What’s the full cost of renting?

25 November 2014

Article by Jonathan Baxter, National Assembly for Wales Research Service

Politicians in Cardiff Bay have spent quite a bit of time discussing the private rented sector lately, and this week they will be talking about it again. That’s probably not surprising when you learn that around 14 per cent of households in Wales rent privately – almost as many as rent from social landlords like local councils and housing associations. But it’s not just the politicians who are concerned, petitions have been raised in the Assembly by members of the public highlighting misgivings and most Assembly Members will have dealt with some constituency casework that involves the private rented sector.

During the third Assembly, following an extensive inquiry into the sector, the Communities and Culture committee called upon the Welsh Government to introduce statutory regulation of letting agents in Wales. This was subsequently taken forward through the Housing (Wales) Act 2014. Under the Act, from autumn 2015 letting agents will have to be licensed and adhere to a code of practice. The Welsh Government’s original intention was that the code of practice would include a requirement for letting agents to publicise their fees, but it now hopes to achieve this objective by supporting an amendment to the UK government’s Consumer Rights Bill. Amongst other provisions, the Bill proposes that letting agents will have to display or publish a list of their relevant fees and charges.

Image from Geograph by Stephen Craven. Licensed under the Creative Commons.

There’s nothing to stop letting agents in Wales or England charging tenants for services, and the Bill won’t change that. For example, many agents will charge for obtaining references, credit checks, renewing tenancy agreements and other administration fees. While there are some things that agents aren’t allowed to charge for, like providing a list of accommodation, most charges (much to the annoyance of tenants) are perfectly lawful. Contrast this with the situation in Scotland where administration charges are illegal.

Letting agency fees are not about to be banned in Wales, but there should at least be more clarity as to what charges tenants, and potential tenants, will face thanks to the proposals in the Bill and the requirement for a full, up-front disclosure of fees and charges.

It will be for local authorities to enforce this new legislation, and they’ll be able to impose a civil penalty of up to £5,000 on agents who fail to comply with the requirements. Letting agents will be able to appeal to the Residential Property Tribunal against any civil penalty.

The Assembly is now being asked to consent to these proposals by agreeing a Legislative Consent Motion (LCM). This procedure is necessary because housing is already a devolved matter and the Assembly, rather than parliament, would normally legislate in this area.

Although in recent years we have seen Wales and England travelling in different directions on housing policy, for example landlord and letting agent registration and licensing, this is one area where there will continue to be harmony.

The Assembly will debate the Legislative Consent Motion on the Consumer Rights Bill on Tuesday 25 November 2014. Assuming the Assembly agrees the LCM, and the Bill receives Royal Assent, it will be for the Welsh Ministers to decide when to commence the new requirements.