Wales follows England as the Tenant Fee Ban comes into Force 1st September 2019
As England has been getting used to the Tenant Fee Ban over the last few months, In Wales the fee ban comes into force on 1 September, with some key differences. Unlike England, there is no cap on the security deposit, one very major difference given the amount of work English agents are having to do in relation to security deposits.
The fee ban in Wales will apply to tenancies entered into on or after 1 September 2019. The Act applies to an assured tenancy (including an assured shorthold tenancy) under the Housing Act 1988. Tenancies of this type will be converted into Standard Occupation Contracts by the Renting Homes (Wales) Act 2016.
Landlords and agents cannot evict a tenant using the Section 21 procedure until they have repaid any unlawfully charged fees or returned an unlawfully retained Holding Deposit. All other rules around the application of the Section 21 procedure will continue to apply.
Any person guilty of an offence under the Renting Homes (Fees etc.) (Wales) Act is liable to Fixed Penalty Notice of £1,000. Alternatively the enforcement authority may choose criminal prosecution with an unlimited fine. As can be seen the Welsh ministers need to pass more legislation to catch up with England
The permitted payments are ;-
• Security Deposits
• Holding Deposits
• Payments in default
• Payments in respect of Council Tax
• Payments in respect of provision of utilities
• Payments in respect of Television Licence
• Payments in respect of communication services
Points to consider.
Rent – This must be the same throughout the period unless agreed by landlord and tenant. In other words you cannot try to get around the ban by charging more rent in month 1 for instance.
Security deposit – currently no cap but the Welsh Ministers may bring in a cap.
Holding deposit – As with England this is capped at the equivalent of one week’s rent.
This is not retrospective.
This can be held for 15 calendar days unless all parties agree to different date.
Must be repaid within 7 days of contract being entered in to or deadline date reached and no contract (see below for retention)
Can be used against security deposit or first month’s rent if agreed in writing. If used against security deposit the date received is taken as start date of contract.
Retention of holding deposit
If tenant provides false or misleading information – not just failing referencing.
If tenant withdraws or doesn’t take all reasonable steps to enter into contract by deadline date.
NB: False or misleading information is information provided by the tenant that is not factually correct and seriously affected the landlord’s decision to let the property. Merely failing referencing would NOT be classed as providing false or misleading information. For example, letting agents must be able to evidence that the tenant’s income declaration was significantly too high, or the tenant provided information which is clearly inaccurate about their income or employment, or the tenant failed to disclose (when directly asked) any relevant information which later comes to the agent’s attention, such as valid County Court Judgments.
Payment in the event of a default - A payment that is required, under a tenancy agreement where the tenant has failed to make a payment by the due date to the landlord (such as rent) or breached a term of the contract.
NB Welsh ministers may prescribe what a default payment is as well las a limit on how much can be charged.
Payment in respect of council Tax/utility/television licence/communication services. If any of these are a requirement of the tenancy agreement then it is a permitted payment
Utility covers electricity, gas or other fuel, water or sewerage.
Communication service means: a telephone (other than a mobile phone), Internet, cable television and satellite television.
For additional information the Government have issued guidance for landlords and letting agents. https://gov.wales/sites/default/files/publications/2019-08/letting-fees-guidance-for-landlords-and-letting-agents.pdf