Big changes for landlords and letting agents in Wales

As you may have read, The Housing (Wales) Act 2014 has been enacted by the Welsh Assembly to allow a greater level of control over the housing market. 

Some of the new legislation is due to launch in autumn this year, and from even the quickest of scan-reads, it’s clear to see that it will have a huge impact on landlords and agents.

The proposed changes include the creation of standardised ‘model’ tenancy contracts, but the biggest change will be the introduction of compulsory licensing for landlords and letting agents for both the letting and management of tenanted properties. 

The new licensing scheme will operate as ‘Rent Smart Wales’, with Cardiff County Council appointed to act as the primary registration authority.

What does this mean for agents?

Under the current proposal, to obtain a licence agents will be required to pass a ‘Fit and Proper Person’ (FPP) test, the details of which are still being agreed. Without a licence, agents will not be able to undertake any letting activity including collection of rent, viewings or management. The licence requirement will extend to ‘tenant find only’ agents, though online agents may be exempt from the legislation.

It’s unclear at this point as to which agency representatives will be required to pass the FPP. However, initial indications are that anyone owning 25% or more of the lettings company will have to pass it. This will become clear when the scheme rules are released.

What does this mean for landlords?

The proposed changes for landlord registration will require landlords to register and pay fees to gain a licence for every property they let. Licences are expected to last for five years, at which point they can be renewed upon payment of another fee. Charges have yet to be decided, though to keep fees down, it’s expected that registration will be a short online process, capturing information about both the landlord and the property.  

If a landlord does not obtain a licence to manage a property, they will be committing an offence - unless they appoint a licensed letting agent to manage it on their behalf. It will be an offence to appoint an unlicensed agent.

Developing a Code of Practice

Some additional conditions are being introduced for agents and landlords applying for a licence. Recently the Welsh Government consulted with Welsh industry about the development of a ‘Code of Practice’ which would need to be adopted and adhered to as a condition of having a licence. Failure to meet the conditions of the code could result in both the licence being revoked and a potentially unlimited fine.

If introduced, the code may also state that landlords and agents will have to undertake mandatory training, though it’s not yet clear what the training would cover.

Licensing is expected to commence in autumn this year. Enforcement is likely to start in late 2016 or early 2017, in order to allow agents and landlords time to comply with the law. The Welsh Government has now launched the Rent Smart Wales website, where agents and landlords will soon be able to find out more and apply for a letting and management licence.