Banning fees in Wales will drive up costs and change the way landlords interact with letting agents, RLA Director for Wales Douglas Haig told the Senedd today.
Giving evidence on the Renting Homes (Fees etc.) (Wales) Bill to the Equality, Local Government and Communities Committee in Cardiff, Mr Haig said that the proposed changes will be lead to an increase in costs for landlords.
He added that there have also been ‘considerable increases’ in cumulative costs over recent times, for example through licensing fees and tax and that landlords in the most rural and deprived areas are finding it more and more difficult to absorb these costs.
The Renting Homes (Fees etc.) (Wales) Bill was formally introduced by the Housing and Regeneration Minister, Rebecca Evans AM, to the Assembly last month.
The Bill will only allow letting agents and landlords to only charge fees that relate to rent, security deposits, holding deposits or if a tenant breaches a contract.
It will also:
- provide a regulation-making power to limit the level of security deposits
- cap holding deposits to reserve a property before the signing of a rental contract to the equivalent of a week’s rent and create provisions to ensure their prompt repayment
- create a robust enforcement regime for when offences occur.
The Bill is a ‘missed opportunity”
Addressing the committee today, Mr Haig said that in his view, the Renting Homes (Fees etc.) (Wales) Bill, is a ‘missed opportunity’ and that an alternative route that could have been capping fees, rather than banning them outright.
He acknowledged some fees charged by agents are ‘ridiculous’, and he said that capping fees would have been a shorter route to take, to then allow for another piece of work on how to achieve a better system under which agents can operate.
He told the committee that what needs to be addressed is how such agents are charging their landlords, and what services they are providing.
During today’s evidence session, Mr Haig said that on the subject of deposits, the RLA has been exploring how this section of the market can be ‘freed up’.
He stated that there are some scandalous schemes out there that landlords need to be cautious about.
The RLA has been working on a tenant passport type scheme, and Mr Haig said that he would like to see deposit schemes which allow landlords to be able to secure a greater proportion of their rents and for tenants with higher risks to be able to ensure against themselves.
Holding deposits- a ‘tournament style approach’
However, on the subject of holding deposits, Mr Haig told the Committee that the RLA would welcome more clarity in the Bill about what is recoverable both from a landlord and a letting agent, and also how easy it is to do this.
Mr Haig said that the issue of holding deposits could in particular causes complications for letting agents.
For example, in situations where tenancies do not go through, due to excess delays for example if a tenant is late to sign a contract, then a letting agent has a property sitting empty for fourteen days.
Mr Haig explained that landlords cannot recover rental time, and said that there needs to be clarity in the Bill about whether letting agents will be able to recover the holding deposit in these case.
He said that the RLA is concerned that this could lead to a ‘tournament style approach’ to securing lets., which would disadvantage both tenants and landlords.
On the subject of enforcement, David Melding AM posed the question as to whether those giving evidence would agree with the views of RLA policy director David Smith, who told a committee last month about the fee ban in England, stating that current rules regarding fees are poorly enforced.
Mr Haig concurred with this, and said that in the past there have been issues regarding poor enforcement.
When the Bill was formally introduced by the Welsh Government to the Assembly last month, the RLA raised concerns, stating that it would likely punish the most vulnerable because these people will no longer get assistance from letting agents in order to obtain a tenancy.
A consultation on the proposed ban was held last year and closed in September, the responses of which you can read here.
What happens next?
Following today’s oral evidence session, the committee will hear more evidence on the Bill.
The Committee will then report back with their findings, and then the RLA will have the opportunity to formally respond to the consultation on the Renting Homes (Fees etc.) (Wales) Bill, for September.
- The RLA runs a Rent Smart Wales Licensing E-learning training course, both for Agents and for Landlords.
- The RLA also runs a Gaining Possession Course, with a date coming up soon in Cardiff. Book your place here
- Rebecca Evans AM was the keynote speaker at our Future Renting Wales conference last year. You can watch an interview with her here