensure their business models, internal practices and procedures are compliant with the Act.
Which Tenancies are Affected?
This Act applies to Assured Shorthold Tenancies (ASTs) granted on or after 01 September 2019, or ASTs renewed on or after 01 September 2019.
This Act does not apply to Company Let Tenancy Agreements and Contractual (Non-Assured Shorthold) Tenancy Agreements nor does it apply to licences.
What Payments are Permitted Under the Act?
- Landlords can make payments to a letting agent in respect of lettings work or property management work; and
- A tenant can be charged:
- Rent (although rent fluctuations are not permitted unless an exception applies);
- A refundable tenancy deposit (these are not currently capped, but ministers have the power to introduce limits in the future);
- A refundable holding deposit (capped at no more than one week’s rent). Strict time frames have been introduced for repayment;
- Payments in the event of default. An AST may require a payment to be made in the event of a breach of the AST by the tenant. These payments will be subject to prescribed limits if further regulations are made;
- Council Tax;
- Utilities / communication services / TV Licence, if the payments are required under the AST and relate to the property.
What Payments are Prohibited?
Landlords, or letting agents on their behalf, are prohibited from charging tenants any fees which are not permitted payments (described above). For example, letting fees (such as administration fees, obtaining references, preparation of inventories, credit checks) cannot be passed on to a tenant and must be fronted entirely by the landlord.
What are the Penalties and Consequences for Non-Compliance?
Any breach of the Act is an offence and is prosecutable in the magistrates’ court. Offenders will be liable to a fine (not subject to a statutory limit). The enforcement authority may offer offenders a civil fixed penalty of £1000 for certain offences as an alternative to prosecution, but this is entirely at its discretion.
Landlords and letting agents will not be able to evict a tenant using the section 21 eviction procedure until they have repaid any unlawfully charged fees or returned an unlawfully retained holding deposit.
A local housing authority must notify the licensing authority as soon as reasonably practicable after it becomes aware of an offence. The licensing authority will take account of any offence notified to them when determining whether a person is fit and proper to hold a licence under the Housing (Wales) Act 2014.
To find out more about the Renting Homes (Fees etc.) (Wales) Act 2019, why not take a look at our all-new Guidance Note? This new document is available here.