22 November 2016
Article by Jonathan Baxter, National Assembly for Wales Research Service
A year after the launch of Rent Smart Wales, 23 November 2016 marks the beginning of the next phase of the scheme’s implementation as the remaining sections of Part 1 of the Housing (Wales) Act 2014 are commenced. From that date, private sector landlords and agents who have failed to comply with the new requirements to register and obtain a licence face a range of potential penalties. This includes the prospect of rent having to be repaid to tenants, being unable to evict a tenant and even criminal prosecution.
What are the new requirements?
There are two aspects to the scheme: registration and licensing.
Registration requires all landlords with properties in Wales let under a ‘domestic tenancy’ to register their personal details, and details of their rental properties, with Rent Smart Wales. Rent Smart Wales is the service within Cardiff Council that manages the scheme for the whole of Wales. ‘Domestic tenancy’ includes assured, assured shorthold and regulated tenancies – that’s the vast majority of tenancies in the private rented sector. It doesn’t, for example, include landlords who let a room in their own home under a lodger type arrangement (as there wouldn’t be a ‘domestic tenancy’). Landlords have to pay a fee to register and the application can be completed online, or on paper – but a paper application will cost more. Registration lasts for five years.
Some landlords will also require a licence, as will agents.
A landlord will need a licence if they undertake lettings or management activities in relation to their own property. These are defined in the legislation, and include things like arranging viewings, organising repairs and collecting the rent. A full list is available on the Rent Smart Wales website.
Agents will require a licence if they undertake lettings or management work, as defined in the legislation. An ‘agent’ does not necessarily have to be a professional letting agent – it could be an informal arrangement such as managing a property on behalf of a friend or relative. There are some exemptions for agents who only undertake very limited work, but the vast majority of agents will need a licence. Full details of when an agent will need a licence are available on the Rent Smart Wales website.
Applying for a licence
In addition to paying a fee, landlords and agents have to undertake training to get a licence and also be ‘fit and proper persons’. Licences will be issued subject to a range of conditions. For agents, there will be a licence condition that requires them to have Client Money Protection, Professional Indemnity Insurance and Membership of a Redress Scheme within six weeks. Many agents who are members of professional bodies will have all three already as part of their membership.
All licences will be subject to a condition that the Code of Practice issued by the Welsh Government is complied with.
Rent Smart Wales must determine licence applications within eight weeks of receipt. Once issued, the licence will last for five years.
What about other licensing schemes?
Some properties must be licensed under the Housing Act 2004. Most notably, certain Houses in Multiple Occupation (HMOs) need to be licensed by the local authority. In some areas, where there are selective licensing schemes, other rental properties will also need a licence. The Rent Smart Wales registration and licensing requirements are in addition to any other requirements for a specific property to be licensed.
Reaction from the sector
There have been some concerns expressed by groups representing landlords that there is not sufficient awareness of the new requirements amongst private landlords. The Welsh Government estimates that there are somewhere between 70,000 and 130,000 private sector landlords in Wales. The latest figures (as at 21 November 2016) from Rent Smart Wales suggest around 55,000 landlords have registered, and a further 12,700 applications have been started but not yet completed.
The Rent Smart Wales website provides a wealth of information that will answer most common queries about the scheme. Landlords should also be able to get advice from landlord associations. Tenants can check whether their landlord and agent have complied with the new requirements by using the search facility on the Rent Smart Wales website.