Welsh Tenant Fees Ban will Lead to Increased Costs for Landlords, Says NLA

The proposal for a tenant fees ban, much like the one currently being discussed in England, is now being considered in Wales.

Members of the Welsh Assembly are being urged to reconsider this ban. Concerns that mirror those brought up in England have been voiced; mainly that such a ban will lead to an increase in costs for landlords.

Chris Norris, the Director of Policy Practice for the National Landlords Association (NLA), gave evidence to the Welsh Assembly committee on the possible impact that the Welsh Fees Bill could have. He highlighted: “The PRS [private rental sector] has a limited elasticity in the landlord’s or owner’s ability to absorb costs; supply in the PRS isn’t unlimited.”

The effectiveness of enforcement was also brought into discussion. Chris Norris questioned the extent to which the Bill would actually achieve its aims. This reflected the points made in his earlier statement about the Welsh Bill last month, when it was first introduced by Housing Minister Rebecca Evans AM: “Whilst tenants and applicants deserve to be treated fairly, and not unduly charged, it is disappointing that the Welsh Government seem to be adding to the enormous amount of change with which landlords in Wales are being expected to contend.

“With all of the uncertainty surrounding the introduction of the new Standard Contract from 2019, and ongoing debate about fitness for habitation in the private sector, the NLA would like to see the Welsh Government focus on getting the fundamentals right before moving onto new challenges.”

Chris Norris was asked by Assembly Member Jenny Rathbone AM about the possibility of increased difficulties for vulnerable renters due to landlords feeling the need to cherry pick their tenants. He responded: “From an admin perspective, you see a relatively straightforward process… or a more expensive, complicated process…

“It is reasonable to suggest that people will favour the simple case if you’re not allowed to recoup the cost of doing [a] longer, more burdensome process… guarantors would provide twice the work, therefore, if the cost is the same, would be easier to choose the prospective tenant without a guarantor”.

Rathbone also enquired as to why tenants should be paying fees to letting agencies, when landlords are the ones benefitting from the services, such as referencing. He responded: “There are some charges for which both the landlord and the tenant are beneficiaries” – avoiding pre-screening, referencing, and particularly checking-in – and where there’s a risk of harm for both parties if the process isn’t followed properly through poor service “there’s an argument for sharing that cost”.

In relation to security deposits, the NLA has stated that it does not believe that there should be a cap. Chris went on to say: “The security deposit never becomes the landlord’s money. The security deposit always remains the tenant’s money.

“The legislation already protects that… it’s not in the landlord’s interest, or the agent’s interest, to ramp up the security deposit that they can’t use as operating capital, because it becomes a barrier to getting people in the homes.”

A written response from the NLA to the Welsh Assembly on the Tenant Fees Bill can be viewed here.