Cynulliad Cenedlaethol Cymru

Yn ôl i Chwilio

Y Pwyllgor Cydraddoldeb, Llywodraeth Leol a Chymunedau

Equality, Local Government and Communities Committee

21/06/2018

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Bethan Sayed AC
David Melding AC
Gareth Bennett AC
Jack Sargeant AC
Jenny Rathbone AC
John Griffiths AC Cadeirydd y Pwyllgor
Committee Chair
Joyce Watson AC
Siân Gwenllian AC

Y rhai eraill a oedd yn bresennol

Others in Attendance

Emma Williams Dirprwy Gyfarwyddwr, Is-adran Polisi Tai, Llywodraeth Cymru
Deputy Director, Housing Policy Division, Welsh Government
Huw Charles Rheolwr y Bil, Llywodraeth Cymru
Bill Manager, Welsh Government
Neil Buffin Uwch-gyfreithiwr, Llywodraeth Cymru
Senior Lawyer, Welsh Government
Rebecca Evans AC Y Gweinidog Tai ac Adfywio
Minister for Housing and Regeneration

Swyddogion Cynulliad Cenedlaethol Cymru a oedd yn bresennol

National Assembly for Wales Officials in Attendance

Chloe Davies Dirprwy Glerc
Deputy Clerk
Jonathan Baxter Ymchwilydd
Researcher
Naomi Stocks Clerc
Clerk
Stephen Davies Cynghorydd Cyfreithiol
Legal Adviser

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.

Dechreuodd y cyfarfod am 09:30

The meeting began at 09:30.

1. Cyflwyniad, Ymddiheuriadau, Dirprwyon a Datgan Buddiannau
1. Introductions, Apologies, Substitutions and Declarations of Interest

May I welcome everyone to this meeting of the Equality, Local Government and Communities Committee? The first item on our agenda today is introductions, apologies, substitutions and declarations of interest. David Melding is substituting today for Janet Finch-Saunders for the legislative scrutiny part of this meeting, and Joyce Watson is substituting for Rhianon Passmore—Siân Gwenllian is just joining us—and those are our substitutions. Are there any declarations of interest? No.

2. Bil Rhentu Cartrefi (Ffioedd etc.) (Cymru): Sesiwn Dystiolaeth 1
2. Renting Homes (Fees etc.) (Wales) Bill: Evidence Session 1

We will move on to item 2 on our agenda today, which is the first of several evidence sessions to inform our scrutiny of the Renting Homes (Fees etc.) (Wales) Bill. I'm very pleased to welcome Rebecca Evans, Minister for Housing and Regeneration, together with her officials, Huw Charles, Bill manager, Neil Buffin, senior lawyer, and Emma Williams, deputy director of the housing policy division. Welcome, everyone.

Perhaps I might begin with our first set of questions today on the general principles and, initially, the need for legislation. So, firstly, then, why is there a need for legislation in this area?

Thank you very much, Chair. Good morning, committee. We believe there's a need for legislation in this area because we know that the private rented sector is playing an increasingly important role in terms of meeting the housing needs of people in Wales. The size of the sector has doubled since the start of 2000 and currently accounts for around 15 per cent of our housing stock, and we would expect that to increase in the years to come. So, it's important that we take action to ensure that the sector does operate fairly, and our particular focus here is on tenants.

We've had research undertaken for us by the Cambridge Centre for Housing and Planning Research, and that really does make a strong case that fees within the sector are preventing people, in the first place, from moving into the private rented sector, but then being able to move within the rented sector. In our consultations, we've found no compelling evidence as to why it should be tenants who are paying the fees, when we know that, in fact, it is the landlord who instructs the letting agent to act on their behalf, and the services provided are very much for the benefit of the landlord. So, the purpose, really, of the legislation is to make the private rented sector an easier sector to move into and to move between properties within that sector.

Thank you for that, Minister. Given that that is the purpose of the legislation, nonetheless, the explanatory memorandum notes that consideration was given to a non-legislative approach, and that could have included a more rigorous approach to enforcing existing consumer rights and, indeed, a voluntary fees code that standardised and capped charges. So, could you tell committee why that alternative approach isn't your favoured way forward on these matters?

Thank you. As you say, in the explanatory memorandum, we do explore different ways of approaching this issue, so doing nothing, as a first option, or undertaking legislation, which is our preferred option, but then we also looked at other ways in which we could potentially make a difference in this sector. We did look at a voluntary scheme and decided that that wouldn't have the impact that we would require of it, partly because it could potentially make the sector unequal, with some landlords and letting agents being part of that voluntary scheme, and others not. So, it simply wouldn't have the kind of impact that we are looking for.

In terms of setting a cap for fees, again, that wouldn't be where we are trying to go with this Bill, because, essentially, we are looking for a situation where tenants are only paying their rent and deposit, whereas a cap on fees would suggest that fees are appropriate and, of course, there's potential there for ambiguity and misunderstanding as to what appropriate fees might be. So, within this Bill, we've tried to take the most simple approach to achieving our policy aim, and we were firmly of the view that legislation was the way in which to do that.

Minister, Scotland have had a ban on fees for some time. Could you tell the committee how this legislation is informed by the experience in Scotland, but also how it reflects the particular characteristics of the lettings market in Wales. Have you sought to strike a balance in those terms?  

09:35

Yes, we looked very closely at the legislation in Scotland. The first piece of legislation, which they introduced back in 1984, was, I think, deemed not to have been successful in achieving its policy aims, but then the legislation that came later was in 2011. The reason that legislation didn't work in the first instance in Scotland was, I think, because it was quite unclear in terms of what was meant by a premium, for example. So, one of the lessons we are really taking from the Scottish experience is that we need to be clear, both with letting agents and landlords, but also with tenants, in terms of what the situation will be following this legislation. 

We also are operating in a different space in Wales, of course, because in Scotland they were operating in an unregulated sector, whereas in Wales we have Rent Smart Wales. That speaks to the second part of your question, which was about how we're making sure that the legislation is cognisant of the situation that we have in Wales. 

The Bill was developed very much in the light of the Housing (Wales) Act 2014 and the operation of Rent Smart Wales. We see Rent Smart Wales as an important backstop in terms of encouraging compliance with our proposed Bill. And we've learned from what works through existing licensing arrangements, such as the level of fees that we've applied to the Bill as well. 

At this point, I'll just pause and see if any of the team have anything further to add on the experience of Scotland or our particular approach here.  

I think you've covered it very well, Minister. The lack of clarity was a key issue in terms of them being able to enforce, hence our approach is to try and be very, very clear and precise in what we're banning by setting it out in the way that we have on the face of the Bill. 

And our Bill also aligns very clearly with the Renting Homes (Wales) Act 2016, so we're talking about contract holders, for example. The language that we use means that this Bill fits perfectly with our previous legislation. 

Okay, thanks for that. I think Jenny Rathbone has a further question. 

Yes. Thank you very much, Minister. I very much welcome this Bill. I just wanted to probe a little bit on the detail around the treatment of holding deposits, because Part 3 is very sparse at the moment. I have in particular in mind people with protected characteristics who are currently privately renting, perhaps in supported living, because I think there needs to be some—. The Bill is silent on at what point do these holding deposits become payable, and what the landlord has to have done. I absolutely agree with holding deposits so that the landlords don't get messed around by people who say they want the property and then they actually don't, so I absolutely agree with that. But I just think that people may not fully understand what they're entering into, and so it's how we provide some clarity and some certainty around that contractual agreement. 

Firstly, I think it's important just to differentiate that the holding deposit, as you have identified, is very different from the security deposit. So, they're not always required. Some people when they are looking at the market and looking to enter into a tenancy agreement will enter into a holding-deposit situation, but it's a smaller payment for a short period of time in return for the property ceasing to be marketed. You make particular reference to supported accommodation. Those kinds of holding deposits would not normally be an issue within that sector at all; it is not normal where a local authority housing options team, for example, are brokering an arrangement or finding suitable accommodation—there would not be a holding-deposit situation in those types of circumstances.  

Because the local authority would be deemed to have entered into an oral contract. 

Because normally in a supported accommodation situation, actually, the local authority may well be contracting for that provision, so it's a slightly different arrangement. A holding deposit would be applicable where you're entering into an open market tenancy agreement for a property, and that's something slightly different. I think that there is probably something operational that we need to explore with local authorities about where they are placing families and households at risk of becoming homeless into the private sector, but our understanding at the moment is that, in those circumstances where the local authority is brokering that arrangement in the first instance, a holding deposit is not the norm. They are more normal in the event of student accommodation, for example, or where there is a high-demand property and a family are seeking to secure that for themselves and just need a few days. It's normally about a week in order to sort out the paperwork. 

09:40

I have constituents who are in receipt of hosting benefit who have had to find the letting agency fees from the money they're supposed to be spending on food. Some of them have mental health issues or other reasons why they're not in employment. And so I suppose those are the people I'm concerned about. There'll be a spectrum of protected characteristics, some more disabling than others. So, I'll want to probe this a bit further with local authorities, just to understand how this is going to work. 

We did, in the RIA, look at the impact that would be had on people with protected characteristics, and overall, we determined that the impact would be positive because we know that people who do rent within the private rented sector are more likely to have one or more protected characteristics. So, to have a system that is simpler and fairer and doesn't require fees for things that we believe are not the responsibility of the tenant—they will be removed, so that the system should have a beneficial impact on people with protected characteristics. 

It's worth also noting that in the Bill we are saying that holding deposits should be capped at one week, which we think is a reasonable amount of money, and that it should be paid back within seven days. Again, that's reasonable, or it could go towards the first month's rent or security deposit and so on. It's fair for the tenant themselves because they're able to take that property off the market and then not be prevented from having that home by somebody who comes in with a better offer or is able to get their money together more quickly. Equally, it's fair on the landlords because we do know that some tenants take several properties off the market while they're making their mind up and that has the impact then of depressing the market. And it's fair on other tenants, so they have that variety of homes to choose from. So, in terms of holding deposits, we've tried to take a fair approach whilst recognising the value of those holding deposits. 

I want to probe about the interaction of this piece of legislation with the Renting Homes (Wales) Act 2016 and how this will do just that. Given that section 19 allows Welsh Ministers to make regulations for the Bill to apply to assured tenancies, is there a likelihood that commencement of the 2016 Act could be delayed?

The implementation of the Act is planned for April 2019. Any delays will be as a result of delays caused at the end of the Ministry of Justice. I'll perhaps ask the team to elaborate on some of the discussions that we've been having there. That really relates to the need to make changes to the court IT system and the civil procedure rules. So, we are aiming for April 2019. But the implementation of this Act isn't dependent on the implementation date for the renting homes Act. But we were hoping, or we intend to have everything come into place at the same time, alongside the Abolition of the Right to Buy and Associated Rights (Wales) Act 2018, because we realise that we're making major changes to the sector, so it's important that we do it in a way that causes least disruption, and in a way that is as simple as it possibly can be. 

The discussions with the MOJ are really on practical implications and seeking their engagement and debating, frankly, who will pick up the Bill for making changes to the court IT systems and to the guidance. So, those discussions are ongoing, but they are the question mark over that April 2019 implementation of renting homes legislation. I think the other thing that's important to say here is that the Bill works equally well regardless of whether that has been implemented. The way it's been drafted, it could come into force before the renting homes Act or afterwards. 

Okay. My next question on this is: despite standard occupation contracts being defined in the Renting Homes (Wales) Act 2016, for clarity, should this Bill include a full definition or at least specify that the provision in this Bill relates to properties wholly in Wales?

09:45

So, this Bill has the same definition as the previous piece of legislation, and that does relate to properties that are wholly within Wales, and also includes the land that surrounds that property as well. So, the intention is for it to be, again, mirroring what we have in other legislation. There are a very, very small number of properties that straddle the border, and those properties will not be captured by this Act, as they weren't captured by the previous Act either. I don't know if Neil has anything to add on that.

In terms of the drafting of the Bill, given the reference to standard occupations under the renting homes Act, there's a clear read-across. And, certainly, from a legal perspective, it's clear. To put any separate definition in this Bill would be, from a legal perspective, otiose. So, we really don't need it—we think there's a sufficient read-across to the renting homes Act. And, certainly, with the title as well, it's creating that corpus or body of law specific to Wales. 

Last night, I met a student who told me that they hadn't had a contract for the whole year that they had this property. The landlord kept on saying they would provide the contract, so she pointed out that, obviously, she hadn't had any rights at all during the full period of when she was renting. So, just by way of illustrating that, even when we have the law in place, some people flout it. So, I think the relationship with Rent Smart Wales is really what I want to explore, because it seems to me that they are our first line of enforcement. Because you have got to have passed the fit-and-proper test in order to get registered. Can you explain how you envisage the role for Rent Smart Wales in ensuring that landlords are clear that they're not able to charge fees for entering into contractual arrangements?

Firstly, on the case that you've just described, if you'd like to drop us a letter about that, we can certainly pursue that particular issue with Rent Smart Wales on behalf of the constituent.

May I pick up on the first point? In terms of written tenancy agreements, there's no actual legal requirement at the moment, and it's precisely why, in the renting homes Act, once it's commenced, there is an obligation, and failure to do so has ramifications, including requirements to provide compensation. So, I think we've addressed that point in the renting homes Act.  

Okay. Thank you for clarifying that detail. So, I won't be writing to the Minister, because there's nothing we can do at the moment. But after April 2019, I will, obviously, keep an eye on that. Could you just explain to us what role Rent Smart Wales are going to play to ensure that landlords are aware that, once this Act comes into force, landlords and letting agents are going to have to absorb their costs in other ways?

Rent Smart Wales is a fantastic tool for us in terms of creating a dialogue with landlords and with letting agents, and certainly a way in which we can very easily and simply issue very complete information and advice to the sector. So, this puts us in a very good place in terms of making sure that landlords and letting agents fully understand the new situation in which they'll be working. It's also important that we ensure that tenants are also aware. So, it would be the intention to revise our advice to tenants as well, so that tenants are aware that, although they don't have a duty to inform Rent Smart Wales if they encounter a situation where they believe that the landlord or the letting agent is breaking the law, we would still encourage them to do so, so that Rent Smart Wales can take into consideration some of those issues. The reason there's no duty on the tenants is that I don't want to put extra duties onto tenants, but if they are informed, then they can take that step if they wish to.

09:50

If a landlord is found to be charging fees for letting a property, at what point would they be, if they're found guilty of this offence under this Bill, no longer deemed a fit-and-proper person? How would it impact on their licence to rent?

That would be something that Rent Smart Wales would have to consider in terms of either renewing or ending the ability to rent, should those people no longer be deemed to be fit and proper. But essentially, we are putting that with Rent Smart Wales in order to take a considered view, based on the situation of the case. Each case, I imagine, will be different, although we would expect high compliance with the law.

Okay, but will you consider, in the explanatory memorandum—? How would you be setting the standards that you would be expecting that Rent Smart Wales would be applying across Wales? Clearly, there will be some offences where there might have been a capability problem or—. At what point would it be thought that a landlord is clearly unable to understand the law and, therefore, is not a fit-and-proper person?

If I can just pick up on that, it's not an automatic bar. So, a breach would not automatically mean that somebody fails that test. It's for Rent Smart Wales to apply their discretion and look at the case in its entirety, and for that reason, it's difficult. We can't be seen to fetter their discretion, if you like, in that regard; we need to leave them with that flexibility. However, we're very clear that it's a serious matter and we know that Rent Smart Wales would take a very serious view of breaches of the law, but they may choose to look at cases slightly differently—a case where there had been a fixed-penalty notice issued as opposed to one that had gone to the magistrates' court, or one where it's an individual landlord who, perhaps, has set out a defence and it's a one-off, versus an agent who really should know better and is flouting the law in a broad sense. So, there isn't a fixed point or bar that we set for Rent Smart to take a view on what is a fit-and-proper person, but they have become very specialised in being able to look at all of the relevant information available on an individual and have demonstrated that they are willing to use their powers in order to revoke or refuse a licence when necessary. 

May I just come in there? The fit-and-proper person test under the Housing (Wales) Act 2014 is designed in such a way as to allow this degree of flexibility so that Rent Smart Wales can take account of a range of different matters. But certainly, breach of housing law and also offences involving dishonesty, which are offences within this Bill, are matters specifically listed. So, they would clearly have to take account of those matters.

I just wanted to probe you further in relation to the current system and what analysis you've made in relation to being reassured that Rent Smart Wales are able to deal with this. Because, as Jenny mentioned, the current system of advertising the fees—Shelter Cymru have questioned whether that has been applied in all instances as rigorously as it could have been. So, I just want to be assured that you know that Rent Smart Wales would be able to cope with any changes so that they would be able then to properly hold those to account. Do they have the capacity to be able to do this? I know it was a television programme, but I went on a television programme on Monday to talk about housing and lots and lots of people in the room knew about Rent Smart Wales or knew about how to hold landlords to account. So, we know that Rent Smart Wales is there, but how are we going to be assured that it can perform its role effectively and that people know that that's the place to go for that enforcement to take place?

I think there are several steps that would have to be gone through before Rent Smart Wales become involved. Before that, there are two ways, really. You've got the criminal prosecutions or civil prosecutions, and perhaps Neil will be able to describe for us those in a bit more detail. Rent Smart Wales really is the kind of backstop, so, when a landlord or letting agent has been found to be in breach of the law, has failed then to pay the fine that they've been given, then at that point Rent Smart Wales would be notified and then they would be able to take that into consideration as to whether they remain a fit-and-proper person. I think Neil perhaps will elaborate.

09:55

Yes, thank you. You've got two separate systems, effectively. You've got the system under this Bill, which is about prohibited payments and the enforcement authorities are the local authorities across Wales, but that feeds into the landlord and agent registration and licensing system under the Housing (Wales) Act. So, a breach or a contravention under this Bill then feeds into the decisions around the fitness of the person to hold a licence or indeed to have a renewed licence. So, I think that's the way it works. This Bill informs the licensing arrangements. It sits alongside but it's separate from Rent Smart Wales itself.

Okay. So, basically, Rent Smart Wales would be the last port of call. So, they wouldn't be doing all the upfront work in relation to this anyway. It would be the end of a process.

No, they wouldn't. But if there was a conviction under this Bill then the local authority must notify Rent Smart Wales. So, there is a provision in this Bill that imposes that duty on local authorities.

And then Rent Smart Wales would have to take them off or decide what they wanted to do.

Thank you, Chair. I'd just like to look at the potential impact of introducing this Bill. One of the possible consequences of banning landlords from charging fees may be an increase in rent to the tenant. Firstly, does the Minister agree with that and expect that to happen in the marketplace, and, if so, what consideration has been given to the impact of higher rents on contract holders who claim housing benefit or universal credit et cetera, given that they could be left with a shortfall between their benefit payment and their actual rent?

Thank you very much. There's nothing in the Bill that will automatically lead to increases in rent, although we are aware that this might be a way in which the letting agent sector does respond to the Bill. When we look at the situation in Scotland, there's no conclusive evidence that their taking action in this way did lead to higher rents in Scotland. I know there was a piece of work undertaken by—the House of Commons undertook an inquiry into the private rented sector in Scotland in March of 2015 and they were unable to find strong evidence there to explain an increase that they did see in rents. There were lots of factors that they thought might have played a part: the operation of the market at the time, looking at the numbers of agents operating, the length of tenancies, changes in how agents were operating, rules around deposit protection, and increased health and safety standards as well. So, there are lots of things that do factor in.

When we undertook our consultation, people generally responded that they would prefer a small increase in rent if they could lose the additional fees that they were paying, and that's partly because the upfront cost of renting was prohibitive to some people. It prevented them from entering the sector or moving around within it. Also, a small increase in rent is more manageable in terms of being able to plan the household budget as well. We are aware and we make it clear in the regulatory impact assessment that this is something that could happen, but, on balance, tenants consider that it would be preferable to the existing situation.

Jack, just before you go on, I'll just bring David Melding in on this point.

Just a point on evidence from Scotland, which—if there was robust evidence, it would be very helpful, and I acknowledge there are at least ambiguities. But the equivalent Bill committee in Westminster, which is scrutinising similar legislation for England, quotes the Scottish Government's own statistics, which show that in the 12 months after the ban came into force, rents in Scotland went up by 4.2 per cent; they fell in England by 0.7 per cent. So, that's a 5 per cent differential. It doesn't mean that's because of the legislation, I acknowledge, but are you aware of that evidence, or is your team aware of that evidence—and whether you could get back to us with some form of assessment, if that's possible? 

10:00

Yes. We considered the evidence in relation to Scotland fully and we've been following very closely the procedure of the Bill in England as well. And I know the team has been watching those evidence sessions and reading up to make sure that we're fully aware of all the evidence that was submitted to the Bill scrutiny process in England as well, but we're happy to provide committee with a further note on the issue.  

Are any Members of your team familiar with what I've just quoted?  

I'm not familiar with the background to those specific figures, so, it's something where we'd rather go away and talk to our Westminister colleagues about what underlies them. 

I was aware that there was that increase of 4 per cent in Scotland, but equally aware that enquiries had been made into it and that it couldn't be directly attributed. But, again, as I say, in the RIA we do recognise that there is a potential for an increase in rents. 

Just in terms of the point about the impact on contract holders of increasing rents, where those contract holders are in receipt of housing benefit or universal credit and there might be that shortfall in terms of their ability to meet the rent increase, have you considered that potential impact? 

It's a slightly strange picture, because, on the one hand, if there is an increase in market rents within an area, that would be picked up by the system that is used to inform local housing allowance allocations. So, if there was an increase in market rents, technically, that would be picked up and local housing allowance would be adjusted to reflect it. On a practical level, of course, we have a UK Government cap on increases, so, an increase in local housing allowance would not feed through at the moment to an increase in housing-related benefits. However, on the flip side of that, because obviously that's something we have no control over—it's a non-devolved issue—we do have discretionary housing payments, which could be used potentially to help people who faced a shortfall and hardship because of that situation. 

This is a tricky one isn't it, because this bit comes to, as far as I'm concerned, the nub of what we're trying to do. And you're right there is an average rent. If there's an uplift and your benefits currently are assessed on the average rent in that given area, I suppose what we're trying to do here is stop the taxpayer, ultimately, paying for the landlords' way around this piece of legislation. We're trying to protect the tenant but, at the same time, we're trying to protect the taxpayer who, ultimately, might pick up the bill if we have, for example, a 4 per cent increase, and, at the same time, protect people who are on benefits from finding that they're going to lose their house anyway, because they can't afford it. So, I'm assuming that those three things are the critical things here. But there has been some work done in Scotland, where there was a 4 per cent increase, as we've just heard, and the impact that might or might not have had in increased contributions through the system by the taxpayers, so that's the money that we might give local authorities to assist, but also the fact that there might be a breakdown in tenancies where people find that they can't pay it. 

It's the same issue in a sense that we do recognise that there could be a small increase in rent, but it won't necessarily flow from this Act. But, equally, what tenants have told us is that they would prefer a small increase in rent to have that certainty and to be able to plan and budget and to be able to move should they wish to, rather than have to pay unknown costs for what, I think, many tenants often see as dubious things and costs that don't actually relate across different letting agents, let alone relate, necessarily, to the cost of the actual service that you're having—for example, returning your keys at the end of a tenancy and paying £30 for the privilege. That kind of thing doesn't make any sense to tenants.  

10:05

And then there are some contract holders who are going to be more vulnerable in terms of meeting the rent increases compared to the generality, Minister. It would be good for the committee to know that this has been fully considered and that the Government is alive to these possibilities and vulnerabilities. 

Yes, we are, and we cover those, I think, quite fully in the regulatory impact assessment as well. 

Thank you for the answers there, Ministers. I'd like to just flip this to the other side and move on to the impacts to letting agents and whether the Minister and the team see that removing this revenue stream of the initial fees and fees throughout the letting contract has potential serious impacts: for example, whether your evidence in Scotland may suggest or may not suggest that letting agencies may close, which would have serious consequences down the line for people—job losses and so on, and less competition in the market. Is there any evidence of that within Scotland with their Bill or any consideration that you may have taken into account?

My understanding, from evidence that the UK Secretary of State gave to the Bill scrutiny process, is that, actually, in Scotland, the number of letting agents actually increased following the introduction of the Act. I think it's important to recognise that all businesses will need to adapt at some point in order to reflect the change in circumstances in which they operate, and the legislation within which they operate. And I'm sure that the sector will be making some robust representations to the committee during the scrutiny process of the Bill. 

Jest cwestiwn cyffredinol yn codi o beth rydych chi wedi'i ddweud yn gyntaf, os caf i. Rydych chi wedi sôn am rôl yr awdurdodau lleol yn y ddeddf newydd. A ydych wedi ystyried pa effaith y byddai hynny'n ei gael ar weithlu awdurdodau lleol a chostau awdurdodau lleol wrth weinyddu hyn?

Just a general question arising from what you've said, if I may. You have talked about the role of local authorities in the new legislation. Have you considered what impact that will have on local authority workforces and the costs for local authorities in administering this?

Thank you very much. We would expect that there would be high compliance with the Act. Our experience with the move to Rent Smart Wales, for example, has shown that the sector is very willing to adapt and very willing to engage. I think people said Rent Smart Wales would never work, but, actually, it's been tremendously successful in ensuring that landlords and letting agents are registered with them, and we would expect a similar level of compliance with this as well, because, as we've explored earlier on in the scrutiny session, the impact, should things get as far as causing Rent Smart Wales concern, could be quite serious for letting agents and landlords in terms of them not being able to let properties in future. The Bill also includes the provision for local authorities, as the enforcement body, to retain any money that they receive as a result of those £500 fines, and that would enable them to continue with their enforcement responsibilities. But we do expect good compliance with the Act.

Ocê. Sôn am gosbau ac ad-dalu taliadau gwaharddedig, yn adrannau 2 a 3, rydych chi'n sôn am ddirwyon, ond na fuasai yna unrhyw fath o derfyn uchaf ar y dirwyon yma. Pam nad ydych chi'n gosod rhyw fath o nenfwd? 

Okay. I want to talk about penalties and repayment of prohibited payments. In sections 2 and 3, you mention the fines, but there would be no upper limit on these fines. So, why don't you set some sort of ceiling?

I'll ask Neil to come in on this, but the fines, which would be issued by the magistrates' court,would be relevant to the severity of the offence. So, it allows the magistrates' court to set higher fines for some offences that it considers to be more serious. And it does acknowledge that there might be the need to take a different approach to a landlord who has just the one property that they're renting, as opposed to a letting agent who has a portfolio of hundreds of properties, for example.

10:10

Thank you, Minister. I think you've covered it for me, but the offences in sections 2 and 3 are the key offences—they're the ones on which the Bill hangs, effectively, around prohibition. So, that's why they are not subject to any statutory maximums, and it does give the court the discretion to consider the nature of the landlord, the nature of the offence and so on.

I would add, as well, that the way we approached this broadly aligns with the approach we took in the Housing (Wales) Act 2014, and it has a very similar set of offences and levels of fines.

I believe that in the English legislation there would be a cap of £5,000, but you haven't discussed that.

I believe it's higher than £5,000. I've got the English Bill with me, but I would have to check. Yes, it's up to £30,000.

So, in England, enforcement arrangements differ here in terms of arrangements for an initial offence. So, the initial offence would have a maximum fine of £5,000 for a breach of the ban, and it also creates a criminal offence subject to an unlimited fine where a person has been fined or convicted of the same offence within the last five years. Civil penalties of up to £30,000 can be issued by local authorities as an alternative to prosecution for the criminal offence.

That's the situation in England, so it does differ from the legislation that we're proposing in Wales. Again, that reflects the different context that we have, with the final deterrent, really, of Rent Smart Wales and the inability to rent properties in future. So, it's a different context, and we think that the limits that we've proposed here are appropriate.

Right, but the threat of withdrawal of licence would be enough, you think, rather than having this cap.

I know it's something that the committee, I'm sure, will be exploring, but we've looked at the cap and looked at it alongside similar enforcement regimes, and it does reflect other enforcement regimes that are similar. Equally, Rent Smart Wales is very different, so we have a regulated sector, and the threat of not being able to have your income from renting, and so on, is quite a severe one.

I think also we felt that it would be an odd outcome if this didn't align with the other main piece of housing legislation applying to landlords. So, if you had two different systems, I think you may have some really quite strange outcomes there. Of course, before you even get to the offence, as the Minister said, there is the fixed-penalty regime, which local authorities can consider to pursue.

Just to finish off, you can have quite reasonable cause to have a different system in terms of penalties in Wales, but I think we need to understand them. Offences under sections 2 and 3 are the key ones, really. In England, there'd be a fine of up to £5,000. If it's repeated, as you indicated, that becomes a criminal offence and the local authority would have the option of discharging that liability with a financial penalty of up to £30,000. Otherwise, it goes to court and is subject to an unlimited fine. Had you thought of having a staged system that has the full rigour of court proceedings, potentially, and then allowing local authorities similar powers to discharge any liability with a similar penalty of up to £30,000, which isn't in our legislation, as far as I can see?

I think, in a way, we do have a staged system—it's just a very different approach to it. Neil will come in on the detail, but we have the options of fixed-penalty notices or magistrates' courts. We have the ultimate sanction of somebody potentially losing their licence. But what we've sought to do is make sure that enforcement is as burden free for local authorities as possible, that action can be taken quickly and swiftly, and that there is an appropriate escalation route, if you like, for those, perhaps, repeat offenders or those who are flouting the law in a very significant way.

10:15

Thank you, Emma. I think your point about the potential burden on local authorities is an important one, because the English approach is considerably different, and it really gives the local authority a quasi-judicial role, which we didn't think was the best way to tackle this. We thought it was simpler to leave it with the courts if the fixed-penalty notice regime wasn't considered appropriate.

Another slight difference with the situation in England as well is that, in England, enforcement of the ban is carried out by trading standards, whereas in Wales enforcement is by the local housing authority. That, again, reflects the legislation that we have and the fact that we think that the local housing authority is the appropriate—.

I haven't come to a view on this, but the points you're putting, as I said, are quite reasonable. I just wonder, if you did allow, it wouldn't be a fixed penalty but it would be a penalty to discharge liability for criminal offence, to be set by the local authority, and I realise that then they'd have to give reasons why they said £25,000 instead of £10,000, or whatever, and that may be a burden, but it kind of gives you another club, before you say, 'Right, refer to Rent Smart Wales and have your licence withdrawn,' and it also could be an income source for the local authority, potentially. Have you considered these matters?

It also gives the person who is in breach of the law another chance to stay, to keep renting their properties. It's almost another chance before you get the final issue of not being able to continue your livelihood, or part of your livelihood. 

Jest yn edrych ar y cyfnod trosiannol rhwng rŵan a phryd fydd y Bil yn Ddeddf, mae adran 6 yn dweud na fydd gwaharddiadau yn y Bil yn berthnasol i gontractau neu ofynion a ymrwymwyd iddynt cyn i Ran 2 y Bil ddod i rym. A ydych chi'n meddwl, rŵan, ein bod ni'n mynd i weld landlordiaid ac asiantau gosod yn defnyddio adran 6 i roi pwysau ar bobl i gytuno i gontractau meddiannaeth cyn i'r Bil ddod i rym? Ac, wrth gwrs, wedyn, ni fyddai beth sydd yn y Bil newydd ddim yn gymwys i'r contractau rheini.

I just want to look at the transitional period between now and when the Bill is enacted. Section 6 states that the prohibitions in the Bill will not apply to contracts or requirements entered into before Part 2 of the Bill comes into force. Do you believe that we will now see landlords and letting agents using section 6 to put pressure on people to agree to occupation contracts before the Bill comes into force? And, of course, then what is in the new Act would not be applicable to those contracts.

Thank you. There is a small likelihood that this could happen. As with any Bill, there's going to be a transition from one system to another. The only way, I suppose, that we could absolutely prevent that from happening would be to make legislation retrospectively, and that's something that we try not to do, where possible.

I think the circumstances in which this could happen would be very limited as well. The landlord or letting agent would have to seek to end the tenancy early, and there's not much value in that for the landlord or the letting agency to be doing that, because they could potentially lose their tenant, they'd have to go to all the trouble of finding a new tenant, and it's almost—. You'd imagine that it would be more trouble than it's worth, rather than continuing with the existing contract until the new contracts come in.

I'm talking specifically about new contracts. Will there be a rush to get new contracts on board before this legislation kicks in?

To do that, they would have to end the existing contract, and, as I say, that could, potentially—

If there weren't any contracts at all before that, I mean, for a completely new set of circumstances.

There could be the chance that people would seek to tie tenants into the existing contract, but then, as I say, the only way that we could avoid that, really, would be to make retrospective legislation, and that would be something that we wouldn't want to do.

I know Jenny's touched on holding deposits, so I don't really need to go into the rationale behind them. I was just wondering whether you could tell us whether Schedule 2 is sufficiently clear, and, just in relation to the deadlines for returning the holding deposit, are you happy with that? 

10:20

I think the deadline that we've set for returning the holding deposit of seven days is a reasonable one, because that does recognise the amount of time that it does take to transfer money from one party to another, although, as I said, that money very often would be going towards the security deposit or the first month's rent anyway. So, again, this is about trying to make the legislation as simple and clear as we can for people. In terms of, 'Is the section of the Bill clear?' I think it is, unless the committee has any concerns about that. 

No, it was just a question of whether you thought that that was the case or not. I was just wondering with regard to the concept that's been raised by the Residential Landlords Association about passport deposits to enable a portion of the deposit to be passported from one tenancy to the next one—I think this is more to do with the security deposit than it is the holding deposit, but I was just wondering whether you had considered that and why that wasn't part of this Bill.

Again, this goes back to simplicity and trying to create a system that is simple for both the tenants and for the landlords and letting agents, and to create a kind of passporting system would require us to set up a whole new system, which could be burdensome, potentially, and—

But it wouldn't be potentially burdensome for the tenant, wouldn't it? Because I've been in this situation before where you would then have that streamlined—. It would go from one landlord to the next as opposed to you having to deal with a new landlord entirely from scratch. If you could just transfer it, that takes a lot of weight off the tenant, so I would have thought that it would be opposite to what you've said, but I don't know the practicalities of implementing it, obviously. 

That wasn't something, I don't think, that we considered through the consultation of the Bill, although I'm aware that the RLA has put forward that and several other ideas as well. 

I think it's a really interesting concept but, in essence, it's outside of the scope of the Bill as drafted at the moment. There's a lot of consideration and people talk about the way that the holding and the security deposits work and differences in security deposit systems, but that would take us quite significantly outside of the scope of what we're trying to achieve here, which is very specifically around fees. I don't know if Neil wants to come in on this with the complexity of those systems that are shared with England. 

Well, I would agree with that. I think, really, it's probably as much, if not more, an operational issue than a legal issue. It would certainly require considerable change to the legislation, but it would also require considerable operational change as well to put such a system in place. But, really, that's a more general matter concerning security deposits as opposed to putting controls or prohibitions on payments that prospective tenants or contract holders have to make. So, really, you're looking at a different issue in trying to grapple with that. 

But to be devil's advocate, if you're going to legislate on this particular area of—. You know, the whole rationale is how to make tenants' lives easier and more affordable—that this would have been something to have been considered, at least. I don't understand why it's so complex. 

You did say that the end goal was to make it easier for tenants to move between properties, so that is a very material consideration, I would have thought. 

Obviously, we take seriously all the evidence that we receive in terms of developing the Bill, and I know that the RLA has very recently written to all Assembly Members with a list of several ideas that they see from their perspective as ones that could be brought forward, and obviously we consider all ideas as they are brought to us, but it wasn't considered in the context of this particular piece of legislation. 

And the other question just to finish on is the payments in default. Now, I understand you have kept that in there, but I was just wondering if you could explain why. I know that there are some voices saying, 'Well, that shouldn't be the case', but I think we'd obviously need to have checks and balances, and, if somebody did default, we'd need to have accountability for that. But I think, when there is accountability, I would like to see something about looking at the tenant again, about the affordability, about the financial education because just putting that on them as a payment of default is not really looking at the holistic nature of this whole discussion really. So, I was just wondering if there was anything additional you could do in that regard.

10:25

In future, because we'll be talking about contract holders, contracts will be changing significantly with our legislation. So, contract holders, tenants, will have a much clearer understanding of what their roles and responsibilities are, and specifically, on the face of that contract, there will be an understanding of what the cost will be should they breach or become in default of that contract. So, an example that's often given is a tenant loses a set of keys. Well, it's reasonable to expect the tenant to pay for a replacement set of keys. Equally, it's reasonable to expect the tenant to pay a reasonable amount for that set of keys. So, the tenant will be very clear as to what the payment in default would have been for losing their keys or for any other breach of the contract. They don't have that kind of clarity at the moment, so this will be a significant step forward. 

I know some organisations would like to see payments in default taken off the security deposit, rather than having the payments for default on the face of the legislation. The purpose really of that security deposit is for the end of the tenancy, to ensure that the property is returned in a fit state back to the landlord. And you could potentially have situations where, throughout the life of that tenancy, a tenant has been in default so many times that there's almost nothing left at the end to give the landlord that security. So, it is really about being fair to both the tenant and also to the landlord, which is why we've taken this particular approach to the payment by default. But I do recognise that there are some conflicting views as to whether or not that would be the preferred way.

And you think the contracts will be sufficiently robust that they won't then move the payments, or costs from the letting fees not happening, to that particular area. So, they wouldn't be able to pass on those payments in this particular part. 

No. So, in future, there will be a much, much greater level of transparency. So, tenants will be able to fully understand what their responsibilities are and the cost to them. 

What I'm trying to say is there wouldn't be a really, really long list of all payments in default, so that that would make—. They may as well have charged the agency fees then, if they're going to have this huge list of things that they can default on. Or you wouldn't think that that would be something that would be within the contracts. 

The default is for things that you would reasonably expect the tenant to pay for, so damage and things like that. I don't know if Neil wants to add anything on that particular point.

Default is a matter that is ongoing during the life of the contract, so if there's a breach at some point in the future. I think that's the first thing. What we're looking at particularly to address here are upfront fees, which prospective tenants and tenants are being hit with right at the start of the contract. But there has to be a degree of interest for the landlord and protection for the landlord's position, and protection of the tenant or contract holder's position. So, you do have to have a degree of balance in all of this, which we think the Bill has achieved by making—

But that's not what I was asking. I was just asking: if the contract then, they had—. Within that contract, they would just be passing on the cost of that fee to a longer list of things within the contract that they may default on, things that they will just dream up because they want to make money from it. 

I'm just trying to make sure that we've covered all the bases, that's all. 

I think you're right in a way that if something has been agreed to, and both parties have signed up within a contract, then it is there and a default against that is a default. What we do have coming through renting homes legislation, though, is the opportunity to set out within model contracts what those kinds of clauses should look like, and I think there is an operational issue about how we help to educate both landlords and prospective tenants about what they might see there and their ability to challenge an unreasonable list, because it is at that point of actually establishing the contract or the tenancy that they should be taking action to challenge anything that is unreasonable or shouldn't be there. 

But your point is an important one about ensuring that what's on the face of the contract is reasonable, which is why it's important that we do develop the model contract. 

Thanks for that. Emma might have finished answering it, but as you talked about the model contracts, will things specifically be prohibited as being payments in default? Because that would stop this issue of possibly letting agents charging silly fees by another means. Would you have a list of stuff that can be charged as payments in default, so that anything outside that would be prohibited?

10:30

It would be prohibited because, under this legislation, it is only payments in default, rent, security deposits and holding deposits that would be allowed. So, things that are not on the face of the Bill and that are not on the face of the contract, I think, would not be—

But you mentioned the keys, for instance as being—. You know, that's an example of an acceptable payment in default. So, I guess these model contracts kind of contain a list—. I'm sorry, maybe not in the model, but would there be a list of acceptable things that you could charge for payments in default?

Well, not mandated—not actually mandated in the model contracts. The model contracts will have fundamental provisions that are set out on the face of the renting homes Act, and then supplementary provisions, which can or it may be agreed if they're not included in the model contracts, and then additional terms that the landlord and contract holder agree. But I think we'd have to look very carefully if we were in the territory of mandating what could or couldn't be included as default payments.

Okay, I'm conscious of the time and we do need to move on, but Jenny, you wanted to pursue these matters.

I just wanted to pursue the holding deposit in relation to the tenant, because, obviously, a lot of students enter into agreements to rent some six to eight months before they actually plan to take up the tenancy, and in the meantime the landlord says, 'I'm going to make lots of alterations and it's all going to be completely different to what you're looking at at the moment.' Too often, it's a building site come September/October, and clearly the agreement hasn't been entered into. I just wondered is Schedule 2, paragraph 3(b) is sufficient to cover the extent to which this commonly happens:

'the parties fail to enter into the contract before the deadline for agreement.' 

Is the tenant going to be sufficiently covered by a clear breach of an agreement to put the property into a fit state for renting some months down the line and then, lo and behold, they have failed to do so?

Well, my immediate response is that, in terms of holding deposits, on that subject of the deadline for agreement, the default position for that is 15 days. So—

They can agree, yes, but it does require both parties' agreement to that.

Indeed, but that would normally—you know, you can see that in a normal conversation they would say, 'I will definitely get this completed by the end of June and therefore that will be the end of the holding period.' But it needs to be clear, I think, that, if the landlord has failed to comply with the promises made to make the property fit and proper in the way that it isn't when viewed, the contract holder will be able to get their deposit back simply because the agreement hasn't been met. And I just wondered if that was sufficiently clear.

I think that's probably something we'd need to consider further.

There is the possibility within the Bill for the landlord or letting agent and the tenant to come to an agreement to extend the 15 days, if that's something that they mutually would like to do.

Okay, well perhaps you could return to the committee if you are able to give that matter further consideration, Minister, and let us know what the Government's view is.

Okay, we do need to move on. David Melding.

Thank you, Chair. If a local housing authority issues a fixed-penalty notice, is there any requirement on the letting agent to then make good the fees that were charged that were prohibited or would the tenant have to take civil proceedings to recover that?

10:35

Neil will correct me if I'm wrong, but I think there are two ways that this would go forward. It would either be at the point of the magistrates' court, when the decision there could be that the fees should be returned to the tenant, or civil proceedings could be undertaken by the tenant.

The fixed-penalty notice regime doesn't have a requirement for the landlord or agent to repay. We did consider this, but we sort of got rather tied up in knots on it on the basis that it struck us that if you were having that, that is another avenue for dispute, and then suddenly you're subjecting the fixed-penalty notice regime to some form of judicial oversight, if there's a dispute on whether or not the payment has been repaid or not. The intention behind the FPN—sorry to use the acronym—is similar to that in the Housing (Wales) Act. It's a sort of fairly quick means of dealing with the matter, and if that's not dealt with, then it goes down the court route.

So, if a fixed-penalty notice is issued, and then it comes to the local housing authorities' notice, say, in six weeks' time that the illegal fee has not been repaid, is that itself evidence of an offence being committed?

If the fixed-penalty notice has been paid, that's the matter settled in terms of the criminal route. The alternative then is section 17, which is the civil route for the contract holder to pursue the payment.

So, there's no recourse, really, in practice, via the fixed-penalty notice.

Thanks for your clarity. I think that's important.

What consideration was given to having a designate lead authority for the whole of Wales, which obviously is what you did with Rent Smart Wales? What are the advantages of having 22 enforcement bodies instead of the one?

Well, we looked at the way in which local authorities are already undertaking their enforcement powers, and they're very well used to working in this kind of field. We don't imagine that the work is going to be particularly onerous. We don't imagine that a large number of people will be found to be in breach of the law. So, it feels the right fit, really, for local authorities to be the enforcement bodies, given their existing enforcement roles and the relatively small amount of work.

May I come in at that point because I was there, as it were, in the development of Rent Smart Wales? One of the drivers behind having a designated authority, as opposed to 22 authorities, was the desire to have a register that held good for Wales, as opposed to having 22 separate registers. So, we are looking at different aims and objectives in these two pieces of legislation.

Again, at this stage I find that a fairly reasonable response—not necessarily one that I will agree with, but it's obviously been thought about. Would it be prudent to have a contingency in the Bill to allow you to create a lead authority? For instance, if you found that the fee generation just simply wasn't enough to pay for the expenses the local authorities are in, especially a smaller rural authority, for instance, whereas you might find Cardiff or Swansea can administer this sort of regime quite effectively because they are able to generate some income from it. So, would a fallback position not be prudent?

We'll certainly take that away and give it some further thought alongside any other recommendations that come forward from the committee.

Okay. Thank you for that. I think we've covered the issue of how local authorities are likely to recover the costs, but I—

Yes, I would, if I may. There is provision in other legislation, particularly local government Acts, that allow both or various authorities to act on behalf of the other, or in joint arrangements, and indeed for one local authority to take on prosecution functions in another. So, we have looked at this in that context as well.

Right. Well, thank you for that helpful addition there.

Just going back to the enforcement and that local authorities are likely to recover some of their expenses, I think the explanatory memorandum does demonstrate that they're unlikely to recover the full costs; you are not going to provide extra funding. So, how sure are you that the burden will not be too excessive? I mean, you've come up with reasons why this approach—if it's a fairly modest increase you expect from local authorities, and that compliance levels will be high—I accept those points, but I would like to be reassured that you've thought thoroughly about this and that local authorities are not going to be faced with quite high administrative costs.

10:40

Obviously, you mentioned there the experience that we've had with Rent Smart Wales, and we've used that in our engagement with local authorities, and talking to them about having to carry out these functions. There isn't a great level of concern being expressed about what we're proposing here from colleagues in local government, and their experience with Rent Smart Wales. Our experience upholds the view that, actually, it should be fairly minimal.

Okay. Well, I think that's helpful, and we'll have them in so that we can put that question to them. It at least puts it in the clear light of day, so thank you for that.

We've covered some of the stuff on the penalties. There's a different regime, then, under sections 11 and 12, to the ones that we were discussing earlier. There are differing fines, between £2,500 and unlimited, and I just wonder how that's going to affect any consistency of approach.

I think the purpose there is to reflect that the picture that we have with letting agents and landlords is so varied in Wales. Many landlords just own and rent that one property, but, equally, you have letting agents with a huge portfolio, so it's important to be proportionate. And also, I think that there's the ability to look at the context within which a fine is being issued as well. So, to what extent was the breach very deliberate and misleading? Or was it more on the end of misjudgement or making that kind of mistake? So, it's there to try and be reasonable and proportionate as to the context of—

So, you want to give the courts that sort of discretion, basically, in terms of—?

I would add as well, if I may, it is on all fours with the comparable provisions in the Housing (Wales) Act. So again, it's about ensuring that consistency of approach in both regimes. Yes, it does reflect the dishonesty element, as it were—the differences in approach.

To return to the fixed-penalty notice, which is a key issue, because that would stop proceedings before the court, what sort of considerations would you be expecting the housing authority to take in deciding to use their discretion to issue a fixed-penalty notice rather than proceed to prosecution?

Obviously, it's a matter for their discretion, as you rightly say, but I think the key aspects they would be taking into account are the type of person who'd committed the offence—a single landlord versus an agent—where there seemed to be a genuine error, rather than a deliberate choice to flout the law, if you like. But it's important to remember that it is their discretion, and it is their choice as to whether they choose to opt for a fixed-penalty notice or whether they choose to go for magistrates' court action. But they are rightly closer to the evidence and the individuals involved in order to be able to make those judgments.

So, there's no assumption, then, that a first offence, for instance, would receive a fixed-penalty notice, because a first offence could be a very egregious offence, couldn't it? I mean, is that fair? There's nothing automatic that it's going to be a fixed penalty as the first stage, and then, if it's repeated, you move up.

Absolutely—a matter of choice. They have two avenues to pursue. 

10:45

Finally—and this brings us back to this issue of the likely costs of administration for the 22 local housing authorities—why not have a regime that allows any fines that are applied to people in breach of the Bill to go to the housing authority, which is what you do with fixed penalties? Why not have it—?

Yes, we do with fixed penalties. It's not usual with fines. The fines are just administered by the courts.

I'd need to consider that, to be honest.

Okay. Well, again, perhaps you will forward your deliberations to us— 

Okay. Still on fines, section 13 doesn't explicitly state that any moneys taken in breach of the Bill must be repaid, as well as a fixed-penalty notice. Do you believe that an amendment to that effect would be valuable?

Sorry, that the payment shouldn't be—?

Well, we sort of explored this earlier. I think the concern we had is that this would change the nature of the fixed-penalty notice regime, because if there was a requirement to pay, then that does open up an avenue for dispute, because a contract holder could say, 'Well, you, the landlord, have paid, but you haven't paid me the right sum.' So, the question is when is that and how is that resolved, and that would need some form of judicial oversight over it.

Okay. Could I just explore a further point on enforcement in terms of guidance? Section 15 allows Ministers to issue guidance, but there is no requirement on Ministers to issue guidance. Would you have any great objection to such a requirement?

We wouldn't want to issue guidance if guidance wasn't necessary, although I think the Bill strikes the right balance, really, of enabling guidance to be issued should it be required.

Os ydy deiliad y contract wedi gorfod mynd â landlord neu asiant i’r llys i adennill taliad gwaharddedig, pa effaith fyddai hynny’n ei chael ar drwydded landlord neu asiant efo Rhentu Doeth Cymru? A sut fyddai Rhentu Doeth Cymru yn cael gwybod am yr achos? Rydw i’n meddwl eich bod chi wedi ateb y rhan gyntaf ynglŷn â phen draw’r broses, ond sut fyddai cyfathrebu’n digwydd rhwng y llys a Rhentu Doeth Cymru?

If the contract holder has had to take a landlord or agent to court to recover a prohibited payment, what impact would that have on a landlord or agent's licence with Rent Smart Wales? And how would Rent Smart Wales find out about any case? I think you've answered the first part, perhaps, on the end point of the process, but how would that communication happen between the court and Rent Smart Wales?

I said earlier on that there's no duty on the tenant to inform Rent Smart Wales, but there is a duty on the local housing authority to inform Rent Smart Wales if there is a breach in terms of non-payment of fines. 

Can I just clarify your question? Your question was specific to where a tenant had applied to the court for the return of a payment as opposed to the actual offence of being charged. Am I correct there?

Right, sorry. Thank you. In which case, I think the short answer is that there isn't an automatic feedback loop there, but on a practical level we would perceive it as being unlikely that in the event that somebody had been charged a prohibited payment, they would be pursuing that through the courts without having also made the necessary report to the local housing authority of the offence being committed. So, there's a dual track here. So, although you're right that there isn't an automatic feedback loop from the court in returning that prohibited payment, the parallel track that would pick up the offence of having charged it in the first place should see the information going through to Rent Smart Wales. But, of course, the individual would be perfectly at liberty to inform Rent Smart Wales independently as well.

10:50

And as I said earlier on in the session, its our intention to amend the guidance for tenants so that they're fully aware of the opportunity, if you like, for them to inform Rent Smart Wales.

Okay. So, through the guidance, the tenants would know about this kind of dual-track way of approaching the situation and that there is a recourse for them to go to Rent Smart Wales. So, are you happy that that form of communication will inform the tenants of their rights in this area?

I think, as part of an overall package of implementation and trying to make sure that everybody is clear on what the new requirements and restrictions on these payments are, we would be looking to make sure that people are very clear on what the appropriate course of action is, should they be faced with a situation where somebody is seeking to breach the legislation. Now, obviously, that will be through a number of different routes. We have the great opportunity to communicate with landlords directly through Rent Smart Wales. We can also use their pages to provide information for prospective tenants. But we also have very active groups such as Shelter and citizens advice bureaux that can help significantly in terms of making sure that messages are clear and that there's clear and accessible information out there for everybody involved.

Requiring the courts to inform Rent Smart Wales in these circumstances might be problematic in terms of lack of control over the courts, as Neil mentioned earlier—

Yes, it's quite a different route.

Yes, that's a different route. The requirement is on local authorities in the event of a conviction.

Thanks. Why are the proposed amendments to the Consumer Rights Act 2015 not on the face of the Bill as they were for the equivalent Bill in England?

We didn't put those changes on the face of the Bill because there might be amendments to the Bill that might complicate the picture, if that's a fair way of putting it. I don't know if Neil wants to elaborate on that development.

I think it's a bit of a futureproofing for the passage of the Bill. If something came up as a result of scrutiny of this Bill that then needed those amendments to be amended, it could be a bit confusing. We thought it would be better just to wait to see what the final picture is under this Bill and then deal with it by means of regulation-making powers.

Thanks. The Bill will ban most fees; there's only going to be a small number of things that can be charged for afterwards. So, what, therefore, is the purpose of strengthening the requirements for transparency in the Consumer Rights Act 2015?

Again, that's about futureproofing the Bill, should there be other fees in future. It's also about—the two things operate in parallel, so I think it's important that tenants are better informed of fees and so on, and, as was suggested right at the start of the meeting by one of the speakers, Shelter, for example, has done some research that showed that the implementation of the Consumer Rights Act has been patchy, it's fair to say, and has led to tenants not always understanding or being aware of the fees that are being charged.

If I could just add there that there are also the implications that, of course, we want to continue to have transparency for fees being charged to landlords. So, the Bill bans fees payable by tenants, but not those payable by landlords, which would also be captured and which we of course would want to ensure remained transparent.

Thanks. Section 18(1)(b) provides a regulation-making power for Welsh Ministers to impose more than one penalty on a letting agent for the same breach. In what scenario would it be appropriate to impose multiple penalties for the same breach? There's also a possible human rights implication of imposing multiple penalties for the same breach, so have you considered that?

So, this is to reflect situations where agents pay a penalty for not advertising fees properly, but then continue to go on to behave in the same way.

So, it's essentially covering an ongoing situation: an agent hasn't advertised fees, and is convicted of an offence under the Consumer Rights Act for not having advertised those fees. If that agent continues not to advertise despite that conviction, this effectively allows a further measure to be taken. Otherwise you have the situation ongoing and no further action can be taken. So, effectively it's plugging that gap in the Consumer Rights Act. 

10:55

Okay. Perhaps we might just briefly return to transitional provisions and section 6. Just to ask: what effect does section 6 have on the renewal of leases or standard occupation contracts entered into before the Bill comes into force? Would a renewal, even if it had no amendments, be subject to the new requirements of the Bill?

When a new contract is entered into, or a contract is renewed after the Act comes into force, those contracts will operate under the new legislation. They won't, however, apply to contracts that are one-month rolling contracts, for example, which are essentially contracts under what will be the old system. 

Okay. Thanks for that. We do have a few other matters that are quite technical in nature, which I think we will write to you on as we have limited time left. So, thanks very much for coming along to give evidence to the committee today. You will be sent a transcipt to check for factual accuracy in the usual way. Diolch yn fawr. 

3. Papurau i'w Nodi
3. Papers to Note

Our next item is item 3, papers to note. We have three such papers. Paper 1 relates to the inquiry into fire safety in high-rise blocks in Wales, which we will return to later in the meeting in terms of an update. Paper 2 relates to the inquiry into human rights in Wales, and paper 3 the inquiry into refugees and asylum seekers in Wales. On paper 3, we did of course have the statement in Plenary this week in which the work of this committee was highlighted, and the fact that the Government had drawn on the committee's work in terms of its response and the drafting of the refugee and asylum plan in draft. So, that was recognition, I think, of the committee's work, which I think does show the value it had. We will follow up on these matters when the consultation is concluded, if Members are content. Are Members content to note all three papers on that basis?

I just wanted to say, on the first one from the Minister on housing and the high-rise blocks element, I appreciate that there's information there about future plans to support the sector, but the letter was specifically about the way they could operate and afford any issues with the cladding as a result of the Hackitt inquiry. I didn't get from the response from the Minister that it was addressing the same thing that we'd asked about, so I was just wondering if we could go back with that particular element to the Minister.

Absolutely. I think we might want to follow up on a few matters, and perhaps if we discuss that later we can formulate the letter that we'd like to send, if Members are content on that basis. Okay. Thanks for that. 

4. Cynnig o dan Reol Sefydlog 17.42(vi) i Wahardd y Cyhoedd o Weddill y Cyfarfod ac o'r Cyfarfod ar 27 Mehefin 2018
4. Motion under Standing Order 17.42(vi) to Resolve to Exclude the Public from the Remainder of the Meeting and from the Meeting on 27 June 2018

Cynnig:

bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod, a'r cyfarfod ar 27 Mehefin, yn unol â Rheol Sefydlog 17.42(vi).

Motion:

that the committee resolves to exclude the public from the remainder of the meeting, and the meeting on 27 June, in accordance with Standing Order 17.42(vi).

Cynigiwyd y cynnig.

Motion moved.

Item 4, then, is a motion under Standing Order 17.42 to resolve to exclude the public from the remainder of the meeting and from the meeting on 27 June. Is committee content so to do? Thank you very much.

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 10:59.

Motion agreed.

The public part of the meeting ended at 10:59.

Archwilio Cynulliad Cenedlaethol Cymru