A ban on letting agency fees charged to tenants in Wales would be a dangerous move, according to RLA Wales.
The association made the claim in its official response to the Welsh Government consultation on the plans.
Following similar moves in Westminster, the Welsh Government is proposing the ban to help tenants struggling to access the private rented sector due to exorbitant and unforeseen fees charged by some letting agents.
In its consultation response, the RLA state that an outright ban, as called for in England, would be a dangerous move, with ripple effects throughout the sector.
With a major source of revenue eliminated, agents would have no choice but to pass on their overhead costs to landlords, who in turn would have no choice but to absorb this cost by raising rents.
Landlords are facing huge financial pressure due to new regulatory changes to Mortgage Interest Relief, stamp duty, mandatory licensing in Wales, and the new EPC standards that will be enforced in March 2018.
The RLA is instead asking for a capped fee, within which a set of services would be required.
Additionally, the RLA is advocating for a set menu of fees for services that might not apply to every tenancy, like guarantor referencing or surcharges for lost keys.
With fees capped and a set of tariffs established via Welsh Government rule-making, tenants would no longer face any confusion about what they are paying for.
It would also level the playing field across the letting agency sector, a proposal also called for by the Association of Residential Letting Agents. Agency fees represent a cost to agents for a service rendered, and they should be fairly compensated for their services.
The RLA also wants the government to use powers already established under current law. The Consumer Rights Act 2015 requires agents to publish a list of their fees. Increased enforcement of this law will go some way in preventing confusion for tenants over any applicable tenancy fees.
The consultation also addresses the fairness of holding deposits.
The RLA believes holding deposits are a necessary measure to ensure that tenants remain true to their commitment to establishing a tenancy.
Without a holding deposit, tenants would be free to make multiple offers on different properties simultaneously, with the end result of agents and landlords performing unnecessary work and – if a fee ban were enacted – without pay.
The RLA believes its proposals get to the root of the problem of “unfair” fees, without stripping letting agents of a primary source of income.
The proposals will also help further the Welsh Government’s goals of continuing to professionalise the sector, render it more transparent to users, and increase access.
To read the RLA response in full click here.