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.”