The Welsh tenant fees ban will come into force on 1st September 2019 for all private rental properties in the country, after it received royal assent last week.
From 1st September, landlords and letting agents across Wales will no longer be able to charge tenants fees to set up, renew or continue a standard occupation contract, except those explicitly permitted by the Renting Homes (Fees etc.) Bill.
The Welsh tenant fees ban will prohibit landlords and agents charging for the following tasks, amongst others:
Accompanied viewings
Inventory charges
Signing contracts
Tenancy renewals
Many landlords may not yet be familiar with standard occupation contracts, but they will replace Assured Shorthold Tenancies (ASTs) in Wales when the Renting Homes (Wales) Act 2016 is introduced – possibly later this year.
The Welsh tenant fees ban means that it will be illegal for landlords and agents to charge tenants anything other than permitted payments, which are: rent, security deposits, holding deposits, utilities, communication services, Council Tax, Green Deal charges, and default fees.
Under the new law, holding deposits will be restricted to one week’s rent, with provisions to ensure their prompt repayment.
The National Landlords Association (NLA) hopes that the Welsh Government looks closely at the impact of England’s planned five-week security deposit cap and the negative impact that this may have on vulnerable tenants.
The Welsh tenant fees ban will be introduced just three months after the similar Tenant Fees Act is implemented across all private tenancies in England, on 1st June 2019.
To keep up to date with both the English and Welsh tenant fees ban, make sure to regularly check the dedicated page on our site, where you will find the latest information on these legal changes: https://www.landlordnews.co.uk/category/tenant-fees-ban/
Landlords, what are your thoughts on the upcoming tenant fees bans across England and Wales?
A huge spike in the number of tenants, combined with increased Government regulation of the private rental sector, means that letting agents are faced with a higher workload than ever before.
Utility management service Tenant Shop is therefore urging letting agents to consider solutions that can help them to reduce their administrative burden, so that they can continue to offer an effective service to landlords and tenants.
The firm believes that two of the issues agents should consider when reducing workload include notifying local councils and utility companies about tenancy changeovers, and dealing with stray bills.
Letting agents’ workload has been increasing steadily as the private rental sector continues to grow.
The latest English Housing Survey (2017/18) shows that there are approximately 4.5m households renting privately in the country, which is equivalent to 19% of all homes.
The size of the private rental sector has hovered at around a fifth of all households since 2013/14, but has doubled since 2002.
An influx of family renters has also been recorded, with approximately 795,000 households with dependent children entering the private rental sector since 2007/08. The proportion of middle-aged tenants (35-44-year-olds) has also increased, climbing from 13% to 28% during the same period.
Glenn Seddington, the Managing Director of Tenant Shop, says: “Feedback from our agents indicates that this influx of tenants over the last two decades has equated to a significant increase in extra work for letting agents in the form of referencing checks, inventories and drafting tenancy agreements.
Letting Agents’ Workload at All-Time High, Warns Management Service
“As a result, this means more moves in, out and within the private rental sector, which creates more work for agents when it comes to managing utilities in rental properties and helping landlords to deal with void periods.”
The latest piece of legislation governing the private rental sector is the Tenant Fees Act, which is due for introduction on 1st June 2019. It will ban upfront fees charged to tenants, and cap security and holding deposits.
Tenant Shop believes that, as well as affecting agents’ finances, the tenant fees ban could unwittingly lead to increase pressure on workload.
Seddington explains: “It’s widely expected that there could be a rush of tenant moves immediately after fees are banned, as tenants who have delayed moving home in recent months to avoid paying fees all spring into action at once.
“A flurry of moves over the summer, when considered in the context of an already inflated tenant population and increased administrative burden, could put even more pressure on an already stretched workforce of letting agents.”
As the amount of work that letting agents are required to conduct continues to rise, finding solutions and practices that can help to reduce workload is becoming crucial.
“Difficult market conditions in 2019 mean agents need to use all the available tools that can help to take the pressure of their staff,” says Seddington. “Solutions which save time, automate tasks and simplify processes are invaluable, and can help an agency to deliver the same high levels of service, despite an ever-increasing workload.”
He adds: “And, with measures like the fees ban becoming a reality, the need to increase profitability is greater than ever this year.”
Agents, how will you manage your workload once the fees ban is introduced?
It is now less than four weeks until the Government’s Tenant Fees Actcomes into force across England.
From 1stJune 2019, landlords and letting agents will be banned from charging upfront fees to private tenants, except for charges relating to replacement keys (or a respective security device) and late rent payments.
Under the Tenant Fees Act, holding deposits will be capped at one week’s rent, while security deposits will also be capped, at five weeks’ rent.
ARLA Propertymark (the Association of Residential Letting Agents) has warned agents to “act now”, as the implementation of the ban is less than four weeks away.
David Cox, the Chief Executive of the organisation, gives his advice: “[Saturday 4thMay] marks the four-week countdown to when the Tenant Fees Act comes into effect, and the industry must face the realisation of preparing doe a post-tenant fees world.
“With no time to waste, agents need to ensure they’re compliant with the law and understand how the ban will impact their business. To help members overcome the legal challenges of the Act and comply with the ban, we launched the Tenant Fees Toolkit last month, providing practical tools and materials to support our members through every step of the transition and beyond.”
ARLA Propertymark recently added frequently asked questions to the toolkit, to better answer any queries letting agents and their landlords may have about the ban.
“We also have a series of upcoming road shows, which will update on the legislation and provide key insights on how businesses can thrive post the ban,” Cox adds. “We urge members to attend, as we rapidly head towards 1stJune.”
He gives a final piece of advice: “Agents can help reduce the impact on their business by being prepared, and, with the date fast approaching, they must act now.”
Whether you’re a landlord or a letting agent, you must assess how the tenant fee ban will affect your business.
Letting agents in England are using potentially unfair terms and conditions, and could be breaching consumer law by demanding deposits before allowing prospective tenants to even see a contract, a new investigation by Which? reveals.
The consumer champion visited 20 letting agents across England, posing as potential tenants looking for a rental home.
Which?’s mystery shoppers asked to see a copy of the terms and conditions that they would be signing up to, but one in four agents failed to produce a contract.
Five letting agents, including a branch of Connells, which has almost 200 offices nationwide, required a commitment or a holding deposit before tenants could view a sample tenancy agreement. Connells informed Which? that tenancy agreements should be freely available upon request.
In some cases, the letting agent also required a reference check to be paid for and completed before tenants saw the terms of the contract.
Letting agents have a duty by law to provide prospective tenants with the key information that they need to make an informed decision about the property. Which? believes that demanding a financial commitment before tenants can view the terms and conditions could fall foul of consumer law, by trapping renters into contracts that they haven’t had an opportunity to review.
Worryingly, three of the letting agents that required a commitment or deposit before tenants could view a contract are members of ARLA Propertymark (the Association of Residential Letting Agents) – a leading membership body for letting agents.
One agent in Leeds requested that the tenant visit its office to read the tenancy agreement. While the contract was accessible in this case, Which? fears that this practice could deter or place undue pressure on the tenant to read the contract quickly.
A report published last year by Which? found that only two-thirds (65%) of tenants read their tenancy agreement in full before signing it. Meanwhile, almost two-thirds (64%) of tenants who used an agent during their property search experienced problems, such as having to make decisions without enough information.
Letting Agents may be Breaching Consumer Law, Which? Investigation Reveals
In 13 tenancy agreements collated and inspected from other letting agents, Which? found evidence of potentially unfair terms and clauses that could breach the Consumer Rights Act.
In seven of the analysed documents, tenants were required to seek permission to notify their landlord or agent before switching utilities supplier, which could prohibit their right to choose for themselves and could mean that they are stuck on expensive tariffs.
Which? also found evidence of unclear language, which could confuse tenants, in at least eight contracts. These agreements included vague descriptions that tenants may be required to pay a “reasonable” amount or “a fair proportion of” additional charges.
But, without adequate explanation of what those charges would be for, or what constituted “reasonable” or “fair”, renters could risk being hit with extortionate fees during their tenancies.
All of the contracts reviewed referenced statutes and legislation that were not attached or explained further within the agreement, putting tenants (most of whom are not experts in property law) at an unfair disadvantage.
In all but two agreements, Which? found a clause that allowed landlords or authorised workpeople access to the property without prior consent, as long as 24 hours’ notice was given. It was not always specified that this notice should be in writing, and these contracts gave no indication that landlords and agents would take their tenant’s objections into account.
A template contract from the Ministry for Housing, Communities and Local Government (MHCLG) includes some examples of good practice, such as guidance notes explaining legal jargon. It also features a note outlining how tenants have a right to quiet enjoyment of a property, even if landlords provide 24 hours’ notice, so, if visits are very frequent or do not have a good reason behind them, the landlord may be breaching those rights.
However, even in that case, Which? believes that tenants’ rights to enjoy exclusive possession of their homes could be made clearer, and they should be empowered to push back if landlords seek non-urgent access at inconvenient times.
The organisation is concerned that many tenants could be rushed into signing contracts that they don’t fully understand and that contain potentially unfair clauses, as they may feel pressured to secure a property quickly, particularly in areas where demand is high.
According to the latest results from the Which? Consumer Insight Tracker, just one in ten people trust estate and letting agents, meaning that only car dealers are trusted less.
Just One in Ten People Trust Letting Agents
It has heard complaints from tenants who had landlords that entered their homes without prior notice or faced excessive charges for minor repair work.
The findings of this investigation suggest that tenants cannot always trust letting agents to act in their best interests, and, with some agencies apparently skirting the law, Which? is calling on the Competition and Markets Authority (CMA) to investigate further issues relating to practices, and tenancy terms and conditions in the private rental sector, and to take action where needed.
The consumer champion also calls on the Government to move forward with introducing a mandatory code of practice for letting agents, which is legally enforceable and ensures that all agents are held to an agreed set of professional standards.
Natalie Hitchins, the Head of Home Products and Services at Which?, says: “It is outrageous that some agents are demanding cash upfront before tenants are even shown a contract – committing them to agreements before they know what they’re signing up to.
“The results of this Which? investigation show how vital it is for the Government to introduce a legally enforceable code of practice, to ensure all letting agents act in a professional manner.”
She adds: “The CMA must also investigate the sector, and take action where needed to tackle unfair practices and contract terms.”
David Cox, the Chief Executive of ARLA Propertymark, responds to the report: “There is currently no legal requirement in England or Wales to have a tenancy agreement, and, as legal statute overrides contract, any unreasonable terms in a contract would be unenforceable in a court of law. As such, we would question the suggestion that agents are breaching consumer protection law. We have long been advocating for a legal requirement to have a written tenancy agreement, as they have in Scotland, to avoid many of the misunderstandings cited in this research. Which? implies that even MHCLG’s template tenancy agreement is in breach of their best practice; this demonstrates just how complex the issue around terms and conditions can be.”
Dan Wilson Craw, the Director of tenant lobby group Generation Rent, has a more positive reaction: “Renters are under pressure to sign up to anything that a letting agent puts in front of them, knowing that, if they hesitate, someone else will take the property. The good news is that, from next month, tenants who are asked to sign up to unreasonable terms are entitled to back out and get their holding deposit refunded, under the new Tenant Fees Act. But, as Which?’s investigation shows, unscrupulous letting agents are adept at finding ways to bamboozle tenants. There is a constant need to identify and expose these unfair practices.”
Recent research by the Government suggests that 1.5 million jobs in England are at risk of becoming automated. PayProp, the lettings payment platform, has responded to this data.
It believes that, rather than cutting jobs, automated processes should be the focus. Employees should have the opportunity to get away from the repetitive admin tasks, and balance their work lifestyle with those that involve interacting with people.
Research from the Office for National Statistics (ONS)
The ONS has analysed the jobs of 20 million people. It has estimated that 7.4% of these are at high risk of becoming automated. However, it has been highlighted that there are no estimates for the property industry. It may well be that the sector is less susceptible to job losses than other sectors such as manufacturing.
What is automation?
Automation has been defined by the ONS as the replacement of tasks done by workers through the use of technology, including computer programs, algorithms or robots.
The ONS study has revealed that the proportion of jobs at high risk of automation has actually dropped since 2011. However, the proportion of those at low and medium risk has increased.
How can automation help letting agencies?
Neil Cobbold, Chief Operating Office at PayProp, explains: “Effective automation for agents is all about putting processes in place to free up staff to do more front-end functions.
“For example, automating accountancy and payment tasks can increase accuracy and efficiency, while at the same time allowing staff to provide a more valuable output than just administration and data processing.”
Cobbold also says that by looking at information gathered from automated processes, agents can obtain a higher level of control over back-end functions and visibility of their business flows. This could lead to the production of better insights for the clients.
Cobbold said: “Implemented effectively, automating certain processes can close transparency gaps, open new doors and help agencies find new ways of doing things.”
Automating jobs is not the answer
Despite the bleak future predicted by the ONS, Cobbold has taken a more positive view on the situation
He said: “Automating certain processes should complement strategic interventions like prioritised staff development and providing the best possible customer service.
“Letting property is a people-centric business, so it remains vital that agencies have the staff in place to build long-term relationships with landlords and tenants.
“When you develop a team of dedicated property experts, PropTech can support this by freeing up capacity and allowing agents to focus on the more personal aspects of the rental process.
“Many industries will feel under threat from the prospect of automation, but if agencies find the right balance between automating key processes and continuing to provide an outstanding personal service, the lettings industry needn’t be one of them.”
Two of the UK’s biggest property portals are making changes to listings rules by the end of this month (April 2019).
Rightmove and Zoopla are no longer going to allow lettings listings that discriminate against tenants in receipt of housing benefit. This decision is part of a wider campaign to stamp out the ‘No DSS’ policy used by some landlords and letting agents.
This change was announced last month, and will include the amendment of Zoopla’s terms and conditions, so that they prohibit the inclusion of the ‘No DSS’ term on its website. This will also apply to listings uploaded onto its website and the search fields in its cloud based software products.
Charlie Bryant, managing director of Zoopla, has commented: “All tenants who are looking to rent a property deserve the chance to be fully assessed for their suitability and matched to a home that suits both their and the landlord’s circumstances.
“We proactively sought the views of our largest lettings focused agents to ensure the measures were undertaken on a collaborative basis and received significant support in respect of our proposed additional measures.”
Chris Town, vice chair of the Residential Landlords Association, has welcomed the move. He said: “Landlords should not refuse someone solely because they are on benefits, and should consider prospective tenants on a case by case basis.”
The Work and Pensions Committee has written to mortgage lenders, property insurers, agents and ad sites in order to ask about the policies they have in place. They wanted clarification on how such policies have ended up discriminating against those trying to rent a home whilst in receipt of benefit.
Today (24th April) the committee will hear evidence in Parliament from these groups, which include: Natwest and Co-op Banks, Kensington Mortgages, Nationwide building society, Shepherd’s Bush Housing Group, Hunters and Your Move estate agents, and the OpenRent ad platform. A panel of benefit claimants and private landlords are also to give evidence.
