The Renting Homes (Fees Etc.) (Wales) Act 2019, banning landlords and letting agents from charging fees to tenants, came into effect this week. It is now illegal for tenants to be charged by landlords or letting agents in Wales in order to set up or renew a tenancy in the private rented sector.
The new law will not just mean a ban on letting fees, but also the majority of other upfront fees payable by tenants to rent a property in Wales.
The Welsh government estimates the new law will save tenants, on average, close to £200 per tenancy.
However, the cost of referencing, credit checking etc will now fall on landlords and agents and as an increase in rents is likely as landlords and agents loook for ways to replace this lost income. After all they are not charities.
Landlords and letting agents re now only allowed to require a payment for rent, security deposits, holding deposits, a payment in default (when a tenant breaches a contract), and payments related to council tax, utilities, a television licence or communication services.
One industry pundit said "Agents do spend quite a lot of time helping those who find it more challenging to go through a standard referencing process, some of those people might be on low incomes or from overseas and not used to the system.
"Because fees are being banned agents are more likely to say: 'I'm going to choose that person because they understand the system, they've got a good paying job'... over someone who may be presenting under universal credit which is a very complex system.
“That's really one of our bigger long-term concerns is in a hot rental market with under-supply of rental properties, that landlords and agents have the ability to pick and choose who goes in there before they even get to the point of being able to apply for the tenancy.”
A ban on lettings fees in England came into force in June.
