Letting fees in Wales: did the Welsh Government go far enough?

BLOG: Letting fees in Wales: did the Welsh Government go far enough?

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This week the Senedd passed regulations that mean private renters will be well protected from some types of letting fee – and potentially wide open to being hit by other fees.

In fact the regulations leave tenants in Wales more exposed to these fees than tenants in England.

The issue is ‘default fees’, which tenants are charged by agents and landlords for perceived breaches of tenancy. Default fees have been a huge focus for us throughout our campaigning to get letting fees banned.

The worst type of default fee, that brings us the most casework, is late payment fees. These can easily spiral into the hundreds of pounds and it’s often people on low incomes or who are vulnerable who get hit the hardest.

Thankfully, late payment fees have been capped by the regulations and in future will be charged at a strictly limited rate. The regulations also cap the amount that can be charged for replacing a set of keys, a lock or a security device.

All good so far. However – and this is where the problem lies – the regulations are silent on every other type of default fee. This means that agents and landlords are able to charge an unprescribed sum for any other perceived breach of tenancy.

It leaves agents and landlords free to start adding unrestricted and arbitrary fees into tenancy contracts for any potential breach, as long as it’s not for late payment of rent, lost keys or damaged locks.

This is not lawful in England.

‘Landlords and agents cannot write terms into your tenancy agreement that require a payment as a penalty should you fail to perform an obligation,’ says the UK Government’s guidance to tenants in England. ‘For example, any clause that says “if you fail to do x then you must pay y”, even if the amount is not specified, is likely to be prohibited.’

In England, agents or landlords who want to claim damages for tenancy breaches can do so via the court, so that the claim can be based on evidence. This is currently the case in Wales, but when the regulations come into effect on 28 April 2020 agents can bypass the court as long as they have included such charges in the contract.

It’s worth remembering that from next year in Wales, tenancy contracts will look very different. The Renting Homes (Wales) Act will mean that contracts become a comprehensive, detailed description of rights and responsibilities. It means we could end up with tenants being charged for:

  • Falling into arrears with council tax
  • Falling into arrears with energy bills, or voluntarily self-disconnecting
  • Failing to allow entry to a landlord or agent.

A tenant may be unable to cut the lawn due to a serious health issue; they may be justified in refusing entry to an agent or landlord who is harassing them; they may be understandably trying to manage energy costs by voluntarily self-disconnecting from time to time.

The decision by Welsh Government not to prescribe limits for any other default fee potentially opens up a new area of bad practice for some unscrupulous agents to rip off tenants. Because of limited public funding for this type of work, it’s going to be hard for tenants to dispute arbitrary and potentially unfair default charges.

The Welsh Government has committed to monitor the situation and revisit the regulations if it turns out bad practice is occurring. We will be keeping a close eye on how this is affecting people.

If you come across examples of tenants being charged rip-off fees, please get in touch with the Campaigns Team and let us know.