New research commissioned by the Welsh Government has recommended that a ban is imposed on letting fees charged to tenants.
The Welsh Government, which is currently consulting on whether a ban should be imposed in Wales, commissioned the study to broaden their understanding of the letting agent fees charged to tenants before making any decisions.
While it acknowledges that there is work involved in setting up a new tenancy and agents do not generally make “excessive” profits on setup fees, the study found little justification for renewal fees because “very little work is actually involved”.
Upfront fees to tenants exacerbate difficulties in accessing the private rented sector (PRS) and there is no compelling evidence as to why tenants should pay the fees rather than the landlord, according to the study.
If the cost is shifted solely onto the landlord, who can choose a different agent if they are unhappy with the fees, there may be an increased incentive for landlords to self-manage. However, experience from the Scottish ban suggests that this would be unlikely.
The research did not discuss security deposits, which the UK Government are looking to cap to one month’s rent in England – a proposal that the NLA has heavily criticised.
The study outlines a number of recommendations for the Welsh Government, including:
- Introduce a ban along similar lines to that being proposed in England and already in place in Scotland
- Renewal and tenancy termination fees (excluding those for leaving early) should be included
- In-tenancy charges for work created by tenants, such as replacing lost keys or failing to be in when a contractor calls should be outside the scope of a ban
- Legislation should address the likely consequence of tenants being asked to produce their own credit check and references, the cost of which can be very low and speed up the process
- If a ban is implemented there should be independent enforcement that does not rely on tenants’ complaints as tenants may prioritise gaining a tenancy over complaining about an illegal fee.
The research is likely to influence what the Welsh Government do next following a consultation on the issue that is running until 27th September. Although with the policy enjoying cross-party support, coupled with the UK Government already promising to take action in England, the introduction of a letting fees ban in Wales seems inevitable.