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Welsh government pledges to fix legislative bug forbidding service charges on some tenancies

The Welsh government has promised to fix a legislative bug that is preventing social landlords from lawfully applying service charges to some tenancies.

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Welsh government pledged to bring forward a statutory instrument to rectify the oversight “at the earliest opportunity” (picture: Getty)
Welsh government pledged to bring forward a statutory instrument to rectify the oversight “at the earliest opportunity” (picture: Getty)
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The Welsh government has promised to fix a legislative bug that is preventing social landlords from lawfully applying service charges to some tenancies #UKhousing

In a written statement, housing minister Julie James admitted that the “complex” issue has emerged as an “unintended” consequence of laws passed last year.

She pledged to bring forward a statutory instrument to rectify the oversight “at the earliest opportunity”, while civil servants are discussing interim arrangements with housing associations and supported accommodation providers.

Sector bodies are also scrambling to identify potential costs arising from the blunder.

The Renting Homes (Fees etc) (Wales) Act 2019, which came into effect in September last year, prohibits landlords from charging nearly all fees on assured shorthold tenancies (ASTs) beside rent, apart from security and holding deposits.

ASTs are the most common tenancy type used in the private rented sector, and the act was passed to prevent agents and landlords charging unreasonable and hidden costs for services such as viewings and inventories.

The Welsh government estimates the legislation is saving private renters nearly £200 per tenancy on average.

In the social housing sector, most tenancies are assured, meaning they are not affected by the legislation.

But some social housing providers do use ASTs – particularly in supported accommodation as well as starter tenancies and market rent tenancies.

The legislation therefore forbids social landlords in Wales from charging tenants on ASTs service charges on top of rent, which, for example, they may do for support services or the maintenance of grounds and common areas.


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As the sector and the Welsh government only became aware of the issue within the past month, some providers are understood to have been charging tenants in contravention of the act.

It is a criminal offence to take payments prohibited by the legislation, with senior officers liable at corporate bodies which break the rules – though it is unlikely any affected social landlords will face prosecution.

Ms James said: “Having carefully considered the core intention of the act and the implications for housing associations and supported accommodation providers, I believe the act has created an unintended difference between the way in which different tenancies in the social sector are permitted to operate, as the act applies only to assured shorthold tenancies.

“It is important that this unintended difference is remedied as soon as possible.”

The legislation will be amended to list service charges by social landlords as permitted payments, the minister said.

In the meantime, officials are working urgently with the sector “to identify interim arrangements to avoid the continuation of any charges in breach of the act and to identify whether this will leave providers in financial difficulty”, she added.

Much of any unlawful service charges will likely have been paid by the Department for Work and Pensions via housing benefits.

Inside Housing understands that the possibility of pausing charges where possible is being explored, as well as converting ASTs to secure tenancies – which is trickier in supported housing where residents often only live for short periods.

Tenants will not be impacted by the issue, Ms James insisted.

Stuart Ropke, chief executive of Community Housing Cymru, and Katie Dalton, director of Cymorth Cymru, said in a joint statement: “We are aware of unintended consequences arising from the Renting Homes Fees Act 2019 which may affect the charging of service charges for assured shorthold tenancies.

“We are seeking legal advice to understand the impact of this issue and we are engaged in intense discussions with the Welsh government to find a swift solution.”

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