Holding Fees & Prohibited Payments


It is an offence, under the Renting Homes (Fees etc.) (Wales) Act 2019, for a landlord or agent to charge tenants any prohibited payments/fees. This applies to all Assured Shorthold Tenancy agreements in Wales, entered into after 1st September, 2019.


Prohibited fees are defined as any payment a tenant is required to pay, that is not permitted by the Act.


Prohibited Payments


Anything which is not permitted, is prohibited and banned by the Act.


This means any payments required after 1 September 2019 in relation to tenancy agreements, such as check-in fees, check-out (or ‘exit’) fees, administration fees, inventory fees, guarantor fees etc. are prohibited payments.


Any term of a tenancy agreement that requires a tenant to either:

  • make a prohibited payment;
  • enter into a contract for services; or
  • make a loan


is not binding on the tenant. The rest of the contract will, however, continue to have effect.


A landlord or agent who has asked for a prohibited payment cannot serve notice to evict a tenant using the section 21 possession procedure, until they have repaid the amount. This also applies where a holding deposit has not been returned in breach of the requirements of Schedule 2 to the Act.


Examples of fees that are no longer allowed:

  • Payments to alter or amend the contract
  • Check in and check out fees
  • Agency fees
  • Referencing/credit check fees


Permitted Payments


The Act allows the landlord/agent to charge tenants the following:

  • Security deposit;
  • Holding deposit;
  • Payments in default;
  • Payments in respect of council tax;
  • Payments in respect of utilities;
  • Payments in respect of a television licence;
  • Payments in respect of communication services.


Holding deposits


A holding deposit is a small deposit which is paid by a tenant to secure a property. It allows the landlord or agent to check the suitability of a tenant. It serves as a guarantee to the landlord that the tenant is committed to taking on the property and a guarantee to the tenant that the landlord will hold the property for them, pending successful completion of their suitability tests.


A holding deposit can be any amount up to a maximum of the equivalent of one weeks’ rent.


Landlords and agents cannot ask a tenant for more than one week’s rent as a holding deposit (this cap is based on the total agreed rent for the property). For example, if there are three tenants who are jointly liable for the agreed total weekly rent of £240, you can’t charge each tenant a £240 holding deposit. The maximum this group of tenants could be asked to pay as a holding deposit between them would be £240. They may then choose to split this equally so that each person would pay £80.


The cap of one week’s rent on holding deposits is not a recommended amount, but simply the maximum that can be taken.


A holding deposit confers the right of first refusal on a property to a tenant, so a landlord/agency are only allowed to accept one holding deposit for one property at any one time.


Specified Information


Where a landlord/agency are taking a holding deposit from a prospective tenant, specified information must be given to the prospective tenant BEFORE a holding deposit is received.

The information required by The Renting Homes (Fees etc.) (Holding Deposit) (Specified Information) (Wales) Regulations 2019 is:

  • amount of holding deposit (which is limited to no more than one weeks rent)
  • address of the dwelling in respect of which the deposit is paid,
  • where a holding deposit is to be paid to a letting agent, the name and contact details of that letting agent,
  • where a holding deposit is to be paid to a landlord, the name and contact details of that landlord,
  • duration of the contract
  • proposed occupation date
  • amount of rent or other consideration
  • rental period
  • any proposed additional contract terms or proposed modifications to fundamental or supplementary terms or terms proposed to be omitted from the contract,
  • amount of any security deposit
  • whether a guarantor is required and, if so, any relevant conditions
  • reference checks the landlord (or letting agent) will undertake
  • information the landlord or letting agent requires from the prospective contract-holder

A failure to provide the prescribed information results in the holding deposit having to be returned even if there is some reason allowing a landlord or agent to retain the holding deposit (except if the tenant has provided false information).


Deadline for agreement and repayment


A holding deposit must be repaid to the tenant within 15 calendar days of payment. This is known as the deadline for agreement. It can be extended, though only by agreement of both parties in writing.


Subject to offsetting against rent or security deposit, if both parties agree to enter into a tenancy, then the deposit must be repaid to the tenant within seven calendar days of that agreement.


If both parties do not agree to enter into a tenancy, then the deposit must be repaid within seven days of the deadline for agreement, whether that is 15 days from receipt, or another date as agreed in writing.


Right to use a holding deposit for rent or security deposit


A landlord or agent may not have to repay a holding deposit if that amount is to be put towards either the first payment of rent or the security deposit for that tenant.


Right to retention of holding deposit for providing false and misleading information


A landlord or agent may be entitled to retain a holding deposit should a tenant have provided false or misleading information at the time of applying for a tenancy.


Examples of this could include (but are not limited to) information coming back from reference checks being different from that provided by the tenant when applying for the tenancy, such as false references, misleading details of current employment (including overall employment status) or CCJs being discovered when the tenant has stated that they do not have any.


Right to retention of holding deposit for failing to enter a tenancy agreement


Should a tenant choose not to enter a tenancy agreement, or fail to take reasonable steps to enter a tenancy agreement, a landlord or agent may be able to retain the holding deposit.


Reasonable steps would include providing the information a landlord or agent would require to set up a tenancy when requested. Again, each case will be different and a landlord or agent would need to be content that a tenant was clear of what was required of them, but had failed to necessary steps as agreed.


Excess holding deposit


Any amount of holding deposit above one week’s rent is a prohibited payment.


It may be necessary for a landlord or agent to require rent in advance, or the security deposit, before a tenancy agreement has been signed. This could be in cases where a tenant is not physically available to sign an agreement before the term of the tenancy begins. Provided the tenant is clear that any such payment was an advance payment of rent, or the security deposit, then this would not be classed as excess holding deposit.


Payments in Default


A payment in default is a payment required by the landlord or agent arising from a breach of the tenancy agreement by the tenant, whether late payment of rent by its due date or some other breach. These are occasions where it would be unfair for the landlord to be responsible for meeting the cost to them as a result of the actions of the tenant.


A payment in default can only be charged if there is a specific term in the tenancy agreement allowing for such a payment. If a landlord tried to charge a payment in default which was not set out in the tenancy agreement, then that payment is prohibited.


Examples of types of default payments could be:

  • Missed appointments – such as a landlord arranging with a tenant for a contractor to carry out remedial work at a property, and a tenant subsequently refusing entry, or not being home to allow entry, resulting in charges to the landlord.
  • Avoidable or purposeful damage to property – damage to a property caused by neglect or careless or wilful behaviour by the tenant.
  • Replacement keys – loss of keys by the tenant requiring a landlord to arrange for the cutting of new keys and delivery of those keys to the tenant.
  • Emergency/out of hours call-out fees – fees incurred as a result of a landlord arranging for someone to attend the tenant’s property at the request of a tenant, such as a locksmith or an emergency glazier at the early hours of the morning, when the problem had been caused by the tenant in the first place, such as a window broken on purpose, or keys locked inside a house.


Payment for ending a tenancy agreement early


In situations where a tenant wants to leave a fixed-term tenancy early, the landlord or agent is usually within their rights to expect to be paid for the entirety of the tenancy.


However, there are situations where the landlord or the agent may come to an agreement with the tenant to allow them to leave early. This may be, for example, an agreement that a tenant will pay a lesser amount which may cover any void period while a landlord finds a replacement tenant. The Act does not prohibit any agreement that a landlord and tenant may reach should the tenant wish to leave the tenancy early.


Of note, the Rent Homes (Fees. etc) (Wales) Act 2019 does state that a fees for a change of sharer is now a prohibited payment. However, our current understanding is that, in order to put the replacement tenant's details on the tenancy contract, the existing contract cannot be amended, but a new contract needs to be drawn up. As such, you may find that you are legally charged for requesting this change to your tenancy agreement. If you would like more guidance on this we would advise you to contact Rent Smart Wales.


What to do if you have been charged a prohibited payment


  • If you have been asked to make a prohibited payment, you can refuse and report the landlord/agency to the local enforcement authority, Shared Regulatory Services (see below). You will also need to think very carefully if you want to go ahead and agree a contract with a landlord/agency who is breaking the law. A disregard for the law at the start can be a very strong indication of the response you will get if you have problems during the tenancy.
  • If you have already made the payment, you can contact the landlord/agency and ask them to give it back. If they refuse, you can apply to a county court to claim back any prohibited payment or holding deposit not reasonably returned. You can also report them to Shared Regulatory Services.
  • A county court will be unable to order repayment to you if the landlord or agent is subject to criminal proceedings in relation to the prohibited payment or holding deposit. This is because a judge may order repayment of a prohibited payment or holding deposit on conviction.
  • A landlord will be unable to issue a section 21 eviction notice, seeking possession of a property, if they have taken a prohibited payment but have not repaid it or they have taken a holding deposit but have not repaid it as required by the Act.


What are the penalties for these offences?


The enforcement authority for offences under the Renting Homes Wales (Fees etc.) Act 2019 is Shared Regulatory Services (SRS). SRS are able to issue landlords or letting agents a fixed penalty notice of £1,000 for the offences of:

  • requiring a tenant to make a prohibited payment, or
  • requiring a tenant to enter into a contract for services in relation to a tenancy, or
  • requiring a tenant to make a loan in relation to a tenancy.

They may also choose to prosecute which, if convicted, may result in a fine (not subject to any statutory limit) for:

  • requiring a tenant to make a prohibited payment, or
  • requiring a tenant to enter into a contract for services in relation to a tenancy, or
  • requiring a tenant to make a loan in relation to a tenancy, or
  • providing false or misleading information in relation to a notice issued seeking information.


The court by which a person is convicted of an offence under section 2(1) or 3(1) of the Act may order the offender to repay the amount of the payment concerned to the tenant.


How to contact Shared Regulatory Services


If you have any questions or queries about the scheme, you can contact

Housing Enforcement Shared Regulatory Service Basement Office City Hall, Cardiff CF10 3ND



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