It’s no secret (or at least it shouldn’t be) that the Welsh Government have been embarking on a period of housing law reform.
Some of it, such as the Housing (Wales) Act 2014, has come into force and has been in force some time. Rent Smart Wales should be words Welsh Landlords – and tenants – are by now very familiar with.
There is still however the ‘elephant in the room’ which is the Renting Homes (Wales) Act 2016.
This legislation, enacted in 2016, is still largely yet to come into force and everyone has one eye on the various consultations which the Welsh Government has been putting forward and is awaiting notification of when we can expect the Act to come into force.
When in force, the Renting Homes (Wales) Act 2016 will alter the landscape of the rental sector in Wales considerably introducing Occupation Contracts in the place of the tenancies we are all familiar with.
It doesn’t appear that these changes are coming in the near future, but some very important changes that are contained in its sister legislation The Renting Homes (Fees etc) (Wales) Act 2019 (RH(F)(W)A 2019) which is came into force on the 1st September 2019.
What actually happening?
For a while now I’ve been frequently asked by client’s what will happen on the 1st September and for a while the honest answer has been – ‘who knows?’.
The RH(F)(W)A 2019 was drafted to apply to Occupation Contracts. These don’t exist and won’t exist for some time.
In order to implement the legislation, as of the 1st September 2019 the RH(F)(W)A 2019 applies to Assured Shorthold Tenancies (ASTs) in lieu of Occupation Contracts.
What this means?
This means that Landlords and Letting Agents who offer ASTs, whether new tenancies or renewal tenancies will be prohibited from charging their tenants certain fees.
The Act makes provision for Landlords and Letting Agents to be prosecuted and charged hefty fines if caught in breach so it makes sense to make yourself familiar with the legislation as early as possible and make any changes you need to make to your working practices.
What are the changes?
From the first of September 2019 Landlords and Letting agents of properties in Wales cannot charge ‘Prohibited Fees’. A fee is prohibited if it is not one of the following:
- Rent (which is strictly defined by the Act to prevent the rent for Period one of the tenancy being higher than any other period of the tenancy)
- Security Deposits
- Holding Deposits (which are subject to strict and rules regarding what you can do with it)
- Payment in the event of default (which will require a carefully drafted tenancy)
- Payment of Council tax (you guessed it – subject to conditions)
- Payment for utilities (only if required by the tenancy)
- Payment for a TV Licence (only if required by the tenancy)
- Payment in relation to a communication service (only if required by the tenancy)
- Payable by the Landlord to a Letting or Managing agent.
These are the only permitted payments – everything else is not. No viewing fees, no holding deposits over the allowed amount, no rent in advance, no security deposits outside the rules.
If these payments are required by a Landlord or a Letting Agent from anyone to take on a tenancy or renew a tenancy the consequences can be stark. It can render your tenancy agreement terms unenforceable, you can be made to repay the funds paid (including any prohibited rent) and end up with a conviction for an offence and a fine.
It will also trigger a notification to Rent Smart Wales and you may find your licences up for review. If you’re not licenced, you cannot let premises. If you cannot let premises you’re out of business. It’s potentially that serious – a prosecution and no livelihood.
It would be worthwhile dusting of those template tenancies and management agreements and making sure that you won’t fall foul of the Act. A bit of due diligence now can save a lot of trouble later.
If you’d like some advice, a pointer or simply someone to take the headache off your hands please feel free to contact the team and we’d be happy to discuss meeting your needs.
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