Setting Rent Levels
There are no rules about setting a rent level for your property however you should bear in mind other rent levels in the area to ensure you do not price yourself out of the market. It may also be worth considering local housing allowance (housing benefit) rates as the rates may determine a tenants affordability.
The Housing (Wales) Act 2014, through the Rent Smart Wales licencing regime brought in certain rules around rents. Landlords and tenants must agree what the rent amount, payment arrangements and schedule will be how and when the rent will be reviewed. This information must be included in the tenancy agreement.
Tenants must be given sufficient opportunity to read the tenancy agreement, and obtain independent advice if they wish.
If the tenancy agreement runs for a set period of six months or more (fixed-term), the agreement should say that rent will either be:
- fixed for the length of the term
- reviewed at regular intervals - and include information on how to review it
Landlords can only increase the rent of a fixed-term tenancy if the tenant agrees. If they do not agree, it can only be increased when the fixed-term ends.
If the tenancy is a periodic tenancy (rolling on a month-by-month basis) the agreement should say how often the rent will be reviewed. Both parties can agree a rent increase for a periodic tenancy at any time and should confirm the increase in writing. You should include a clause in the agreement that allows a yearly increase in rent. Landlords cannot normally increase the rent more than once a year without the tenant's agreement.
In addition to the rent, landlords may have other fees they wish to charge the tenant. The new Renting Homes (Fees etc.)(Wales) Act 2019 restricts these to a permitted list.
You can charge a tenant the following permitted fees;
- Rent (but must not fluctuate throughout the term)
- Security deposit (must be held in authorised scheme)
- Holding deposit (max 1 week rent and must be repaid to the tenant later)
- Council tax (but only to the value of the bill)
- Utilities and communication bills (but only to the value of the bill)
- Certain payments in default of the contract, which will be set out by other statutory (Currently changing locks, new keys and interest on late rent payments)
All other charges such as check in fees, or a fee for renewal or amendment of tenancy are classed as prohibited payments and are no longer legal. You could be fined if you charge a prohibited payment. You will also be unable to issue a section 21 notice for possession of the property if you have taken a prohibited payment, and not repaid it.
Bond Deposit Schemes
Since April 2007 landlords must protect their tenants' deposits using a tenancy deposit protection (TDP) scheme if they have let the property on an assured shorthold tenancy. Any assured shorthold tenancy that began before the 6th April 2007 but has been renewed by way of a new tenancy agreement since this date needs to comply with the legislation and the original deposit amount needs to have been protected.
Tenancy deposit protection (TDP) schemes ensure that money paid by tenants (as deposits) is kept safe. The schemes guarantee that tenants will get their deposits back at the end of the tenancy, if they meet the terms of the tenancy agreement and do not damage the property.
If these conditions don't apply - for example, because you live in the property with your tenant - the deposit does not have to be protected. However, it is still good practice to do so.
Landlords or agents must use one of the three approved TDP schemes to protect tenants' deposits where these conditions apply. If any other scheme is used, deposits are not protected in law. The three approved schemes are:
- Deposit Protection Service (DPS)
- My Deposits
- Tenancy Deposit Scheme (TDS)
You should provide your tenant with the details of the scheme you are using. The landlord should provide the tenant with details within 14 days of the deposit being paid, including;
- Contact details for the landlord or letting agent
- The contact details of the tenancy deposit scheme they are using
- Information on how to apply to get the deposit back at the end of the tenancy
- What tenants can do if there is a dispute about the deposit.
If the deposit is not protected in one of the three approved schemes the tenant can take you to court and you may have to pay the deposit plus three times the amount of their deposit back. You will also be unable to seek possession of your property with a standard 'Section 21' notice.
- encourage landlords and tenants to draw up clear tenancy agreements
- provide a free service to resolve disputes
If the tenant is having difficulty meeting the bond amount you can direct the tenant to the Bond Guarantee scheme which may be able to help provide a bond guarantee (non cash bond certificate) to the landlord and offers advice to both landlords and tenants. This scheme is run and managed by Ceredigion Care Society. Please contact our Housing Options service on 01545 574123.