The Renting Homes (Wales) (Fees etc) 2016 has now been set to come into law on 1st September 2019. It will be the biggest change to the way we rent, let and manage tenancies for over a generation.

 

The new law completely rewrites residential tenancies in Wales which are currently governed by the Housing Acts 1985 and 1988, and will entirely replace assured and assured shorthold tenancy regimes.

The Welsh Government has wanted to completely review and overhaul the provision of residential rented homes in Wales for some time, with a view to seeking to create a system that offered better integration between social and private renting and make the sector more clear and simple for all users.

 

As well as protecting occupiers, this new system would be to reduce the number of barriers to renting by removing restrictions on landlords that did not serve a definable purpose, and by streamlining processes involved.

Under the Renting Homes Act, there are two types of tenancy agreement contract: the standard contract, and the secure contract. Modelled on the current assured shorthold tenancy agreement, standard contracts would be used for private tenancies by private landlords. Modelled on the current assured/secure tenancies, secure contracts would be used for social tenancies by social landlords (defined as “community landlords” in the Act). Standard contracts can be used for social tenancies, but only under very specific, limited conditions.

Subject to the Bill receiving Royal Assent in the next few weeks, the tenant fees ban will come into effect in Wales on 1 September 2019, to coincide with the implementation of the Renting Homes Act.

The ban will mean tenants cannot be charged fees except those allowed under Schedule 1. Exemptions currently include rent, a security deposit, a refundable holding deposit (capped at 1 week’s rent), payments for defaults, and payments for services such as utilities and council tax.

 

All other payments are “prohibited payments”, and will be illegal. Charging prohibited payments could result in Rent Smart Wales licenses to let or manage tenancies being revoked.

The Rent Smart Wales Code of Practice will also be updated to reflect this change.

Landlords and agents currently charge a number of different fees to tenants to set up and start tenancies. The ban will mean the following fees are prohibited and cannot be charged:

• Administration fees
• Referencing fees
• Inventory fees (including check-in and check-out meeting fees)
• Renewal of contracts fees

There will be a list of other permitted fees such as charging tenants if they loose their keys, but this has yet to be released.

The First Minister of Wales, Mark Drakeford AM, announced at the Welsh Labour Party Conference that the Welsh Government intends to axe Section 21 notices.

 

The concern is that without being able to serve Section 21 notices, landlords could be forced to go to court to get their properties back. There are also plans to modify Section 8, and bring in new dedicated “Housing Courts” to handle housing-related issues.

 

Residential Landlords Association (RLA) Policy Director David Smith says: “Over the weekend (and narrowly beating England to the punch!) the Welsh First Minister announced that Wales would be holding a consultation on getting rid of its own version of section 21.

 

“In the Welsh case they do not in fact appear to be getting rid of section 21. What they are in fact proposing to do is to pass legislation which will amend the Renting Homes (Wales) Act 2016 to remove sections 173 to 180 inclusive. These sections create an equivalent power to section 21 in that they allow a landlord to give a tenant notice without specifying any particular breach or reason.

 

"Presumably there will be other consequential amendments to other parts of the Act to allow for possession to be sought in other appropriate cases.

“This is not a huge surprise in that the First Minister had already indicated that he was keen to do this. However, this takes the Act increasingly far from the conception originally put forward by the Law Commission and alters the balance in the legislation from that struck by the Law Commission and that originally approved by the Assembly. Whether other steps will be taken within the legislation to redress that balance remains to be seen.

“Additionally, the Welsh Government is not able to promise any aspect of Court or possession reform as it has no control over this area. Any changes to the possession process in Wales will essentially mirror those in England as they will be made by the Ministry of Justice, albeit that they will consult with the Welsh Government in doing so.

“There is also the difficulty for the Welsh Government that they are seeking to amend an Act which is still not actually in force and which has been subject to considerable delays already. There is a risk that the Act will not be enforced before these changes are made in which case it will end up being delayed still further, possibly for some time.

“Further details will have to await the formal consultation in which the Welsh Government will have to make its intent clearer. However, this weekend has heralded a further period of significant change for the PRS with much more yet to come”.

The RLA has recently launched a survey for landlords, collecting their views on the possession process. Please click here to share your views.

At McCartan, we take a proactive approach to property management and to keeping our landlords informed of changing legislation and how it might affect them. We will keep you updated on both the Renting Homes Act and the Tenant Fee Ban as they progress.

Disclaimer: The information on McCartan website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.

Sources: RLA on Section 21 / RLA on Tenant Fee Ban

Related: Why is Section 21 Big News? / How Can Landlords Stay Profitable in 2019?