The Tenant Fees Act will come into force in England on Saturday 1st June, but in Wales fees are not set to be banned until 1st September.
In this blog first published on the Anthony Gold website, our policy director David Smith writes about the similarities and differences between the legislation in England and Wales.
I have written extensively about the Tenant Fees Act 2019 and its operation in England. However, it only applies in England and not in Wales. Therefore, at the same time as Parliament has been working on the Tenant Fees Act, the Welsh Assembly has been working on its own equivalent, the Renting Homes (Fees etc.) (Wales) Act 2019. This Act was given its Royal Assent, becoming law, on 15 May 2019 but it is not planned to come into force until 1 September 2019.
In some ways the Welsh legislation mirrors that in England but in others it is distinctly different.
In terms of similarities the Welsh legislation mirrors that in England by banning all payments and then specifically authorising a select list. This has the same strengths and weaknesses as the English legislation in many ways.
However there are key differences:
- The Welsh legislation provides no explicit provision allowing for payments to be demanded as long as they are optional and there is a permitted payment offered alongside the charge. That said, it is debateable whether this specific carve out was really necessary in the English legislation anyway as if an optional payment is being required but there is a free option available too then the tenant is not being “required” to make the payment and so the terms of the legislation are not being offended against. It may be that the Welsh government does not intend to allow optional fees but it may also be that they realise that the legislation as written probably allows them anyway without a specific statement that they are permitted.
- Secondly, the enforcement mechanism in Wales is totally different. Unlike in England where the system starts with a financial penalty and only if there is a second breach within 5 years is an offence committed. In Wales every breach of the legislation is an offence and is prosecutable in the magistrates court immediately. The local authority may, at its discretion, offer the offender a civil penalty of £1,000 as an alternative. It does not have to make the offer but if the penalty is paid then the liability for prosecution is discharged. Given the lower penalty levels in Wales then presumably the Welsh government is intending to fund enforcement activity more directly rather than by allowing local authorities to keep penalty fee monies. In addition, any prosecution or penalty is reportable to Rent Smart Wales and so this may lead to a landlord or agent losing their authorisation.
- Like in England there is guidance which will be produced. However, unlike in England, in Wales authorities are required to have regard to that guidance and to comply with its main requirements. Precisely what it will ask of them is yet to be established.
- Unlike in England the appropriate level of tenancy deposit is not fixed in the legislation and is to be decided later by regulations. From past experience it is unlikely that Wales will set a different level of penalty from England.
- Unlike in England it is possible for the Welsh government to require that when taking a holding deposit, which is set at the same one week’s rent as in England, the tenant is given some prescribed information. The exact form of this information is being consulted on at the moment.
- The Welsh government has sought to avoid falling into the same messy trap as in England in respect of the uncertainty about damages and default fees (for more on this see my post here). Instead the Welsh legislation does not say anything about contractual damages, which do not really need to be approved anyway as they are court awarded for breaches of contract, and simply states that default fees are permitted. However, they are subject to further limits both in terms of the permitted amount and in terms of the things that default fees can be charged for. Again these are to be set by regulations which are the subject of consultation .
The final operation of the legislation in Wales will not be properly known until the various regulations and guidance have been produced. However, agents and landlords will need to begin their preparations now.
*Disclaimer: The information on the Anthony Gold 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.*