RLA Wales submits default fees response

24 Jul 2019 03:39 PM

RLA Wales has told the government it must take landlords’ time into account when setting default fees. 

While the fee ban in England was introduced in June, the Welsh ban does not come into force until September.

However, unlike the English equivalent, matters such as default fees (paid by tenants breaching their contract) and prescribed documents (compulsory information to be given to tenants) have yet to be finalised, and are at the discretion of the Welsh housing minister.

The RLA has now submitted its response to the consultation ‘Renting Homes (Fees etc.) (Wales) Act 2019: default fees and prescribed information’.

Favoured option

The Welsh government has already laid its cards on the table, saying it wants a set limit for default payments to reflect the ‘actual costs incurred by the agent’: Simply, if it costs £20 to have new keys cut, then the fee is £20.

It has chosen this approach above the alternative of placing a cap on payments, over fears landlords would simply charge the maximum amount as a matter of course.

RLA proposals: time is money

The RLA wants the government to go further and proposes default payments should cover the actual financial loss AND the loss of the landlord’s time.

RLA vice-chair and director for Wales Douglas Haig yesterday said:

“For a landlord and agent time costs them the most. 

“Time addressing matters such as replacing a lock or rearranging a pre-agreed callout with a tenant who then refused to let workmen in to do the work. 

“Time that the property is not being advertised and time lost in the search for new tenants, time assisting tenants with agreements and time spent on late night callouts and emergencies.

“The physical costs of a key and a lock is one thing, but the time spent arranging repairs, being called out at 4am or attending to the property yourself, costs the landlord and agent dearly. Therefore, there must be some redress to claim the reasonable cost of that time back.”

In its official response RLA has told the government:

Late Rent Charges

The consultation also asks questions about the amount charged for a late payment of rent.

The RLA said for a healthy private rented sector to exist tenants must pay their rent – and it is vital there are deterrents to those tenants tempted not to do so.

The government has accepted that this seems fair, with the consultation seeking a ‘reasonable balance’ between both parties.

However, RLA Wales has concerns the government will mirror English law, where it believes penalty fees are not high enough to put tenants off defaulting.

In England, the current set of permitted rent default is 3% of the rent plus Bank of England Base rate.

Using the rate payment calculator, this would put the cost of late payment of £500 for 31 days at only £1.55 at the time of going to press. 

The concern here is that there is no real deterrent. 

Instead the RLA would advise a reasonable interest rate is charged, set at a level charged by most credit cards/banks as a permitted payment for late rent.

It would also like to see rent payment to be included as a part of a credit history to reassure landlords tenants have a history of paying rent in full and on time.

To read the consultation response in full click here.

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