Under the Renting Homes (Fees etc.) (Wales) Act 2019, receiving payments in relation to a tenancy are only permitted if specifically included in the Act. In the list of “permitted payments” (found in Schedule 1), payment in the event of default is a permitted payment but regulations may prescribe limits on the amount which can be charged in relation to a default. Regulations can also specify certain descriptions of breaches covered.
The Renting Homes (Fees etc.) (Prescribed Limits of Default Payments) (Wales) Regulations 2020 have been published in draft form and are awaiting approval by resolution of the National Assembly for Wales. These regulations prescribe certain limits and descriptions for charges which may be made in relation to a tenancy.
If approved, the regulations will commence on 28 April 2020.
The regulations have a similar effect to those already existing in England and they limit the amount which can be charged if the tenant defaults with paying the rent and if keys or security devices have been lost or a lock requires changing.
Failure to pay rent
The regulations will limit the amount which can be charged for failure to pay rent to the following amounts:
- before the end of the period of seven days from when due, zero can be charged
- after the end of the period of seven days from due, 3% above Bank of England base rate may be charged.
The actual formula for calculating the 3% plus base rate is:
the aggregate of the amounts found by applying, in relation to each day after the due date for which the rent remains unpaid, an annual percentage rate of three per cent above the Bank of England base rate to the amount of rent that remains unpaid at the end of that day.
Keys or Security Devices
If the tenant breaches the tenancy which leads to:
- a lock requiring to be changed, added or removed; or
- a key or security device being lost and needs to be replaced
A charge can be made but only for the “actual cost” of the replacement, change, addition or replacement of the key, security device or lock.
“Actual cost” means the cost of the key, security device or lock “as evidenced by an invoice or receipt”.
However, where a contractor undertakes the replacement of a key/security device or to the change, addition or removal of a lock on behalf of the landlord, the “actual cost” includes the cost of the contractor’s labour “as evidenced by an invoice or receipt”.
It’s important to note (and assuming the regs are approved in current form) in order to be able to charge, there must be a “breach by a [tenant] of a term of the contract which leads to the requirement … (replacement key, change lock etc.).
If the tenant simply leaves home, forgetting the key to the property, is that breaching the tenancy? Probably not unless it is specifically specified in the tenancy. Our agreements contain a clause that should cover this and allow a charge to be made.