Landlords, letting agents and property management
Requirements regarding the fees that may be charged to clients by landlords, letting agents and property management businesses, the display of fees and membership of client money protection schemes and information to be provided to clients
This guidance is for Wales
Legislation requires that property tenants may only be charged certain fees. There are also requirements for accommodation letting agents and property management businesses to display fees and charges to clients
RELEVANT BUSINESSES
The requirements relate to businesses that receive instructions from clients regarding accommodation to be let under assured tenancy agreements to:
- introduce prospective tenants to landlords with accommodation available for rent
- arrange assured tenancy contracts between landlords and tenants
- carry out property management services for landlords
PERMITTED FEES
Landlords may only charge clients the following fees in respect of tenancy agreements:
- rent
- security deposits (money paid as security for the performance of obligations of a tenant or discharge of any liabilities arising under or in connection with a tenancy agreement)
- holding deposits paid before a tenancy agreement is made, which must not exceed one week's rent
- payments required in the event of a default by the tenant in respect to:
- failure to make a payment by the due date
- a breach of a term of the tenancy agreement
- relevant council tax
- provision of:
- utilities (gas, electricity, etc)
- a television licence
- communication services (landline telephone, the internet, cable and satellite television)
- a reasonable fee for a further written statement of a standard occupation contract
- a fee for further copies of written statements
All other fees are prohibited. A landlord may not give notice until any prohibited payments have been repaid.
PRESCRIBED LIMITS FOR FAILURE TO PAY RENT
Where a tenant fails to pay rent by the due date the maximum default charges that may be made are as follows:
- failure to pay rent up to, and including, seven days after the due date:
- failure to pay rent later than seven days after the due date:
- an annual percentage rate of 3% above the Bank of England base rate, charged daily, until the rent arrears plus the total of daily charges are paid
For example:
- a £500 monthly rent that is not paid up to, and including, seven days after the due date:
- no default changes can be applied
- a £500 monthly rent that is not paid more than seven days after the due date:
- with a Bank of England base rate of 0.75%, a maximum daily default charge of 3.75% APR (£0.51) can be made
Where the tenant is in breach of contract requiring locks, keys or other security devices to be replaced, the default charge payable by the tenant can be no more than the actual cost of providing replacements, including any contractor labour charges (with an invoice or receipt as evidence).
INFORMATION TO BE PROVIDED
Before a holding deposit is paid to a landlord or letting agent, the following information must be provided to the prospective tenant:
- amount of the holding deposit
- address of the dwelling in respect of which the deposit is paid
- where the holding deposit is to be paid to a letting agent or a landlord, the name and contact details of that letting agent or landlord
- duration of the tenancy contract
- proposed occupation date
- amount of rent or other consideration
- rental period
- any proposed additional, modifications to, supplementary or omissions of terms from the tenancy contract
- amount of any security deposit
- whether a guarantor is required and, if so, any relevant conditions
- what reference checks the landlord or letting agent will undertake
- any information the landlord or letting agent requires from the prospective tenant
The required information must be provided to the prospective tenant in writing and may be given in person or provided by electronic means (if the prospective tenant consents to receiving it electronically).
HOLDING DEPOSITS
Where a prospective tenant is required to pay a holding deposit to secure first refusal on a tenancy agreement, that holding deposit must be repaid if the parties enter into the agreement before the deadline for agreement (except in the circumstances outlined below).
The holding deposit must also be refunded if the parties fail to enter into the agreement before the deadline for agreement (except in the circumstances outlined below).
The deadline for agreement is 15 days after the holding deposit is made, or another period as agreed in writing by the parties.
The deposit must be repaid within seven days of an agreement being made, or the deadline for agreement if one is not made.
A holding deposit does not have to be repaid where:
- it is used towards the first payment of rent under the agreement
- it is used towards the payment of a security deposit under the agreement
- the prospective tenant provides false or misleading information to the landlord or letting agent that materially affects the decision whether to grant the agreement or not
- the prospective tenant notifies the landlord or letting agent before the deadline for agreement that they have decided not to enter into the agreement
- a landlord or letting agent takes all reasonable steps to enter into an agreement before the deadline for agreement but the prospective tenant fails to take all reasonable steps to enter into it
For more information see Renting Homes (Fees Etc) (Wales) Act 2019: Guidance for Landlords and Letting Agents, which was produced by the Welsh Government.
RELEVANT FEES
The fees that have to be indicated are the fees, charges and penalties payable to the letting agent by their clients under contracts for:
- introducing tenants to landlords with accommodation available for rent
- arranging assured tenancy agreements
- the management of rental properties
However, the following fees do not have to be indicated:
- rental charges
- tenancy deposits
- any fees, charges or penalties that the letting agent receives from a landlord under a tenancy on behalf of another person
- any other fees, charges or penalties specified in regulations
An assured tenancy is one as defined in section 1 of the Housing Act 1988 (excluding long leases as defined in section 7 of the Leasehold Reform, Housing and Urban Development Act 1993), except where the landlord is a:
- private registered provider of social housing
- registered social landlord
- fully mutual housing association
DISPLAY REQUIREMENTS
Letting agents must display a list of relevant fees:
- in each of their premises where they deal with clients or potential clients face-to-face
- on their website (if they have one)
This list must be displayed in a conspicuous place.
FEES CONTENT
The displayed fees list must include:
- an adequate description of each fee and its purpose
- whether the fee is payable for the accommodation or by each tenant
- the total amount of the fee inclusive of all taxes
- the method of calculating the fee, if the fee cannot be determined in advance
Information regarding use of a client money protection scheme must be made available to the tenant within 30 days of receiving the deposit, and the tenant must be given an opportunity to check and sign the information given. There is also a requirement, as part of the Rent Smart Wales licence conditions, to be a member of an independent letting and management redress scheme (as accepted by Rent Smart Wales).
TRADING STANDARDS
For more information on the work of Trading Standards services - and the possible consequences of not abiding by the law - please see 'Trading Standards: powers, enforcement and penalties'.
IN THIS UPDATE
No major changes.
Last reviewed / updated: February 2024
Key legislation
Please note
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