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A ban on letting fees will have a ‘significant impact’ on the PRS in Wales

Landlords and letting agents could be banned from charging fees to private rental tenants in Wales under plans for a new law.

At the moment, tenants can be charged fees for a range of administrative reasons, including credit, reference and immigration checks or for an accompanied viewing.

But the Renting Homes (Fees etc.) (Wales) Bill, supported by AM’s from all parties, will prohibit all fees connected to granting, renewing or continuing a standard occupation contract except those explicitly permitted by the Bill.

Many landlords may not yet be familiar with standard occupation contracts, but they will replace assured shorthold tenancies when the Renting Homes (Wales) Act 2016 is commenced, probably in 2019.

The Renting Homes (Fees etc.) (Wales) Bill will list ‘permitted payments’, such as rent, and include powers to limit the levels of security and holding deposits, the latter of which will be limited to a week’s rent.  

However, many letting agents and landlords believe that the proposed new law will lead to increased rents and a potentially negative economic impact on the letting agency sector, including job losses.

Following a debate in Plenary on general principles yesterday, David Cox, ARLA Propertymark’s chief executive, commented: “A ban on fees will have a significant impact on the private rented sector. The Committee has listened on the issue of payments of utilities but further consideration is needed around charges for change of sharer and surrender of tenancy. 

“Furthermore, reference checks must be exempt as referencing is really important when you’re setting up a tenancy agreement and the risk is that without any means through which to cover the cost of this process, the most vulnerable tenants will find it very difficult to secure suitable rental accommodation.” 

Although the Committee supported the general principles of the Bill, its report does highlight issues of concern and makes a number of recommendations.  

Some of the concerns it highlights relate to the effectiveness of the enforcement provisions, including the level of financial penalties, and the need to ensure that where prohibited payments are taken, the Bill should make it as straightforward as possible for these to be repaid.  

The Committee also saw an important role for Rent Smart Wales in making implementation of the legislation effective.

Cox added: “The Committee’s report sheds light on a number of unintended consequences and the Welsh Assembly must now consider minimising the effects of the legislation on agents, landlords and tenants.

“We look forward to working with the Welsh Assembly on the Committee stages.”

Poll: Do you think a ban on letting agent fees will push up rents?

PLACE YOUR VOTE BELOW

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    Finally someone is considering law of unintended consequence.....
    You don't always get what you intend, and sometimes it ends up worse! I don't believe banning fees is a feasible route, these things cost money, better a committe spend time on recommending a fee structure kept to a minimum with RPI annual increases.

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    Typical WAG plan, Tony Blair was clever when he suggested an assembly for Wales, as he knew that Labour would hold the majority power base.
    Welcome to the socialist WUSSR, where the 'politics of envy' are alive and well.

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    Another stupid and not thought tbrough exercise.
    Of course tenants have to pay a fee, search say £15, landlords ref say £15, Tenancy Agreement say £15, admin fee say £50, so if one person £95. If 2 £190. Landlords pays for Inventory. NO Check Out fee, No Inspection fee.
    It's the Agents who charge rip off fees that are the problem.

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    I use a local agency on a'tenant find' basis which works well for me, but if this measure is implemented, I will have to consider doing it myself or using a referencing agency.
    This will be a major inconvenience and perhaps we should move to a minimum 12 month contract to alleviate the costs, as it is only 6 months down here ?

     
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