In this week’s #ExpertView, ARLA Propertymark provides us with 11 top tips for letting agents to survive the Welsh fee ban that came into force on 1 September 2019.
1. All fees are illegal unless it is expressly stated as a Permitted Payment
Under the new legislation the only Permitted Payments are:
- Rent
- Security deposit
- Holding deposit
- Payments in default
- Payments in respect of Council Tax
- Payments for utilities
- Payments for a television licence
- Payments in for communication services e.g. telephone; the internet; cable television, satellite television.
If a fee is not listed as one of these Permitted Payments, it can’t be charged.
2. No security deposit cap
There is currently no cap on security deposit in Wales, unlike in England. However, you should be aware that a power is contained within the Act for this to be changed in the future.
3. Holding deposit regulations could change
Welsh Ministers have consulted on whether to prescribe a list of the information that must be provided to tenants before a holding deposit can be taken. However, the information will be subject to additional legislation and the Welsh Government has not yet clarified any further details.
4. You must prove a potential tenant provided false information to withhold a holding deposit
You can only withhold a holding deposit if you can prove the potential tenant provided false or misleading information, rather than making a mistake during referencing. For example, a potential tenant saying their salary is higher than it really is, would be providing false or misleading information.
You must return the holding deposit if a tenant provides factually accurate information but fails referencing.
5. You can take rent or a security deposit before a tenancy is signed
If a tenant is not physically available to sign an agreement before the term of the tenancy begins, you can take rent or the security deposit in advance. This cannot be classed as an excess holding deposit and the tenant must be made aware in writing that any such payment was an advance payment.
6. No transition period
There is no transition period, unlike the one included in the English legislation. The Wales fee ban applies to tenancy agreements signed on or after 1 September 2019. For tenancies signed before 1 September 2019, the ban will apply when the term of that tenancy agreement has finished, and a new tenancy agreement is signed.
7. New tenancy not defined by the Welsh Government
As stated in the previous point, for tenancies signed before 1 September 2019, the ban will apply when the term of that tenancy agreement has finished, and a new tenancy agreement is signed. However, the Welsh Government have not provided guidance defining a new tenancy.
In England, fixed-term tenancies which started prior to its ban coming into force (1 June 2019) that become periodic tenancies after the ban comes into force, are classed as a continuation of the existing tenancy. Therefore, fees can be charged until a new fixed-term agreement is signed.
Be careful here until this is clarified by the Welsh Government.
8. You can’t charge to amend a tenancy agreement
If either the landlord or tenant wish to change a tenancy agreement, a fee cannot be charged.
9. Default fees are breach of contract by the tenant
Under the ban, default fees are fees that are charged if the tenant defaults on their tenancy agreement and include (but are not limited to):
- Missed appointments such as arranged contractor visits where the tenant has subsequently refused entry or not been in the property to allow entry, resulting in charges to the landlord or agent.
- Replacement keys for those lost by the tenant, requiring the cutting of new keys and delivery of those keys to the tenant.
The Welsh Government is yet to specify further default fees and what amount they are limited to. Until there is an additional list of default payments and the limits of payments, you should charge the actual costs for doing the work and a reasonable administration charge. These charges must be set out clearly in the tenancy agreement and fees schedule agreed.
10. Changes to other transparency rules
Under the Renting Homes (Fees etc.) (Wales) Act 2019, agents are still required to display their fees schedule, Client Money Protection information and redress scheme membership in their office and on their website.
This requirement has been extended to advertisements on online advertisers which includes portals (Rightmove, Zoopla, OnTheMarket) as well as other websites such as local newspaper sites, local property portals and social media (e.g. Facebook, LinkedIn, Twitter). It may not be possible on a social media website to fully advertise all these details. In this instance, a link may be provided to the agent’s website which provides all the information.
11. Charging banned fees results in serious consequences
Any person guilty of charging banned fees is liable for a fine of £1,000. Local authorities are required to notify Rent Smart Wales when they become aware of a person who has been convicted of an offence under the Act relating to a property in their area. Rent Smart Wales will then consider whether a convicted person is fit and proper to be granted or retain a licence to carry out lettings or property management activities.
More information and guidance is available in ARLA Propertymark’s Tenant Fees Toolkit Wales.
About TDS
Tenancy Deposit Scheme (TDS) is a government approved scheme for the protection of tenancy deposits; TDS offers both Insured and Custodial protection and also provides fair adjudication for disputes that arise over the tenancy deposits that we protect.
We provide invaluable training in tenancy deposit protection and disputes for agents and landlords through the TDS Academy as well as joining with MOL to provide the Technical Award in Residential Tenancy Deposits.
TDS Insured Scheme: where a TDS member can hold the tenancy deposits as stakeholder during the term of the tenancy.
TDS Custodial Scheme: where TDS hold the deposit for the duration of the tenancy.
TDS Academy: TDS provides property professionals with invaluable training in tenancy deposit protection and tenancy deposit disputes.
TDS can only comment on the process for our scheme, other deposit protection schemes may have a different process/require different steps. Content is correct at the time of writing.
These views are those of the author alone and do not necessarily reflect the view of TDS, its officers and employees.
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