Rent Smart Wales is challenging letting agents and landlords over the widespread practice of charging student tenants summer ‘retainer fees’ which it claims are unlawful under Welsh legislation.

It says a retainer is an additional fee which is unlawful under the Renting Homes (Fees etc) (Wales) Act – the equivalent of the Tenant Fees Act, which took effect in 2019, and has been flagging up the issue during recent audits of letting agents in the country.

Many student tenancies ask tenants to pay half the rent in July and August meaning that students can’t pick up the keys permanently until they move in full-time; if they want to drop off some belongings, landlords will usually lend them the keys for a few hours at a time.

They can then give seven days’ notice when they want to move in, and it then becomes full rent.

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David Smith (pictured), property solicitor at JMW, says students have become much more militant about their rights and what they’re paying and that a successful challenge could have big consequences.

He admits there are problems with the way that some landlords charge a retainer, but that there are ways to do this lawfully – and regulators don’t understand the difference.

He tells LandlordZONE: “Rent Smart Wales are saying it’s not a tenancy because you’re not living there, but it is – you still have a tenancy on a shop, even if you’re not living there.”

He advises landlords: “If you draw it up such that it’s a tenancy with restricted use it’s probably OK, but if it’s drawn up as a tenancy with an additional fee on the front of a tenancy, it’s probably not.”

LandlordZONE has approached Rent Smart Wales for a comment.

Read more about Rent Smart Wales.

4 COMMENTS

  1. Regardless of whatever Rent Smart Wales are stating or whatever David Smith is saying- the entire practice of charging ‘half rent’ is probably illegal and has been for many years- how is it legal to charge rent and not give access to a property?

    • Well I can come up with two counter points to that.
      1) They are being given exclusivity. The property is “theirs”, guaranteed to be there at the start of term, and won’t be let to anyone else. So there is something material being given in return for the payments.
      2) An obvious alternative is the landlord simply tells the students to pay full rent. Pay full rent, get your keys – it’s not the landlords’ problem if the tenant doesn’t want to live there during the summer. Don’t want to pay rent over summer ? No problem, someone else will be prepared to.
      If these “fees” are declared illegal, then the end result is likely to be the tenants paying more, not less ! And if people don’t want to reserve, and pay for, their accommodation over summer – then it’s going to be a mad scramble to find somewhere to live in the couple of weeks before the new academic year starts – and rents will be going up to cover the losses during summer.

  2. Very misleading headlines…

    Words like “Probably” are meaningless until someone is challenged in court.

    Someone might describe my haircut as criminal that doesn’t mean its unlawful 😊

    Something only becomes unlawful when it has gone through the court system and has been declared as unlawful… case law then sets a precedent and tends to clarify a given “Loophole”

    What is criminal is people not paying their rent or abiding by their contracts.

    • HI can’t comment on your haircut Dave 🙂 but the parenthesis in the headline are there to indicate ‘unlawful’ is a point of view by Rent Smart Wales rather than a legal certainty/claim. Cheers. Nigel

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