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Enforcement key if ban on letting agents fees is to work effectively

26/10/2018

A proposed law which would stop letting agents charging fees for admin and other services will only work if there are proper resources to enforce the rules, according the National Assembly’s Equality, Local Government and Communities Committee.

 

House


In agreeing with the general principles of the Renting Homes (Fees etc) (Wales) Bill, the Committee wants to see enforcement provisions strengthened and fines for non-compliance increased.


It is generally envisaged removing the burden of spending hundreds of pounds up front on letting agents fees would help the more vulnerable and those people on low incomes who find it more difficult to save up.

The Committee was unable to establish whether abolishing letting agent fees would lead to increased rents but noted evidence from the Welsh Government which stated any increases would be marginal.


The Welsh Government has committed to monitoring rents as part of its evaluation of the Bill should it become law.


Case Study 1


“Three years ago I was living on Barry Island. I’d rented a house from a friend of a friend so didn’t pay a deposit. The landlord and landlady got divorced and I was served a Section 21 notice, so I had to look for somewhere new to rent, along with my non-dependent son. I looked around Barry but every property was via letting agencies. We found a property we liked but because my son was doing agency work at the time and was therefore in and out of work and had been signing on for housing benefit in between, we weren’t able to access a budgeting loan because he hadn’t been in receipt of benefits long enough. The admin fees were £230. Plus, I had a dog which added £200 to the deposit. I had to take a loan out to be able to move.

I wasn’t expecting my landlord and landlady to get divorced. It was a real bolt out of the blue and very stressful”

Private tenant, Vale of Glamorgan


Committee members were not convinced by the argument that the fees would simply be passed onto landlords, pointing out that landlords were in the advantageous position of being able to shop around, whereas tenants were tied to whichever letting agent managed the property they chose.

“We believe that this Bill will remove one of the barriers to accessing the private rented sector for the most vulnerable,” said John Griffiths AM, Chair of the Equality, Local Government and Communities Committee.

“We support the Welsh Government taking a legislative approach. We believe that the approach proposed is the most likely to create a fairer market.

“But we think this law will only work if there are stronger provisions around enforcement with the relevant organisations provided with the resources they need to enforce the rules.”

Case Study 2

“We spent months looking for a property because most agencies wouldn’t accept pets. We found one who was willing to accept and went through the agency procedure and paid fees. Within three months, the landlord said he wanted to move back into the property so we had to look again. Eventually we found a property to rent that would accept pets, but having paid agency fees, deposit and first month’s rent up front, we were £1,500 down. Until we got the deposit back from the first property, which was £600, we had to find money for the deposit and first month’s rent. Fortunately, we didn’t have to pay fees on the second property as we had posted an add on ‘Buy, sell, swap’ looking for a landlord who would accept pets.”


Private tenant, Gwynedd


The Committee makes 15 recommendations in its report, including:


- That the Welsh Government brings forward amendments at Stage 2 to place requirements on Welsh Ministers, local authorities and Rent Smart Wales to take reasonable steps to inform tenants, landlords and lettings agents of the changes being introduced by the Bill;


- that the Welsh Government brings forward amendments at Stage 2 to increase the levels of fixed penalties; and,


- that the Welsh Government brings forward amendments at Stage 2 to put on the face of the Bill that all default fees should be fair and reasonable.


Case Study 3


“My rent at the moment is £650 a month. I have just purchased an identical property on the same road, and I will be paying £540 a month in mortgage re-payments.”


Private tenant, Conwy


The Bill and the Committee’s findings will be debated by the National Assembly before a vote to decide whether it will move on to the next stage in the law-making process.

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