Following the approval by the National Assembly for Wales, the Minister for Housing and Local Government, Julie James confirmed that the Renting Homes (Wales) (Fees etc.) Bill is expected to receive Royal Assent in May and will come into force on 1 September 2019.
The new Act will make it unlawful for landlords or letting agents to charge tenants fees that have not been specified as a ‘permitted payment’. This includes, but is not limited to, fees relating to viewings, inventory checks and signing a contract.
Permitted payments include rent, security deposits, holding deposits, default payments for breach of contract, and payments relating to council tax, utilities, television licence or communication services.
Holding deposits will be restricted to one week’s rent with provisions that ensure their prompt repayment. There has not been an explicit cap to restrict security deposits, but the legislation has embedded powers to enable the National Assembly to be more prescriptive at a later date.
To ensure compliance with the Act, fixed penalty notices can be issued against any parties seeking to charge prohibited payments. Failure to comply with the notices for payment can lead to prosecution of the alleged offence which can result in parties incurring an unlimited fine. Furthermore, Rent Smart Wales will have discretion over the awarding or renewing a licence following a prosecution.
What you can do:
Landlords managing their own portfolios should review their contracts for future tenancies to ensure that they do not contain clauses that may result in prohibited payments. Whilst those landlords that rely on letting agents should liaise with them and ensure that provisions are in place to ensure compliance with the legislation. We will provide further guidance to NLA members closer to the Act’s implementation date.