Julie James, Minister for Housing and Local Government
The Renting Homes (Fees) (Wales) Act 2019 (‘the Act’) ensures tenants are not subject to additional – sometimes hidden - and often unreasonable extra costs.
The Act is focused on assured shorthold tenancies, which is the predominant form of tenancy in the private rented sector.
Since the Act came into force tenants know that, when they enter into or renew a rental agreement they cannot be asked for any other payments in addition to the rent, beyond those permitted under the Act. Permitted payments include security and holding deposits. This means tenants cannot be charged for an accompanied viewing, receiving an inventory, signing a contract, or renewing a tenancy.
It is estimated the Act is saving tenants, on average, almost £200 per tenancy.
In recent weeks, we have become aware of the way the Act is impacting on some assured shorthold tenancies in the social rented sector. These include ‘starter tenancies’ and ‘market rent tenancies’ issued by housing associations and some tenancies issued by supported accommodation providers.
The vast majority of housing association tenancies are assured tenancies, which are not affected.
The issue specifically relates to service charges made in connection with assured shorthold tenancies and whether these are prohibited under the Act. Where assured shorthold tenancies have been granted by housing associations and supported accommodation providers, service charges, and potentially other related charges, may have been charged in contravention of the provisions of the Act.
Having carefully considered the core intention of the Act and the implications for housing associations and supported accommodation providers, I believe the Act has created an unintended difference between the way in which different tenancies in the social sector are permitted to operate, as the Act applies only to assured shorthold tenancies.
It is important that this unintended difference is remedied as soon as possible.
This is a complex issue and in order to address it there are two key areas where I intend to take action immediately.
Firstly, I will bring forward, at the earliest opportunity a Statutory Instrument to amend the schedule of payments allowed under the Act to include these charges as appropriate. This will be subject to the affirmative procedure and therefore Members will have the opportunity to debate it at that time.
Secondly, my officials will continue to work closely with providers to identify interim arrangements to avoid the continuation of any charges in breach of the Act and to identify whether this will leave providers in financial difficulty.
This work is being taken forward as a matter of priority and I will keep Members informed of developments. I would like to reassure tenants that this issue will not impact on them. This is an issue for landlords – registered social landlords or third sector partners – and the Welsh Government to manage. I would also like to thank Community Housing Cymru, Cymorth Cymru and other partners across the sector for working with us to ensure that issues are resolved as fully and quickly as possible.