Tenant Fees in Wales: new rules for holding deposits

The Welsh tenant fees ban came into force on 1 September 2019, applying to assured shorthold tenancies granted from that date onwards for properties in Wales.

The Renting Homes (Fees etc.) (Wales) Act 2019 has a handful of subtle differences from the English legislation, the Tenant Fees Act 2019. For example, the Welsh legislation did not specify a tenancy deposit cap or prescribe limits for default fees. There was a power for the Welsh Government to make regulations to fill in the gaps, but this was not used when the Act was brought into force.

The Welsh Government recently published a summary of responses to its consultation on default fees and prescribed information for holding deposits in the private rented sector and stated its intention to make two sets of regulations:

• Firstly, to prescribe information which a landlord or agent must provide to a tenant before a holding deposit can be taken.
• Secondly, to provide further detail about the default payments which will be considered as permitted payments under the Renting Homes (Fees etc.) (Wales) Act 2019.

The first set of regulations, the Renting Homes (Fees etc.) (Specified Information) (Wales) Regulations 2019 have now been published and they will come into force on 13 December 2019 (except in the very unlikely even that they are annulled by the Welsh Assembly).

Holding Deposit Prescribed Information

The information which must be provided when a landlord or agent takes a holding deposit is:

“(a) amount of holding deposit;

(b) identify the dwelling in respect of which the deposit is paid;

(c) name, address, telephone number and any email address of the landlord (and if instructed, the letting agent);

(d) nature and duration of the contract;

(e) proposed occupation date;

(f) amount of rent or other consideration;

(g) rental period;

(h) any proposed additional contract terms or proposed modifications or exclusions to fundamental or supplementary terms;

(i) amount of any security deposit;

(j) whether a guarantor is required and, if so, any relevant conditions;

(k) reference checks the landlord (or letting agent) will undertake; and

(l) information the landlord or letting agent requires from the prospective contract-holder.”

This will need to be provided whenever a holding deposit is taken in respect of a proposed assured shorthold tenancy in Wales from 13 December 2019 onwards. The information must be provided before the holding deposit is taken, if it is not the circumstances in which a landlord or agent may make deductions from the holding deposit are restricted to only where the tenant has given false or misleading information.

The information must be provided in writing and may be handed over in person or posted, or sent electronically where the tenant consents to this.

Default Payments

Draft regulations regarding the permitted default payments will be laid before the Assembly in early 2020 and will be shared with stakeholders – these regulations will not come into force until approved by the Welsh Assembly.

Guidance

I wrote in an earlier post about a divergence between the Renting Homes (Fees etc.) (Wales) Act 2019 and the official guidance.

The guidance has been updated and now states that a tenant cannot contractually required to pay for requesting or requiring changes to a joint tenancy agreement to reflect a change of sharer or for amendments to the tenancy agreement. Previously the guidance said that landlords or tenants could not charge for these matters at all.

It is correct that a term in a tenancy agreement which sought to impose a charge for making changes to a tenancy agreement or arranging an assignment would breach the Renting Homes (Fees etc.) (Wales) Act 2019. However, that would not prevent a landlord or agent refusing to arrange or agree to a variation or assignment without imposing a reasonable charge, as long as they did not seek to do so through a term in a tenancy agreement. However, a landlord or agent could not simply impose this charge without the tenant agreeing first that they will pay it.

This is somewhat unsatisfying result – the intention of the Welsh Assembly was probably to abolish such fees altogether, but the result is that the Welsh Government has no way to cap these fees without further primary legislation, whereas if these had been permitted, the forthcoming regulations could fix a maximum amount to be charged.

What landlords and agents in Wales need to do

These new regulations are going to require further amendments to assured shorthold tenancy agreements and holding deposit agreements in Wales. Many holding deposit agreements will already contain all the required information, so the work required at this stage ought to be modest. However, agents who have been taken a casual approach to holding deposits will now need to ensure that they have a proper contract.