Wales now operates under the Tenant Fee Ban, which is a product of the Renting Homes (Fees, etc) Wales) Act 2019.
In Wales, the tenant fee ban – a product of the Renting Homes (Fees, etc) (Wales) Act 2019 – came into force on 1st September 2019.
The tenant fees ban is wide ranging and effectively bars most fees from being charged. Landlords and agents will only be able to charge for payments defined as permitted in the legislation.
This guide offers practical tips on how to deal with the legislation, as well as a number of document templates to help comply with the fee ban.
What types of tenancy does the legislation apply to?
In Wales, the fee ban will apply to assured shorthold tenancies only and will apply to occupational contracts once the Renting Homes (Wales) Act 2016 comes into force. It applies to both agents and landlords.
When did the fee ban come into force?
In Wales, the tenant fee ban came into force on 1 September 2019. Tenancies entered into before then, even if the tenant moved in after this date may continue to charge fees as normal until there is a renewal tenancy OR a new statutory periodic tenancy arises after this date.
Does the fees ban apply to older tenancies?
In Wales, there was no transition period, so any new tenancies including any new periodic tenancies that were created on or after 1 September 2019 are affected by the ban.
Landlords should read their tenancy agreements to identify the type of periodic tenancy that their tenancy will run on as. If the tenancy has a contractual periodic continuation of the existing tenancy then they will likely not be caught by the ban even if their periodic tenancy starts after the commencement date.
However, statutory periodic tenancies or contractual periodic clauses that specify a separate periodic contract is created will definitely be caught.
The NRLA's current tenancy agreement runs on as a contractual periodic continuation so any tenancy signed before September 1st should be exempt from this ban.
What fees are prohibited?
Simply, anything which is not permitted is prohibited and, thus, banned by the Act. This means any payments required after 1 September 2019 in relation to tenancy agreements, such as check-in fees, check-out (or ‘exit’) fees, administration fees, inventory fees, guarantor fees etc. are prohibited payments.
Additionally, any term of a tenancy agreement that requires a tenant to either: make a prohibited payment, enter into a contract for services, or make a loan, is not binding on the tenant. The rest of the contract will, however, continue to have effect.
Landlords or agents are unable to contractually require a payment from a tenant to change a joint tenancy agreement to reflect a change of sharer, should one tenant leave and be replaced by another. Also, should either party wish to amend a tenancy agreement, a landlord or agent cannot contractually require a payment for the amendment.
What fees are permitted?
Welsh Government guidance says the following are permitted payments: Rent; security deposit; holding deposit; payments in default; and payments in respect of council tax/utilities/television licence/communication services.
However, the holding deposit, rent, and default fees are currently subject to additional restrictions (detailed in this toolkit) but Welsh Government ministers have the power to add limitations to security deposits if they so desire. Landlords may also charge for allowing tenants to vacate the property early.
For England most required payments to third parties are prohibited especially for agents. Landlords have slightly more freedom and can require the tenant to use a specific utility or communications provider. In Wales, agents and landlords follow the same rules and most terms requiring a tenant to enter into a contract with a third party are not allowed.