WELSH MOVE TO BAN FEES

I suppose it was easy to predict this was coming, but the Welsh devolved Government launched their consultation on tenant fees last week which will run for approximately 12 weeks, closing on 27th September.

All the political parties in Wales had committed to introducing a ban and in the light of the introduction of Rent Smart Wales, which is widely recognised as the most comprehensive licencing scheme in the UK, it is not surprising that ministers in Cardiff Bay were not going to be top trumped by a Theresa May Government.

The timing of the consultation means that Wales could introduce legislation even before England, as the civil servants in London are still wading through the, close to 4,750, responses they received to their consultation as well as bringing a new Housing Minister up to speed on the issue. The intention in England is to produce their legislation in draft and use a select committee to scrutinise and call for evidence before presenting a ready cooked bill for fast track through Parliament. However the mechanics of law making is painfully slow and with so much other legislative pressure on Westminster as a result of Brexit, many people in the industry were counting on a good lead in time before any ban becomes a legal requirement.

The slicker Welsh system, however, could mean legislation in double quick time with a bill being presented early next year. This means that Welsh agents and tenants will join their Scottish counterparts in experiencing the ban before their colleagues across the border.

It is also arguable whether when all the constituent parts of the UK have established their laws, that these will be the same across the different countries. What is included in the ban in one jurisdiction may not be included in another. Both Wales and England will be considering, what constitutes a fee, what can and can’t be charged, whether landlords can charge fees or not and the added complication that a cap on tenancy deposits and holding fees are being considered in England. (The Welsh remit may or may not include these elements.)

Wales shares a long border with England and has many common markets in the property sector. Ironically the welcome news that tolls are to be scrapped on the Severn Crossing, opening up potential benefits for an enhanced, Glamorgan, Gwent and Avon economic area along the M4 from Bristol to Cardiff and beyond, would not be such an opportunity for the private rented sector if the compliance environment was widely divergent. In the north of the country conurbations such Wrexham and in England, Chester, their proximity to the border mean that agents and landlords already face two different systems if they operate on both sides and this will be even greater if the Welsh fee ban is distinctly different from the English.

Dichotomies exist over an increasing number of areas due to devolution and business has to deal with these. The consumer however also faces these dilemmas, Wales, for example, has a thriving tertiary education sector, with a large student population and good a proportion using the private rented sector.  Different experience between students are already plain, for example, those who come from outside Wales pay full tuition fees, whilst their fellow academic natives have theirs subsidised. If the issue of tenant fees further widens the difference between the markets the impact of this will need to be looked at. In addition, the information that the tenant consumer is provided will need to be clear and transparent.

From the point of view of a universal redress scheme like the Property Redress Scheme, to which all Welsh letting agents must be a member following Rent Smart Wales, we will need to understand the nuances of different systems if we are to offer to deal with complaints about fees. What happens if the Agent is in England and lets a property in Wales? What if under English law a reference fee to the tenant is legal but in Wales is banned? OK, exceptions do not make the rule however these scenarios will exist and especially from an enforcement point of view will need to be considered.

I will, of course, raise these concerns as part of my contribution to the consultation, however, the unique relationship between the separate parts of the United Kingdom have always sprung up these conundrums, commonly known in political parlance as “West Lothian” questions. Anomalies will always exist and agents and landlords will have to adapt. After all if the current football champions of the Welsh Premier League, The New Saints can actually play in Oswestry, England and English Chester FC play in a stadium predominantly in Wales, then I am sure we can get used to it.

Whatever the outcome and the timings of any future legislation, we at the Property Redress Scheme will help and support members to adapt and comply with the law. We supported Welsh agents before and after the introduction Rent Smart Wales with a workshop and individual visits to agents to explain how redress and client money protection fitted into the equation. We are looking at providing similar assistance as the process of tenant fees enactment progresses.

I do however urge agents, tenants and landlords on both sides of the border to make their contributions to the consultation. The more information that those people who will be drafting the legislation have, the more the benefits and disadvantages of the proposal can be examined and the unforeseen consequences, identified and addressed. The balance, after all, should be struck between the Welsh Government’s ambitions for national autarky and a system that works for all.