Cynulliad Cenedlaethol Cymru

May I welcome everyone to this meeting of the Equality, Local Government and Communities Committee? Item 1 on our agenda today is introductions, apologies, substitutions and declarations of interest. David Melding will be substituting for Mark Isherwood. Lee Waters is substituting for Jack Sargeant. Siân Gwenllian has sent her apologies. Are there any declarations of interest? No. 

We will move on to item 2 today, which is the Renting Homes (Fees etc.) (Wales) Bill, and our Stage 2 consideration of amendments. I'm very pleased to welcome the Minister, Rebecca Evans, Minister for Housing and Regeneration, together with her officials, Emma Williams, deputy director, housing policy division of the Welsh Government, and Helen Kellaway, a lawyer with the Welsh Government. Welcome to you all. 

The purpose of the meeting, then, is to undertake Stage 2 proceedings on the Renting Homes (Fees etc.) (Wales) Bill, and in relation to this item, Members should have before them the marshalled list of amendments and the groupings of the amendments for debate. The marshalled list of amendments is the list of all amendments tabled, marshalled into the order agreed by the committee at its meeting on 7 November. So, for this meeting, the order in which we will consider amendments will be as follows: sections 1 to 4, Schedule 1, sections 5 to 9, Schedule 2, sections 10 to 25, and the long title. 

You will see from the groupings list that amendments have been grouped to facilitate debate. The order in which amendments are called and moved for a decision is dictated by the marshalled list. I will advise Members when I call them whether they are being called to speak in the debate or to move their amendments for a decision. There will be one debate on each group of amendments. Members who wish to speak on a particular group should indicate this in the usual way. I will call the Minister to speak on each group.

For the record, in accordance with the convention agreed by the Business Committee, as Chair, I will move amendments in the name of the Minister. For expediency, I will assume that the Minister wishes me to move all her amendments, and I will do so at the appropriate place in the marshalled list. So, Minister, if you do not want a particular amendment to be moved, please indicate this at the relevant point in the proceedings.

In line with our usual practice, legal advisers to the committee and the Minister are not expected to provide advice on the record. If Members wish to seek legal advice during proceedings, please do so by passing a note to the legal adviser. 

Group 1, then, relates to prohibited payments—termination of contract. The lead amendment in the group is amendment 30 in the name of David Melding. I call on David Melding to move amendment 30 and speak to his amendment and other amendments in this group. 

Diolch yn fawr, Cadeirydd. Before I do that, can I just say that I think I'm leading several of the groups, and I think in several other groups I've also got amendments down, and my general approach has been to strengthen the legislation, which I think is very important, and I've sought to draw on the experience and recommendations of two key reports: this committee's report at Stage 1 and also the Constitutional and Legislative Affairs Committee report? As I said at Stage 1 a couple of weeks ago, this Bill is a very important step, but a step amongst others to build a housing market that is fit for the future, and one that balances and protects the rights of both landlords and tenants. And, again, that's been very much behind my approach in drafting amendments at Stage 2.

So, as you said, I have the lead amendment, 30, and I also move amendments 31, 32 and 52. These amendments state clearly and unambiguously on the face of the Bill that any exit fee charged for terminating an occupation contract at the end of the agreed contractual term is a prohibited payment. The key point here being that the prohibition is being placed on the face of the Bill, and it stems from recommendation 6 of this committee's report. I do not believe there's a legitimate reason for any exit fees for terminating a tenancy, if it is at the end of the contract, and I know that these concerns were echoed and raised by Shelter Cymru in our evidence sessions. Now, I must say, I do welcome the Minister's statement that exit fees are prohibited by the Bill, but to avoid any doubt, we believe the Bill should follow the example of the Tenant Fees Bill in England, and explicitly prohibit fees in connection with the termination of an occupation contract, and that to be on the face of the Bill. I understand that the Minister is going to reflect on this, and may bring forward something at Stage 3, but I think at Stage 2 we should set this out very, very clearly and have it there upfront and explicit. That will strengthen the Bill and give it the dignity of clear expression in primary legislation, providing greater certainty and clarity, and I think it makes a strong statement of the sort of changes that we want to see in law, so that that balance between the tenants and landlords and their respective interests and rights is fully respected. I so move. 

Okay. Are there other Members who wish to speak? No. Then, I call on the Minister to speak.

Thank you, Chair. The amendments brought forward by David Melding are ones that I can't support in their current form. However, I do wish to address this matter and have already committed to bringing forward an amendment at Stage 3 to clarify which payments are permitted at the end of a standard occupation contract. I understand the committee's desire to replicate similar provision from the Tenant Fees Bill, which has an almost identical provision, as set out in amendment 52, but although that works for the UK Government Bill, it doesn't follow that the same approach would work for our Bill and in the Welsh context.

I have some reservations, for example, about the meaning of 'loss suffered by the landlord'. I'm not sure that this can be defined clearly at present, and a clear definition isn't provided within the Tenant Fees Bill. So, consequently, I would be concerned that it could result in conflict between contract holders and landlords in understanding what is meant. For example, we consider that further tests may be required to understand the meaning of 'loss incurred by the landlord'; for example, is 'loss' in this context the same as 'rent lost'? Or does it potentially cover more, for instance the cost of unexpectedly arranging a new tenancy for the property—for instance, agent fees, or check-out fees, such as an inventory check? Consideration may also need to be given to situations where a landlord does not incur any loss, for example by finding a new contract holder immediately, and in such circumstances it would be unreasonable to charge the contract holder.

So, I'm absolutely committed to giving greater clarity around what is a permitted payment at the end of a standard occupation contract, but I have set out that this would be by an amendment at Stage 3, and this reflects the need to give the issue the consideration it needs, and to avoid any unintended consequences or ambiguity. On this basis, I would urge the committee to reject these amendments on the understanding that an amendment will be brought forward at Stage 3, and I would be happy to work with Members to develop a revised version of the amendment. My concerns do relate to a limited range of matters only, rather than the principle of the amendment, and I'd be happy to support an amendment once I can be confident that it works within the Bill.

Okay, thank you. I call on David Melding to reply to the debate.

Chair, I think Members who are new to this process need a little bit of instruction here. It is not uncommon for the Government to come back and say, 'Well, we agree with the general object, the principle, but we have some particular concerns' and then go into those details at this stage, but do not present their own amendment, so that we cannot scrutinise at this stage, but they can, and this adds to some imbalance in the process. Obviously, I can't, at this notice, immediately respond to the very specific drafting points that the Minister has raised, other than to say that I've taken the advice of our lawyers. We've obviously reflected on the process in Westminster. I'm not following that just simply to follow it. I've also looked at the Scottish legislation in respect of other amendments as well to strengthen the Bill. But I do think that the opportunity we have in terms of saying that an exit payment is a prohibited payment should be on the face of the Bill, and should be in no way ambiguous and, as a central purpose of the Bill, should be stated. And I would urge Members to back my amendment, so that the Minister has to bring forward a better amendment, if one exists, with the various drafting issues, if they seen to be coherent upon further examination, so that she must bring an amendment at Stage 3. She's not chosen not to do it at Stage 2, so I strongly urge you to back my amendment, and I so move. 

Okay. So, you wish to proceed to a vote on amendment 30?

I do. 

The question, then, is that amendment 30 be agreed. Does any Member object? [Objection.] I will therefore take a vote by show of hands. The question is that amendment 30 be agreed? Those in favour please raise your hands. Those against, please raise your hands—which doesn't leave room for any abstentions. So, in relation to amendment 30, there voted in favour three, against four, no abstentions. Amendment 30 is therefore not agreed. 

Group 2 relates to prohibitions applying to landlords and letting agents. The lead amendment in the group is amendment 15 in the name of Leanne Wood. I call on Leanne Wood to move amendment 15 and speak to her amendment and other amendments in this group. 

Diolch. I move amendments 15, 16, 17 and 18. We've tabled these amendments because we think it's important that the legislation is clear in terms of the consequences of charging a tenant unlawful fees, so that it's not that you 'may' have to repay the amount that you took, but that you 'must' do so. The other amendments in the group are about ensuring that a court has the power to revoke the licence to be a landlord or a letting agent if they think that the offence is serious enough. We think that those amendments strengthen the legislation, and will prevent it being seen as something that's toothless and able to be easily ignored. 

Are there other Members who wish to speak? Jenny Rathbone. 

I think this is a very important issue because I think the committee is concerned that this could potentially just increase the work of Citizens Advice or other advice agencies, because it puts the duty on the contract holder to somehow get back the money from the errant landlord. So, I'm concerned to understand why the Government might think that this would fetter the decisions of the court, because, if that is the case, then what is the Government's solution to ensure that this is not used as a get-out clause by a bad landlord to simply not repay the money they should never have charged in the first place?

Okay. If there are no other Members wishing to speak—. David Melding.

I have a lot of sympathy with Leanne's position, but I'll not be supporting it. In Wales, we're in a unique position to have Rent Smart Wales in place, and the Welsh Government pushed and promoted this body significantly to be transformative in the private rented sector. One of my later amendments, which Plaid Cymru are supporting, I believe, provides that Rent Smart Wales will be notified when a fixed-penalty notice has been issued, and another one of my amendments ensures that Rent Smart Wales are able to issue fixed-penalty notices. If these amendments pass, I think Rent Smart Wales will be gaining a significant amount of responsibility and this area of legislation will improve. 

On the two other amendments regarding the court ordering the repayment of prohibited fees, again, I already have amendments further into the Bill that will achieve this at the same point that a fixed-penalty notice is paid, whoever issues that fixed-penalty notice. So, I think my amendments achieve similar objectives in perhaps a more efficient way, though, obviously, I accept that other Members may have a different view on that. But, this area is something that needs attention, and in that sense I support the spirit of the amendments. 

Okay. Any Members wish to speak? No. Then I call on the Minister to speak. 

Thank you, Chair. Amendments 15 and 17 place a duty on the court upon conviction of an offender of an offence under sections 2 and 3 of the Bill, requiring a prohibited payment, to order a landlord or agent to pay back a prohibited payment. I do understand the concern to ensure that prohibited payments are repaid. However, there is an important principle we need to consider here, which is to preserve the independence of the court. They will make such an order if they consider it appropriate under the circumstances, and of course, Chair, we do take a dim view of governments that seek to impinge on the independence of the court. The court will take into account all relevant factors before deciding whether to order the offender to pay any amount, and that would depend on whether there's already been part repayment of the prohibited payment. This is a matter for the court to decide. The Bill already provides a power to order the offender to pay any outstanding amount to the individual by whom it was paid. Accordingly, I think it is important to respect that process and the court's independence, and, for these reasons, I must reject both of these amendments. 

Amendments 16 and 18 similarly seek to restrict the independence of the licensing authority, Rent Smart Wales. This also takes away any other action that Rent Smart Wales might choose to pursue with a landlord or agent through further training that could prevent future offences from occurring. The amendments undermine the ability of Rent Smart Wales to apply their discretion, in turn undermining their role and status when dealing with agents and landlords. The Housing (Wales) Act 2014 already gives Rent Smart Wales, under section 20 of that Act, which deals with fit-and-proper-person requirements, the appropriate powers to take action once an offence has been committed. Licensing arrangements require agents and landlords to show their fitness to operate. Conviction for an offence would be a signficant factor in Rent Smart Wales deciding whether or not a licence is granted or renewed. 

Fit-and-proper-person requirements under section 20 of the Housing (Wales) Act 2014 mean that, in deciding whether a person is a fit and proper person to be licensed, the licensing authority must have regard to whether or not there is a contravention of any provision relating to—excuse me, I'll start that again. Fit-and-proper-person requirements under section 20 of the Housing (Wales) Act 2014 mean that, in deciding whether a person is a fit and proper person to be licensed, the licensing authority must have regard to whether or not there is a contravention of any provision of the law relating to housing or landlords or tenants. A conviction of an offence would be a contravention and so would be something that the licensing authority, Rent Smart Wales, must have regard to in deciding whether someone is fit and proper to be licensed under part 1 of the Act, and could mean revocation of a licence if the licensing authority is no longer satisfied the licence holder is a fit and proper person to hold that licence. 

The amendments would also potentially create a slightly perverse situation whereby a licence to operate as a landlord or agent is revoked by a criminal court, but the same landlord or agent may continue to hold a licence to manage a house of multiple occupation, whilst operating without a Rent Smart Wales licence. The amendment would also create a slightly odd situation whereby a landlord or agent who wishes to appeal against the decision of a licensing authority to revoke a licence would have the appeal heard in a residential property tribunal. 

Under amendments 16 and 18, the court could potentially order the licensing authority to revoke the offender's licence under section 25(1)(b) of the 2014 Act, but this amendment would not work in tandem with existing legislation. Rent Smart Wales would have to defend the revocation of a licence that they were ordered to revoke by the court, despite having played no part in the decision to revoke.

Okay, thank you, Minister. I call on Leanne Wood to reply to the debate. 

I don't think what the Minister has said covers the point that Jenny Rathbone made about the onus being on the tenant. So, I think that, as things stand, it's too much of a get-out clause for bad landlords. If there's a severe enough penalty and everyone knows about that, then that can act as a deterrent for that bad behaviour. So, I would like to move to a vote, Chair, please.

On amendment 15.

Yes.

Okay. The question is that amendment 15 be agreed. Does any Member object? [Objection.] The question, then, is that amendment 15 be agreed. Will those in favour please raise your hands? And those against. And, therefore, there are no abstentions. In relation to amendment 15, there voted two in favour, and five against. Therefore, amendment 15 is not agreed. 

The question is that amendment 16 be agreed. Does any Member object? [Objection.] Okay, the question, then, is that amendment 16 be agreed. Will those in favour please raise your hands? Those against. And those abstaining. So, in relation to amendment 16, there voted two in favour and five against, and amendment 16 is not agreed.

The question is that amendment 31 be agreed. Does any Member object? [Objection.] Okay, the question then is that amendment 31 be agreed. Would those in favour please raise your hands? And those against. And there are no abstentions. So, in relation to amendment 31, there voted three in favour, and four against. And amendment 31 is not agreed.

The question is that amendment 17 be agreed. Does any Member object? [Objection.] Okay, the question, then, is that amendment 17 be agreed. Will those in favour please raise your hands? And those against. And any abstentions? So, in relation to amendment 17, there voted two in favour, and five against, and amendment 17 is not agreed.

The question is that amendment 18 be agreed. Does any Member object? [Objection.] Okay, the question, then, is that amendment 18 be agreed. Will those in favour please raise your hands? And those against. And any abstentions? In relation to amendment 18, there voted two in favour and five against, and amendment 18 is not agreed.

Group 3 relates to definitions. The lead amendment in the group is amendment 1 in the name of the Minister. 

I move amendment 1 in the name of the Minister and call on the Minister to speak to her amendment and the other amendment in this group. Minister.

Thank you, Chair. Amendments 1 and 6 are brought forward to ensure clarity in the drafting of the Bill where reference is made to 'lettings work'. These amendments ensure clarity in the use of the definitions in this Bill and the Housing (Wales) Act 2014. The definition of 'letting agent' in Part 6 feeds into the Consumer Rights Act 2015, the Act which regulations under section 18 would amend. It also avoids confusion with a different definition that the Consumer Rights Act 2015 gives to a 'letting agent'. I'm grateful to the committee for identifying this issue following my first appearance before you in June, and I would urge Members to support these amendments.

Are there other Members who wish to speak? No. Is there anything further you wish to say, Minister?

No, thank you, Chair.

No. Okay. So, do you wish to proceed to a vote on amendment 1? 

Yes, please.

Yes. Okay. The question is that amendment 1 be agreed. Does any Member object? [Objection.] Okay, there is an objection, so we will move to a vote. The question is that amendment 1 be agreed. Will all those in favour please raise your hands? Those against. Any abstentions? In relation to amendment 1, then, there voted seven in favour and none against, and amendment 1 is therefore agreed.

Group 4 relates to permitted payments. The lead amendment in this group is amendment 2 in the name of the Minister.

I move amendment 2 in the name of the Minister and call on the Minister to speak to her amendment and the other amendments in this group.

Amendments 2, 3, 4 and 5 amend section 4 of the Bill, adding further permitted payments for utilities, communication services, television licences and council tax. These implement recommendation 5 of the committee's report and deliver my commitment to bring forward the amendment. I've been persuaded by the work of the committee and our stakeholders that this amendment is needed. There are potentially practical advantages to contract holders from these changes, making the renting process simpler. The amendments mean a landlord may require such payments under the contract.

Amendments 10, 11, 12 and 13 follow on from amendments 2, 3, 4 and 5, providing definitions of these new payments and what may be required of a contract holder in respect of their contract. These are technical but important amendments that ensure these payments can be made without issue, and I commend them to Members.

Amendments 19 and 16 [correction: 26] seek to achieve permitted payments for council tax, utilities and television licences, and achieve the same objective. I cannot support these amendments not because of any lack of support for the policy intent, but purely because amendments 2, 3, 4, 10, 11 and 12 achieve the objective. We have also tabled an amendment to the Bill to permit payments for communication services, through amendments 5 and 13

Are there other Members who wish to speak? Leanne Wood.

We tabled some of the amendments referred to there—19 and 26—because we were persuaded that the legislation needed clarification that we're not seeking to ban utility payments and so on. However, in the light of similar amendments tabled by the Government, we're happy to withdraw those, Chair.

Okay. David Melding.

Okay. I'm in some confusion now, because I was going to support Plaid, simply because they make it clear on Green Deal payments that they would be included, and I think that reflects the Tenant Fees Bill in England. But as these are not my amendments, if the Government is prepared to clarify on Green Deal payments and make that clear at Stage 3, I won't move Plaid's amendments—if you can follow that. But I did feel that aspect of it was helpful. I realise there's an overlap here in terms of, you know, all the amendments seeking to pursue roughly the same intention. So, I won't complicate things by moving those amendments that I would have, in particular, supported in this group.

Okay. Any other Member? No. I call on the Minister, then, to reply to the debate.

Thank you, Chair. I'm grateful to Leanne Wood for not moving her amendments today, because we clearly have the same intent behind our amendments and seek to achieve the same thing for contract holders. I can clarify on the issue of Green Deal payments. We're not convinced that we would need to make provision in the Bill for this, and that is because Green Deal payments relate to contract holders' obligations towards the utility company, rather than payments required by a landlord under a contract.

Okay.

I should just say on that, that I think it needs further examination, and perhaps the Minister will be prepared to exchange correspondence, but I don't seek to resolve that now.

I'd be happy to do that, Chair.

Okay. Minister, do you wish to proceed to a vote on amendment 2?

Yes, please.

Okay. The question, then, is that amendment 2 be agreed. Does any Member object? Okay, amendment 2, then, is agreed.

I move amendment 3 in the name of the Minister. The question is that amendment 3 be agreed. Does any Member object? Amendment 3 is agreed.

I move amendment 4 in the name of the Minister. The question is that amendment 4 be agreed. Does any Member object? Amendment 4 is agreed. 

I move amendment 5 in the name of the Minister. The question is that amendment 5 be agreed. Does any Member object? Amendment 5 is agreed.

Leanne, do you wish to move amendment 19?

No, I'm happy for those to be withdrawn, Chair.

Okay. So, they are withdrawn.

David, do you wish to move amendment 32?

Yes, I move.

Okay. The question is that amendment 32 be agreed. Does any Member object? [Objection.] Okay. We will then take a vote on amendment 32. Will those in favour please raise your hands? Those against. Any abstentions. So, in relation to amendment 32, there voted in favour three, against four. Amendment 32 is therefore not agreed. 

Group 5 relates to holding deposits. The lead amendment in the group is amendment 51 in the name of David Melding. I call on David Melding to move amendment 51 and speak to his amendment and other amendments in this group. David.

Thank you, Chair. My leading amendment is my only amendment in this group. It prohibits a landlord or letting agent taking more than one holding deposit per property, and is based on recommendation 7 of this committee's Stage 1 report. During the evidence sessions of this committee, Let Down in Wales, Generation Rent and Shelter Cymru all told us of concerns about landlords or letting agents taking multiple holding deposits, and supported the calls for this Bill to be amended to prohibit a landlord or letting agent taking more than one holding deposit per property. It was a very strong part of the evidence we received. In committee, too, we agreed that the Bill could and should be strengthened to prevent a landlord or letting agent from doing this because we would not want to see a situation where a landlord or letting agent takes multiple deposits and then potentially plays off the prospective tenants against each other to drive up the rent. I welcome the Minister's indication to bring forward such a recommendation, but, again, this is promised at Stage 3. So, I think it is important that we discuss it now and try to resolve the matter at Stage 2, and at least we can see what the Minister's response is.

If I can discuss the other amendments—and I have to say, my amendment then influences the approach that I have taken to the others, and I'm reluctant to support them because I think the balance perhaps is not well struck between the interests of tenants and landlords. My amendment dictates that landlords cannot take multiple holding deposits, and I've put forward this amendment on the basis that a holding deposit is a form of commitment, and I think we really do need to utilise this opportunity to rebuild the trust between landlords and tenants. So, by implementing a 48-hour cooling-off period, as Plaid Cymru's amendments 27 and 28 seek to do, we undermine the purpose of a holding deposit and adversely affect the business model of the landlord. Forty-eight hours is a long time for landlords to be in a potential position where they stop the business examination on that property and hold it. They may have had other strong notifications of interest but, obviously, because they have the holding deposit, they cannot pursue them. So, I think it's unreasonable to put that extra burden on landlords, given that we are seeking to tighten up the law here profoundly in the interests of tenants, quite correctly. But then this 48-hour period of grace for the tenants just takes away the reasoning to have a holding deposit, so I'm not prepared to accept amendments 27 and 28.

Additionally, I won't be supporting amendment 29 from Leanne because I believe that that will add further complexity and confusion, and be a greater burden for landlords. The burden of proving, I quote, 'knowingly and recklessly', end quote, would fall to the landlords, and I don't think that that adds to great clarity. And, given the central purpose of prohibiting multiple holding deposits, I think that should be the focus of what we want to do here—to strengthen the bond once agreed between tenants and landlords in accepting a holding deposit. I so move my amendment. 

Okay, thank you. I call on Leanne Wood to speak.

We've tabled these amendments to strengthen the protection available to people. There's a power imbalance in all of this, and we are seeking to reapportion some power back to the tenant. So, amendments 27 and 28 are to ensure people who pay a holding deposit can get it back if they decide not to go ahead with the contract. Amendment 29 is tabled to ensure that it's only on occasions where a tenant knowingly provides false or misleading information that they lose their deposits. I'd also like to welcome amendment 14, as that will prevent the exploitation of people, some of whom are in the most difficult of circumstances. 

Okay. I call Jenny Rathbone. 

I think these matters are entirely pertinent to my constituency, which has the highest number of students of any constituency across the UK. There is huge competition for properties that are convenient for getting to the universities, and often young people enter into contracts some six months before they're actually going to occupy the place, or at least enter into what they think are binding arrangements. So, this would provide the—. If there's only one property, why on earth should the landlord be holding more than one holding deposit? I can't understand the reason for it. If we don't have something in place that prevents them doing that, then a bad and exploitative landlord could be taking multiple deposits off several people over many months and using that money for whatever purpose. I think that this really is a get-out clause that needs tying down. It seems to me that simply asking the landlord to give the contract holder or the putative contract holder 48 hours to sort out whether they can really afford this rent, whether they're going to be able to get hold of the deposit, et cetera—48 hours is not a long time to take a property off the market. I don't think it fetters the market in this respect. So, I hope the Government will look again at this, because I think otherwise it will be open to exploitation, particularly where there are young people who have never entered into a commercial contract before. 

Lee Waters. 

I think if the committee has received consistent and strong evidence on this, I think it's not sufficient for the Government to say they feel the evidence is weak. So, I think, when it comes to the next Stage, the Government needs to put a better defence for the status quo than it is going to be doing today. I think Jenny makes strong points, as did the people who gave evidence to the committee. 

Okay. I call on the Minister to speak. 

Thank you, Chair. I think Lee has pre-empted my statement, but he might not be entirely correct in his predictions, but we'll see now. Because amendment 14 responds to recommendation 8 of the committee's report. I recognise the committee's concerns about this issue and I would stress that the provision that we are proposing to remove with this amendment doesn't in any way suggest that the Welsh Government endorses the right to rent. This is a matter for the UK Government. If they choose to bring the Immigration Act 2014 fully into force in Wales, the UK Government would, if amendment 14 is agreed, have to amend the Bill to make similar provision to ensure equality of treatment for landlords in England in Wales under the Immigration Act. I strongly oppose the right to rent under the Immigration Act 2014, but immigration is a non-devolved matter. Paragraph 7 was included in the Bill to ensure it was futureproofed for the roll-out of the 2014 Act in Wales and to avoid a situation where a landlord in Wales could potentially have been at a disadvantage to their counterparts in England. I recognise and sympathise with the concerns expressed by Members on this issue and I'm pleased to have been able to find a way forward. 

Amendments 27 and 28 have been brought forward by Leanne Wood to provide for a cooling-off period of 24 hours—sorry, 48 hours—during which the contract holder can notify the landlord that they do not wish to enter into the contract and receive a refund of the holding deposit. I ask the committee to reject this amendment, because I consider it likely to be prejudicial to other prospective contract holders as well as the landlord. The purpose of a holding deposit is to reserve the property for a short period of time to allow for checks and paperwork to be completed by the landlord. It bars other potential contract holders from the property, giving a first right of refusal on that property. The landlord, having taken a holding deposit, is prevented from offering the property to other possible contract holders. If this amendment were agreed, it's possible that a contract holder could speculatively put down holding deposits on a number of properties, safe in the knowledge they would get their money back. This would mean other contract holders would be prevented from agreeing a contract on a property that the contract holder who paid in the deposit had only a partial interest in. A cooling-off period may be appropriate where the distance selling arrangements apply. In this circumstance, the cooling-off period gives an automatic right to cancel and rescind a contract, normally seven days after the contract is formed. However, distance selling arrangements are made because no-one else is deprived as a result, other than the seller, because a contract has been entered into. 

In the case of a holding deposit, other contract holders could miss out on finding a home, and there is no binding requirement to enter into a long-term contract. I would add that sums involved with a holding deposit are not substantial when compared to a month's rent or a security deposit, and, as I've said, do not bind the prospective contract holder to the contract. I will, however, ensure that this matter is also discussed further with Shelter and other stakeholders, including the National Union of Students, to see whether an alternative approach to address the concerns raised, especially around pressure selling, can be found. 

Amendment 29 has been tabled by Leanne Wood in order to prevent holding deposits being retained if a contract holder knowingly and recklessly provides false or misleading information to the landlord. Unfortunately, I don't think the amendment is workable because of the difficulty in understanding the mind of a contract holder and whether they had knowingly and recklessly provided false information. This would be very difficult to police, with an agent or landlord having to assess whether the actions of the contract holder were deliberate or not, and it also introduces a criminal burden of proof, which would not be appropriate. 

I understand the concerns raised by Shelter Cymru that some contract holders who have failed a credit or reference check may be at risk of having their holding deposit kept by a landlord. However, I can assure the committee that this isn't the case. Failure of a credit or reference check is not sufficient to warrant the retention of a holding deposit under Schedule 2. Schedule 2 makes provision about why a holding deposit might be retained. It doesn't include failure of a credit or reference check as a reason for retention. For these reasons, I cannot support the amendment and ask Members to reject it. 

Finally, amendment 51, tabled by David Melding, seeks to permit only one holding deposit per dwelling. I agree with the sentiment behind this amendment. However, for amendment 51 to work, it would need to apply to each contract rather than each dwelling. In some shared properties, so student properties, for example, a landlord issues an individual contract to each contract holder, and this would be an entirely legitimate reason for taking more than one holding deposit on the property. It's in the interest of students in shared houses, for example, to have their own contract, to avoid having responsibility for others in the property. So, I would be willing to give Members a commitment to address this with an amendment at Stage 3.

Okay. Thank you, Minister. And David Melding to reply to the debate. 

Thank you, Chair. In relation to the burden of proof and the 48-hour period, we're in agreement with the Government. We may well end up agreeing with the Government on multiple holding deposits, but, again, we've got this position of not receiving the Government's amendment at this stage, when it could get full scrutiny. I will reflect on the issue of student accommodation in particular; it's an important section of the market, but it's certainly not the majority of the market. And I think our amendment is clear, and indicates a clear direction of travel and a good one to get endorsed at this stage, again to give that added certainty that, should it be in some way deficient, then the Government would have to come back at Stage 3 to correct it. But I do move, despite what the Minister has said, my amendment 51.

Okay, then. The question is that amendment 51 be agreed. Will those in favour please raise your hands? And those against. And there are no abstentions. So, in relation to amendment 51, there voted three in favour and four against, and amendment 51 is not agreed. 

I move amendment 10 in the name of the Minister. The question is that amendment 10 be agreed. Does any Member object? Amendment 10, then, is agreed.

I move amendment 11 in the name of the Minister. The question is that amendment 11 be agreed. Does any Member object? No. Amendment 11, then, is agreed.

I move amendment 12 in the name of the Minister. The question is that amendment 12 be agreed. Does any Member object? Amendment 12, then, is agreed.

I move amendment 13 in the name of the Minister. The question is that amendment 13 be agreed. Does any Member object? No. Amendment 13, then, is agreed.

Group 6 relates to default payments. The lead amendment in the group is amendment 21 in the name of Leanne Wood. I call on Leanne Wood to move amendment 21 and speak to her amendment and other amendments in this group.

Diolch. We've tabled these amendments on the suggestion of Shelter Cymru to provide a bit more protection for tenants against the unreasonable imposition of default fees, and to ensure that such fees are not disproportionate.

Okay. I call on any other Member to—. David Melding.

Thank you. I just want to state why I don't agree with, or why I'm not prepared to support, these amendments, which are a more detailed and expansive version of recommendation 4 of this committee's report, namely to specify on the face of the Bill that all default fees should be fair and reasonable. I was inclined to bring a similar amendment forward myself, so I understand the intention and believe that's sincere, but in terms of a contract to be fair and reasonable, under the Unfair Contract Terms Act 1977 that is already embedded, and it could therefore be argued that, by adding a particular amendment to the face of this Bill, it would just be unnecessary and potentially confusing.

Additionally, with the amendments in this grouping I feel that they do not strike the right balance between tenants and landlords, and as I said at the beginning of this stage, we are trying to build a housing market that is fair to everyone, and that balances and protects the rights of both landlords and tenants. By defining default fees as specifically as this amendment does, and by deleting a breach in the terms of the contract from a qualifying default, I think that this would leave landlords vulnerable to actions that could be the clear and deliberate fault of the tenant and leave the landlords without any effective means of response. For example, this could be in relation to property damage, which then goes unreported for a long time, causing very substantial damage to the landlord's property.

Additionally, by only allowing late payment fees for rent if the rent is overdue by 14 days, surely this effectively gives tenants the right to be overdue by two weeks. If this amendment were to pass, tenants could do this every month if they so wished, at the expense of the landlord, and there would be nothing the landlord could do about it. So, for these reasons, Chair, I won't be supporting the way that Plaid Cymru has gone forward on this, although in some respects I do understand why they've moved them.

Thank you. Jenny Rathbone.

I think David Melding makes some very fair points, but I think we need to, in entering into this legislation, ensure that exploitative landlords who've previously used agency fees to take a lot of money from potential contract holders aren't then—that we aren't giving them a loophole to conduct similar poor behaviour at other ends of the contract. So I support the sentiment of what Leanne is doing, but I understand the points made by David Melding that there are circumstances where the landlord has rights too and if somebody's wrecked the property, clearly the contract holder needs to pay.

But I do think that the Government needs to, and I hope will, go away and think about how we prevent this law providing new loopholes for those who wish to inappropriately take money off people for something that they shouldn't reasonably be charged for.

Okay. If there are no other Members wishing to speak, I call on the Minister to speak.

Thank you, Chair. Amendment 21, tabled by Leanne Wood, would limit payments in default of the contract to just lost keys and late payments of rent. It appears from the debate that has surrounded this issue more widely that the intent of the amendment is that any other costs associated with the default of a contract could be absorbed by the security deposit. Security deposits are dealt with under the Housing Act 2004 and are strictly regulated to protect the interests of all parties involved. Where a deposit has been paid, that deposit must be safeguarded. This is not an alternative means for landlords to dip into when they need to recover costs where a tenant is at fault. Where taken, security deposits must be protected and returned to the contract holder at the end of a contract, as is currently the case. 

I don't consider that default payments should be restricted to the late payment of rent and lost keys. There may be other legitimate situations where the contract holder is at fault and where a landlord may seek repayment from the contract holder over the course of a contract, and these may differ from contract to contract. I consider that such a restrictive limitation to a contract would be harmful to the relationship between contract holders and landlords. Landlords may be extremely reluctant to let their properties in this way. 

Amendment 21, in affecting the treatment of security deposits, would extend the scope significantly beyond what was agreed through the general principles debate. We would inevitably have to look at what the payments are and what payments could be taken from the security deposit. If there was a dispute, this would need to be dealt with under a dispute-resolution process. There would need to be a means for managing how default payments are taken from security deposits and, if the sums involved were quite low, in the region of £20 to £30, for example, this would be a highly inefficient use of resources, even if it were permitted. Our guidance, which we have sent committee a summary of, will set out substantial information on payments in default, and Rent Smart Wales will be using this guidance to monitor, via agent audits, the levels of compliance. 

Amendments 23 and 22, tabled by Leanne Wood, would put in place regulations whereby Welsh Ministers could prescribe the limit on the level of the default payment that may be required by an agent or landlord. This would be a very limited use of a regulation-making power in setting out a limit on how much could be charged for replacing a set of keys or how much could be charged for late rent. This would be an overly restrictive approach to take when dealing with these types of defaults, which we cannot support.

The amendment assumes that all contracts are short term, but not all are, and we actively encourage contracts that last for longer periods. Security deposits may be held for a period of three, five, or even 10 years, until the tenancy ends, during which time there may be many instances where the contract holder is at fault and for which the landlord would seek to be reimbursed for any incidents that may occur, and it wouldn't be appropriate for the deposit to be used in this way. 

A security deposit is not provided to pay for issues that are caused by a tenant throughout a tenancy. Even if it were, a landlord would not be able to reclaim any losses back from the deposit until the end of the tenancy. Conceivably, this might be after many years. I don't want to risk making landlords more reluctant to rent a property for a longer period because they would be fearful that the security deposit would be used for purposes for which it was not intended, leaving uncertainty as to what happens to the deposit when it has run out. Usually, it is a month's rent.

Amendment 24, tabled by Leanne Wood, in setting a 14-day period before a late rent default payment can be made, would be unfair to landlords, especially smaller ones. Landlords rely on income from rent and have a right to expect it to be paid on an agreed contractual date. For some, not being able to rely on receipt of an income on a specific date might jeopardise their ability to make mortgage payments or pay staff. In introducing this Bill, I have to be mindful of the interests of both landlords and contract holders. The proposed amendment would potentially give a two-week extension or flexibility on rent payments each and every month, to which I cannot agree. This would not be helpful to the landlord or the tenant, and may risk the property on which they both rely if the landlord is reliant on the rent to make their mortgage payments. 

The majority of landlords rent just one or two properties, so they are more likely to have to make a mortgage payment, and wouldn't be in a position to do so if the rent was not there from the contract holder. At times as well, a landlord may even be renting a property themselves, so will be even more dependent on getting a regular income through the rent they're owed.

I do acknowledge the aims of the amendment, which I understand seeks to alleviate the situation whereby some tenants face charges perhaps because of delays in benefit payments, or income being out of sync when the payments are due. However, I believe that the amendment proposed introduces greater risks than benefits. Whilst I am committed to continuing to seek out ways to support tenants, especially those who are most vulnerable, I can't support this amendment.

Turning, finally, to amendment 25, which seeks to provide that late payment fees are limited to one charge per rental period, I'm afraid, whilst having merit in the issue it seeks to address, it does have the potential for significant unintended consequences. Examples of rogue agents and landlords charging multiple late payments are, I agree, very troubling. On amendment 25, there is a risk that the amendment could result in an unintended consequence of disadvantaging contract holders who pay on a weekly or a fortnightly basis. This amendment will make it possible for more than one late payment fee being charged in a month. This could particularly hit hard individuals on low incomes who disproportionately rent in this way.

The Bill does currently provide for regulation-making powers that can be used to revisit permitted payments, including payments in the event of a default. I've asked my officials to contact Shelter directly to explore the situation they have highlighted in more detail. This is part of my desire to keep the issue under active review, and to work with key stakeholders to find a way to address abuses of the system that protect the interests of both good landlords and tenants. This would allow us to ensure that intervention on this issue is better targeted to poor practice where it exists, and may help develop the role of the private rented sector in meeting housing needs here in Wales. 

Thank you, Minister. I call on Leanne Wood to reply to the debate. 

Diolch. I welcome your commitment to discuss this further with Shelter, but I'm not convinced from the arguments that you've just put forward that there is sufficient protection for tenants in your thinking. So, I will push to the vote, please, Chair. 

Okay. The question, then, is that amendment 21 be agreed. Does any Member object? [Objection.] Okay, the question, then, is that 21 be agreed. Will those in favour please raise your hands? And those against. There are no abstentions. So, in relation to amendment 21, there voted one in favour and six against, and amendment 21 is not agreed. 

Leanne, do you wish to move amendment 22? 

Yes, please. 

Okay. The question is that amendment 22 be agreed. Does any Member object? [Objection.] Okay. Will those in favour, then, please raise your hands? And those against. And there are no abstentions. So, in relation to amendment 22, there voted one in favour, six against, and amendment 22 is not agreed.   

Leanne, do you wish to move amendment 23? 

Yes. 

Okay, the question is that amendment 23 be agreed. Does any Member object? [Objection.] Will those in favour please raise your hands? And those against. And there are no abstentions. So, in relation to amendment 23, there voted one in favour, six against, and amendment 23 is therefore not agreed. 

Leanne, do you wish to move amendment 24? 

Yes, please. 

The question, then, is that amendment 24 be agreed. Does any Member object? [Objection.] Okay, so in relation to amendment 24, will those in favour please raise your hands? And those against. And there are no abstentions. So, in relation to amendment 24, there voted one in favour, six against, and amendment 24 is therefore not agreed. 

Leanne, do you wish to move amendment 25? 

Yes, please. 

The question is that amendment 25 be agreed. Does any Member object? [Objection.] Okay, will those in favour, then, please raise your hands? And those against. And there are no abstentions. So, in relation to amendment 25, there voted one in favour, six against, and it is therefore not agreed.

Leanne, do you wish to move amendment 26?

No, I'm happy for that to be withdrawn.

Does any other Member wish to move that amendment? No. Okay, then that amendment is withdrawn.

David, do you wish to move amendment 52?

I do.

Yes. The question is that amendment 52 be agreed. Does any Member object? [Objection.] Okay. Will those in favour please raise your hands? And those against. And there are no abstentions. So, in relation to amendment 52, there voted three in favour, four against, and it is therefore not agreed.

I move amendment 6 in the name of the Minister. The question is that amendment 6 be agreed. Does any Member object? Amendment 6 is therefore agreed.

Leanne, do you wish to move amendment 27?

Yes, please.

The question is that amendment 27 be agreed. Does any Member object? [Objection.] We will therefore take a vote by show of hands. Will those in favour please raise your hands? And those against. And there are no abstentions. So, in relation to amendment 27, there voted one in favour, six against, and it is therefore not agreed.

Leanne, do you wish to move amendment 28?

Yes, please.

The question is that amendment 28 be agreed. Does any Member object? [Objection.] Okay. We will therefore take a vote by a show of hands. Will those in favour please raise your hands? And those against. And there are no abstentions. So, in relation to amendment 28, there voted one in favour, six against, and amendment 28 is therefore not agreed.

I move amendment 14 in the name of the Minister. The question is that amendment 14 be agreed. Does any Member object? [Objection.] Object. We will therefore take a vote by a show of hands. Will all those in favour of amendment 14 please raise your hands? And those against. And there are no abstentions. So, in relation to amendment 14, there voted six in favour, and one against, so it is therefore agreed.

Leanne, do you wish to move amendment 29?

Yes, please.

The question is that amendment 29 be agreed. Does any Member object? [Objection.] Okay. We will therefore take a vote by a show of hands. Will all those in favour please raise your hands? And all those against. And there are no abstentions. So, in relation to amendment 29, there voted one in favour, six against, and it is therefore not agreed.

Group 7 relates to enforcement powers and Rent Smart Wales. The lead amendment in the group is amendment 33, in the name of David Melding. I call on David Melding to move amendment 33, and speak to his amendment and other amendments in this group.

Thank you, Chair. And I move the amendments. Amendments 37, 39 and 40 are consequential to the first three amendments, and ensure that Rent Smart Wales have the necessary powers to require documents and information to investigate whether any offence under the Act has been committed. They must also have due regard to guidance issued by Welsh Ministers. While there's an expectation of high compliance with this Bill, enforcement is clearly going to be an important factor in delivering the intended purpose.

When we explored this issue in committee, a range of witnesses could see the benefit of establishing a lead authority agency, but the general consensus concluded that this shouldn't be followed, and we agreed with this. I do not believe there is a need for a single lead enforcement body, as there was under the Housing (Wales) Act 2014, which established a single lead enforcement body for the purpose of licensing landlords and letting agencies. It is clear that this Bill has a different purpose, and will operate differently to that legislation. However, I do believe there's a need to give Rent Smart Wales additional powers to strengthen this legislation we're considering today, and reduce the opportunities for those flouting the law to go unpunished. I would not want to see a position where Rent Smart Wales discovers that an agent is charging a prohibited fee as part of its work under Part 1 of the Housing (Wales) Act 2014, but is then required to pass the enforcement role on to a local authority. In these circumstances, Rent Smart Wales should be able to either issue a fixed-penalty notice or, indeed, take forward prosecution, and this will make the whole system more efficient, because, clearly, it does combine with that 2014 legislation as well. 

Indeed, Rent Smart Wales agreed with this approach in their evidence. They stated that it would be beneficial for them to have powers to enforce where appropriate—not the lead authority, but to have enforcement powers. They described how the process currently works and the arrangements that are in place to issue fixed-penalty notices or to take forward prosecutions. Generally, it is Rent Smart Wales that takes forward enforcement action, but where a local authority is already involved with a property or landlord, that authority may take the enforcement action rather than Rent Smart Wales under that particular legislation. So, we are suggesting a similar system under this Act.

Rent Smart Wales suggested a similar approach then in enforcing provisions under this Bill, and whilst the local authority generally takes the lead, or would take the lead, the provision for Rent Smart Wales to take enforcement action, where appropriate, would be provided.

The Welsh Local Government Association also supported giving Rent Smart Wales additional enforcement powers and said that such an amendment to the Bill would, I quote, reflect 

'the reality of working on the ground.'

So, I move this amendment and think it will strengthen considerably this Bill.

Are there other Members who wish to speak? Jenny Rathbone.

I think David Melding's amendment makes a really important point about the consistency role of Rent Smart Wales, because we don't want to see develop one local authority in a particular part of Wales taking a laissez-faire attitude towards poor landlords who we're endeavouring to rectify their behaviour through these Bills. So, I think that there is a very important role for Rent Smart Wales to ensure consistency and also to be able to see, across Wales, landlords who may be committing offences in more than one part of Wales, which a local authority on their own would not necessarily know about. So, just as legislation on who is empowered to give financial advice or provide loans to people hasn't eliminated loan sharks, we have to ensure that there is appropriate enforcement, and it seems to me that Rent Smart Wales is that body that will ensure consistency and enforcement across Wales. So, I hope the Minister will consider how we can strengthen the powers of Rent Smart Wales either with this amendment or with a further amendment.

Are there any other Members who wish to speak? No. Then I call on the Minister to speak.

Thank you, Chair. David's amendments align very closely with my own thinking on this matter, and I have been persuaded by the arguments of the committee. I did indicate during the general principles debate that it was my intention to bring forward amendments at Stage 3. Having had a chance to review the amendments that are before us today, there are issues that would mean that, whilst I do remain supportive of their aim, I can't support them in their current form. 

In particular, I think further work is needed on the amendments to ensure appropriate consents are provided by a local housing authority when the licensing authority is undertaking enforcement work. At present, I'm concerned that the amendments would allow, for example, a fixed-penalty notice to be served by the licensing authority whilst a prosecution is being initiated by a local authority. But I'm happy to confirm my intention to bring forward amendments at Stage 3, which would meet the expectations of the committee as set out in recommendation 3 of their Stage 1 report, namely giving Rent Smart Wales powers so that it can enforce the Bill alongside a local housing authority. I'm in agreement that this can lead to a more effective and efficient enforcement regime, overall, whilst at the same time maintaining the link between enforcement and local knowledge that the committee and I see as vitally important. 

Okay, I call on David Melding to reply.

I welcome the Minister's response. I'm still in the same position though—that I want to push our amendment at this stage to send a very clear message, and I don't doubt that the Minister will come forward with an amendment at Stage 3, clearly, from her remarks. And I do commend the attitude of reflecting deeply on the evidence that's been received and then making an amendment, and it's a key amendment. It is a big change. I think it's in complete sympathy with the approach, indeed, of the Government's previous legislation, but it was lacking and it came forward in a very strong fashion. So, I'll give the Minister two cheers, but not the third, which is why I move my amendment.

Okay. So, the question is that amendment 33 be agreed. Does any Member object? [Objection.] Okay, we will therefore take a vote by a show of hands. Will all those in favour please raise your hands? And all those against. No abstentions. So, in relation to amendment 33, there voted three in favour, four against, and it is therefore not agreed.

David, you wish to move amendment 34, then.

I do.

The question is that amendment 34 be agreed. Does any Member object? [Objection.] We will therefore take a vote by show of hands. Will all those in favour please show? And all those against. And there are no abstentions. So, in relation to amendment 34, there voted three in favour, four against, and it is therefore not agreed.

Group 8 relates to fixed-penalty notices. The lead amendment in the group is amendment 7 in the name of the Minister.

I move amendment 7 in the name of the Minister and call on the Minister to speak to her amendment and other amendments in this group. Minister.

Thank you, Chair. I've brought forward amendment 7, doubling the level of fixed-penalty notice to £1,000, to address recommendation 10 made by the committee. As I set out in committee, it's important to see the fixed-penalty notice in the context of the wider enforcement regime. The fixed-penalty notice is designed to be a quick and simple response as an alternative to prosecution, where the local housing authority has reason to believe a person has committed an offence under the Bill.

Where it is felt that a more robust response is needed, then there is the option for prosecution, either in the first instance or when there are repeated offences after an FPN has been issued. I do want to stress there are alternatives to issuing a fixed-penalty notice. Depending on the situation, a local housing authority may want to take someone straight to prosecution if they think it is the best thing to do.

Where a person has been convicted of an offence under the Act, the local housing authority must notify the conviction to Rent Smart Wales. Ultimately, there is the risk that, if convicted, this is something that would impact on whether a person is fit and proper to be licensed as a landlord or agent.

Having listened to the concerns raised regarding the FPN being set at £500, I reflected and concluded that a higher rate is appropriate. The FPN needs to be set at a level where it provides a clear deterrent to landlords and letting agents, but avoids overcomplicating what we intend to be a swift reaction where offences are committed. An overly complex system would be more difficult for a local housing authority to manage, be more open to differences of interpretation and enforcement, and potentially require complex appeal mechanisms to be put in place. It may also mean that local housing authorities would be discouraged from issuing FPNs if they considered agents or landlords would prefer to challenge the matter in court.

I'm aware that, during the committee's evidence sessions, some stakeholders suggested that the fixed penalty should be set at a level well above this sum. Amendment 35 seeks to achieve the same objective. I've reflected carefully on the suggestion to increase the level of fixed-penalty notice to £2,000. However, I believe that £1,000 is the right level and, given that the Bill makes provision under section 13(3) for Ministers to revisit this issue via regulations if it proves necessary, I urge Members to support my amendment.

The explanatory memorandum for the Bill looked at the cost of issuing a fixed-penalty notice. Figures provided by local authority officers showed that, on average, each notice issued costs between £300 and £370—£1,000 comfortably covers any costs to a local housing authority. I would not want to increase the level of the fixed-penalty notice significantly above the amendment I have proposed.

Amendment 38, submitted by David Melding, seeks to require a local housing authority to notify the licensing authority once a fixed-penalty notice has been paid. I accept David's aim for ensuring an effective dialogue exists between a local housing authority and the designated licensing authority. Anyone familiar with the work of Rent Smart Wales will know of the strong relationship they have with local housing authorities. This, in part, is because section 36 of the Housing (Wales) Act 2014 already places a duty on a local housing authority to pass on any information to the licensing authority for the purposes of exercising its functions under Part 1 of the 2014 Act. This applies to any information that has been obtained by a local housing authority in the exercise of its functions as an LHA. This amendment therefore effectively replicates a duty with which local housing authorities must already comply. I am confident that, once the Bill is enacted, if a licensing authority requests information from a local housing authority, that will be provided to Rent Smart Wales, including once a fixed-penalty notice has been issued. The significance of the fixed-penalty notice is not something that will be overlooked as part of the licensing of an agent or landlord. Under existing arrangements, fixed-penalty notices issued under the 2014 Act will continue with this Bill.

Thank you, Minister. I call on David Melding to speak. 

Thank you, Chair. As the Minister indicated there, my version increases the fixed-penalty notice from £500 to £2,000. I do welcome the fact that the Minister has moved somewhat with regard to her policy here, but I think there was clear evidence from the sector that the proposed levels of fixed penalties were not high enough. It was really quite comprehensive in our evidence. It was surprising that there was such unanimity from tenants and landlords and agents. I don't think £1,000 quite does it, so I think that we do need to go further to have fully robust legislation and a sufficient deterrent to rogue landlords and letting agents. I think it's really important that we send that signal.

The Minister did say that there would be provision to review the level of the fixed penalty and increase it in regulations, but I think the initial fixed penalty has to be set at a level that is something of a deterrent. Whilst the Minister has shifted—let's remember, £500 was set as the administrative cost to the local authority, and the model there was just that those costs should be recovered. So, you've moved a bit, but I don't think an extra £500 is a full deterrent—£2,000, I think, sends a stronger signal, and I hope that Members will agree.

I do agree with what the Minister says, that the ultimate deterrent is the potential loss of a licence from Rent Smart Wales. That, as far as the landlord is concerned, is a very powerful sanction. Because of that, I thought setting the fixed penalty at a higher rate—say, £5,000, as in England—wouldn't quite strike the right balance, because I think we should acknowledge the importance of Rent Smart Wales in Wales. I'm pleased to put on record that I think it's a system that was well conceived and is now operating in practice with greater and greater efficiency and is an important part of our model to strengthening the rental sector in Wales and provide a fairer market.

So, building on that is really important, but that is why I've brought my second amendment, which places a duty on local authorities to notify Rent Smart Wales when a fixed penalty is paid. The Minister said, 'Well, actually, that duty already exists because the local authority has to pass on information to Rent Smart Wales and can't withhold it', but it seems very passive not to put it on the face of the Bill. And then, in the Minister's account of why she thinks her policy is currently robust enough, she talked about Rent Smart Wales requesting the local authority for this information. That's not a duty for the local authority to say when the fixed penalty is paid. It seems to me that that's a really important difference.

Rent Smart Wales told us that this duty would help improve their intelligence in terms of the robustness of the systems, and that, currently, there are no such provisions within the Bill. Now, that's what Rent Smart Wales told us in Stage 1, and I think that it was the view of this committee at Stage 1 that Rent Smart Wales were right, and that the process needed to be tightened to make it more robust. I have sought to do that, and I think it's actually—. The level of the fixed-penalty notice is important, but I think that this duty, clearly in the Bill, that when that fixed notice is paid, the local authority has to inform Rent Smart Wales—a very clear statement that that needs to be done. I'm slightly surprised that the Minister has not quite seen the importance of having that. There are weaknesses in her approach, and I think they need to be fully examined—whether the passive situation that we currently have is one that we can rely on, even now, but certainly in the future. The evidence that we received at Stage 1 is that it wasn't a firm foundation, so I urge Members to support all my amendments in this group.

Okay, thank you. Any other Members wishing to speak? Jenny Rathbone?

I welcome the Minister increasing the level of penalty, but what the committee actually recommended was a tiered approach, so that we can have a different approach to the accidental landlord to the professional letting agent, who obviously will have known about the law and, for one reason or another, has decided to flout it. So, I'd welcome some indication from the Minister as to why it's not possible to have a banded or tiered approach to a fixed-penalty notice. Obviously, there is clause 3, which enables the Welsh Ministers to come back by regulation and substitute a different amount. But we are only talking about 'a different amount' rather than 'a suite of amounts', and I just wanted to probe that. I would reinforce what David Melding is saying: it's absolutely vital that local authorities must inform Rent Smart Wales, because otherwise they don't have the full picture.

Okay. Any other Members? No. Then I call on the Minister to reply to the debate.

Thank you very much, Chair. I'll start with the issue of the level at which the fixed-penalty notice should be set. I do think that £1,000 is a reasonable and proportionate response to it, and I'll just remind the committee that the FPN is only one part of the picture. Should the breach be of a nature or the—. Should the enforcement authority decide, they can actually move straight to prosecution, where there is an unlimited fine, and I think that that shows the choice, really, between a fixed-penalty notice, which is a relatively simple and straightforward way in which to address this issue, as compared to something that could lead to an unlimited fine, which is a huge deterrent, I think, in this area, and certainly would respond well should there be bad practice and flouting of the law. 

I'd also say that the level of fixed-penalty notice under the 2014 Act in relation to Rent Smart Wales is at a lower sum—that's at £500—but there does continue to be very high compliance with that Act and, of course, we do expect there to be high compliance with this Act. Fixed-penalty notices aren't singular, so a landlord or agent could find themselves subject to multiple fixed-penalty notices for further breaches. And prosecution, again, with the potential for an unlimited fine would likely be forthcoming for those landlords or agents who show continual disregard for the law.

I did write to the committee earlier this week, responding to some of the concerns on the areas where we would not be going further with the recommendations. So, recommendation 11 from the committee asked us to consider the banded or tiered approach, and we did consider that. However, there would be opportunity there, I think, for those who would seek to flout the law to use a banded approach to game the system, and it wouldn't necessarily impact on those landlords whom we particularly would want to be compliant with the law, particularly rogue landlords who would seek to find ways around that, potentially, by splitting property portfolios or claiming a lower income, for example, to put themselves in different bands. I think the threat of prosecution would be the appropriate way forward, were there to be landlords or agents flouting the law at a scale, and I think that that is more appropriate than a tiered or banded approach. Remember, of course, that most of our landlords have just one or two properties, and for whom a £1,000 fixed-penalty notice would be significant, in the sense it could represent one or two months' rent for them. 

Okay. Do you, then, Minister, wish to proceed to a vote on amendment 7?

Yes, please.

Okay. If amendment 7 is agreed, amendment 35 falls. The question then is that amendment 7 be agreed, does any Member object? [Objection.] Okay, we will then move to vote by a show of hands. Will all those in favour please show? Those against. And there are no abstentions. So, in relation to amendment 7, there voted four in favour, three against. And it is therefore agreed.

David, do you wish to move amendment 36?

I do.

The question is that amendment 36 be agreed. Does any Member object? [Objection.] Okay, we will then move to vote by a show of hands. Will those in favour please raise your hands? And those against. And there are no abstentions. So, in relation to amendment 36, there voted three in favour, four against. And it is therefore not agreed.

David, do you wish to move amendment 37?

I do.

The question is, then, that amendment 37 be agreed. Does any Member object? [Objection.] We will then move to a vote by a show of hands. Will all those in favour please raise your hands? And all those against. And there are no abstentions. So, in relation to amendment 37, there voted three in favour, four against. And it is therefore not agreed.

David—amendment 38?

Move.

The question is that amendment 38 be agreed. Does any Member object? [Objection.] We will therefore move to a vote by a show of hands. Will all those in favour please raise your hands? And all those against. And there are no abstentions. So, in relation to amendment 38, there voted three in favour, four against. And amendment 38 is therefore not agreed.

Amendment 39, David?

Move.

The question is that amendment 39 be agreed. Does any Member object? [Objection.] We will therefore move to a vote by a show of hands. Will all those in favour please raise your hands? And all those against. And there are no abstentions. So, in relation to amendment 39, there voted three in favour, four against. And amendment 39 is therefore not agreed.

Amendment 40, David?

Move.

The question is that amendment 40 be agreed. Does any Member object? [Objection.] We will therefore move to a vote by a show of hands. Will all those in favour please show? And all those against. And there are no abstentions. So, in relation to amendment 40, there voted three in favour, four against. And amendment 40 is therefore not agreed.

Okay, that takes us on to group 9, but before we proceed with group 9, I suggest we take a short comfort break. We will return, then, at 10:55. Thank you very much.

Welcome back, everyone, to our Stage 2 scrutiny of the Renting Homes (Fees etc.) (Wales) Bill. Group 9 relates to restrictions on termination by landlord of standard occupation contracts. The lead amendment in the group is amendment 8 in the name of the Minister.

I move amendment 8 in the name of the Minister, and call on the Minister to speak to her amendment and the other amendment in this group. Minister.

Thank you, Chair. Recommendation 9 of the committee's Stage 1 report proposed placing a restriction on landlords issuing a section 21 notice, or the equivalent 'no fault' notice under the Renting Homes (Wales) Act 2016, when a landlord has charged a prohibited fee and not returned it. I indicated in my statement given to Plenary that I supported this recommendation and would bring forward an amendment to give it effect. 

I'm pleased to commend amendment 8 to the committee. Amendment 8 inserts an additional restriction to the renting homes Act. The effect is that a landlord would be unable to issue a section 173 landlord's notice to end a periodic standard contract where the landlord is in breach of the Bill's requirements. A section 173 notice is the equivalent of a section 21 notice under the Housing Act 1988. Consequential amendments are also made to ensure the same restriction applies in other similar situations. These situations include the ending of a fixed-term standard contract after the fixed term has ended and become periodic. Amendment 8 also places a similar restriction on the use of any landlord's break clause included in a fixed-term standard contract.

David Melding's amendment 41 also relates to the issuing of a notice to end a fixed-term standard contract. However, this is not quite the same as a 'no fault' notice served in relation to a periodic contract. Amendment 41 places a similar restriction on issuing a possession notice under a section 186 of the renting homes Act 2016. Section 186 provides for a landlord to issue a notice to end a fixed-term contract, either on the date the contract was originally due to end, or after that date.

Amendment 8 prevents the issuing of a section 186 notice to end the contract after the end of the fixed term, once it becomes periodic. However, I recognise it doesn't prevent the landlord from issuing a section 186 notice to end the contract on the date originally agreed. I can see that David Melding has identified an issue here, and why he might be concerned that ending a fixed-term standard contract on the originally agreed date should also be prevented. Whilst I'm sympathetic to the objective that is sought to be achieved, there are some matters relating to the amendment that I think merit further examination. In particular, I do not think the proposed consequential amendments to section 126 work. The amendment seeks to make consequential changes to section 126 of the Renting Homes (Wales) Act 2016. However, since section 126 does not relate to fixed-term contracts, these consequential amendments do not work in their current form. Section 186 deals only with fixed-term contracts.

In summary, amendment 8 also relates to fixed-term standard contracts, but there would be merit in taking time to ensure that amendment 8 gives complete effect to our policy intent. This is that a landlord who is holding a prohibited payment or holding deposit in breach of this Bill should not have the right to issue a 'no fault' notice to end the contract. I'm also happy to commit to examining in detail the scope of David's amendment. Thank you.

Thank you, Minister. I now call on David Melding to speak.

Yes, I think that's a helpful response from the Minister, because I think there's a clear intention to follow through on the committee's recommendation. I have to say that it requires lawyer to speak unto lawyer, I think, to really understand if we're capturing what we need to capture here. So, at this stage, I'm prepared to withdraw and ask the Government lawyers to talk to our legal advisers to ensure that the legal drafting is robust, because I don't think there's any policy difference here, and that could be resolved, probably, at Stage 3. So, I was always going to support the Government amendment, in addition to mine, but now I won't move mine. I think we'll go away and just have a thorough check of the whole legislative phrasing.

Okay. Do any other Members wish to speak? Jenny Rathbone. 

Just to say that I very much welcome the Minister's amendment and hope that it does the job that we all want it to do. We've got to ensure that somebody who quite rightly complains about an illegal payment isn't then subject to being put on the street. So, I will await the lawyers' resolution of this matter and hope that this does the job that we need it to do. 

Okay. If there are no other Members wishing to speak, I call on the Minister to reply to the debate.

Thank you, Chair. I'll just take this opportunity to thank David for identifying this particular issue in the Bill and to commit to ensuring that lawyers can work together and have that meeting to ensure that an amendment is brought forward that addresses the issues that have been identified. 

Okay. So, you wish to proceed to a vote on amendment 8?

Yes, please.

Okay. The question is that amendment 8 be agreed. Does any Member object? Okay, amendment 8, then, is agreed. 

David, you've indicated that you do not wish to move—

I won't move amendment 41.

—and nobody else wishes to move amendment 41. 

We move on, then, to group 10, which relates to recovery of payment. The lead amendment in the group is amendment 42 in the name of David Melding, and I call on David Melding to move amendment 42 and speak to his amendment and the other amendment in this group. David. 

Thank you, Chair. The purpose of this group's amendments, namely amendments 42 and 43, is to ensure that prohibited payments and holding deposits are recovered at the same point that a fixed-penalty notice is paid. There are no provisions in the Bill to ensure automatic repayment of prohibited fees on the issuing of a fixed-penalty notice. However, the court may order the fees to be repaid where there is a successful prosecution. Where there is no prosecution, if a prohibited fee is not repaid by the landlord or letting agent, a tenant will have to pursue that payment through the civil courts. There is consensus—I'd say very strong, overwhelming, indeed, consensus—among all stakeholders that any prohibited fees should be repaid automatically. I think there's a sense here that the Bill needs to do what it says on the tin. 

Citizens Advice argued that, and I quote, we need, 'accessible methods of redress'—end quote. And that this, 'Key for tenants', and that courts are not—and I, again, quote—'necessarily the place for them'.

It is important that tenants should be able to recover fees that have been charged illegally in the easiest possible way, otherwise tenants will not see the full benefits of this legislation, which, again, I think, is highly perverse. We, therefore, want to see the Bill amended so that there is a requirement for any prohibited payments to be repaid when a fixed-penalty notice is paid.

We're not convinced by the evidence from the Minister and her officials on this issue. Expecting tenants to go through a legal process to recover fees that were charged illegally is unreasonable and unfair. It is a significant omission within this legislation, and I do hope the committee will agree to rectify this lacuna. 

We note, with interest, section 10 of the Tenant Fees Bill in England provides the enforcement authority with the powers to require repayment of the prohibited fee. Without a similar amendment being introduced here, tenants in Wales will be at a significant disadvantage compared to tenants in England, and I think we should aim for best practice. The situation we want is that in England people look at our legislation, perhaps, for some pointers of how it could be even more effective and to have a fuller protection of tenants, and not to end up with something that, compared to the English model, is deficient. So, I strongly urge fellow Members to back this amendment in particular. I, honestly—. If you go away from all this and we've not ensured that these illegal payments are repaid in an efficient and effective way, then I think that would be very, very disappointing for those most vulnerable people we're seeking to protect here, and I so move. 

Okay, thank you, David. Any other Members? Jenny. 

My constituents, who are renting privately, are generally people who would find it very difficult to navigate their way around the civil courts and certainly don't have the money to do so. So, I would hope that the Minister will look at this very carefully because it's not a question of asking the local authority to act as a debt collector; it's simply a question of the local authority obliging the person who has committed the offence to provide evidence in the form of a bank statement, or something like that, that they have actually repaid the prohibited payment. I don't think that that is onerous or difficult for the local authority to ensure has happened. 

Okay. Are there any other Members wishing to speak? No. Then I call on the Minister to speak.

Thank you very much, Chair. I appreciate what David is trying to achieve with these amendments, but I don't think local authorities have either the expertise or the resource to recover fees on behalf of a contract holder. To ask them to take on this additional role, in addition to their current work, risks diverting them from their enforcement work of investigating offences, issuing fixed-penalty notices or bringing proceedings through the courts. I also strongly believe that the right and proper place for seeking redress is through those courts. This is where most contractual disputes are brought, and the courts do have the expertise and the capacity to deal with this type of dispute and the type that might result from a prohibited payment being made. My preference throughout the Bill is to have clarity on where disputes are heard. The Bill is consistent with existing arrangements to ensure that claimants have the best possible access to justice.

There is also an issue with the amendment as proposed as it doesn't provide for enforcement of any requirement to pay. Therefore, there's no guarantee the contract holder would be repaid the prohibited payment. This means that, ultimately, a claim would still need to be made through the court, which brings us back to this being the best place for such matters, and the same principles, I think, apply in terms of local authorities having a duty to have a bank statement, for example, to prove that the payment had been made. 

The need for payment to be repaid to the individual is already provided for in the Bill, and any order made by the court in response to such a claim would, of course, be enforceable by the court. I recognise, however, that in saying contract holders have recourse to the courts, there is a need to ensure they are supported in these efforts. Currently, contract holders can take their own legal advice or get free, impartial support from either Shelter Cymru or Citizens Advice, and both are highly skilled and experienced in dealing with redress for contract holders. But I do want to make sure that process is made as easy to follow as possible for contract holders, and to that end, I will bring forward an amendment at Stage 3 that would place a requirement on local authorities to signpost and provide information to tenants who may require assistance in obtaining repayment of a prohibited payment. I would also add, Chair, that there is a different approach entirely to enforcement in the UK, where their enforcement is undertaken via trading standards, and ours is through the LHA.

So, the move to ensuring that individuals do have that information as to where they could receive assistance via a requirement on local authorities will ultimately assist a contract holder in making that claim through the court. And on that basis, I would ask Members to vote against these amendments. 

Okay. I call on David Melding to reply to the debate.

Well, I welcome any response, I suppose, and to have signposting and information is not unhelpful, but, as the Minister says, it is current good practice. But I simply don't accept that a local authority, in receiving payment, is not also in a position to verify that the illegal payment has been repaid. We expect high compliance with this legislation. The consequences of being a rogue landlord are that Rent Smart Wales may take away your licence. All these things point to a system that should work pretty effectively, but where there are breaches, those that are performing and meeting their obligations—those landlords and agents that are fully responsible—need to be protected from the rogues, just as the tenants need to be protected in terms of being able to recover payments that were illegally imposed upon them.

I honestly think it's bureaucratic monstrosity, really, to expect the tenant to be able to sort this out through a court process and not the local authority. I think we need to come up with a system that is for the convenience of the tenant, rather than the minor administrative convenience of the local authority, which is in a far stronger position to align systems and to ensure that there is an efficient process, and that the whole system operates smoothly. There is an element of the Monty Python about this—that the one thing we won't be doing in this system is requiring the illegal payment to be repaid. I mean, that's what will happen, and I think it needs to be sorted. Now, if the Minister can do that at Stage 3, fine, but at the minute you've not brought anything other than a promise to try to make information giving and signposting more robust. So, I urge Members to back my amendment.   

Okay, then. So, David, you wish to move amendment 42. Does any Member object? [Objection.] Okay, we will move to take a vote by show of hands. Will those in favour please raise your hands? Those against. And there are no abstentions. So, in relation to amendment 42, there are three in favour, four against, and amendment 42 is therefore not agreed.   

And David—amendment 43? 

Move. 

The question is that amendment 43 be agreed. Does any Member object? [Objection.] We will then move to a vote by a show of hands. Will all those in favour please raise your hands? And those against. And there are no abstentions. So, in relation to amendment 43, there voted three in favour, four against, and amendment 43 is therefore not agreed. 

Group 11 relates to information for contract holders, landlords and letting agents. The lead amendment in the group is amendment 44 in the name of David Melding, and I call on David Melding to move amendment 44 and speak to his amendment and the other amendment in this group. David.  

Thank you, Chair. Amendment 44, the lead amendment, places a requirement on Welsh Ministers to take reasonable steps to inform contract holders, landlords and letting agents of the changes being introduced to the Bill, and it stems from recommendation 2 of our Stage 1 report. Amendment 50 is consequential to amendment 44, and would allow amendment 44 to come into force on the day after Royal Assent. This will allow information about the effect of this Bill to be disseminated to all relevant stakeholders at the earliest opportunity, and before the substantive provisions of the Bill come into force. 

Chair, for me, these are some of the most crucial elements of this whole policy, and this amendment that I've put forward is designed to ensure that we have a process that's similar to what was followed in the Abolition of the Right to Buy and Associated Rights (Wales) Bill last year. There was a broad consensus from stakeholders that it was important that the introduction of the ban must be clearly communicated. The Chartered Institute of Housing Cymru said, and I quote:

'There must be a comprehensive and clear programme of supported communication activity to ensure the public are aware of what "fees" incorporate and therefore what enacting this legislation could mean for those renting in the future.'

End quote. They also made comparison to the provisions in the Abolition of the Right to Buy and Associated Rights (Wales) Act 2018, which places duties on Welsh Ministers and local authorities to make tenants aware of the forthcoming changes. There was a lot of discussion about that element, as I recall, in the passage of that legislation. 

In oral evidence, it was highlighted that in Scotland, Shelter had a big communication campaign to make letting agents and tenants aware of the changes. And in Wales, at the minute, I can see no specific provision for a communications strategy on that scale. 

We know that certain groups of tenants, for example students, who are active in social media are likely to find out quickly about the changes, but I'm concerned about more vulnerable tenants, and the smaller agents and landlords being made aware of the changes, and how we do that. In particular, it's important that tenants are made aware, as they will be the people who have to identify landlords and letting agents charging illegal fees. The committee acknowledged that there's a clear vehicle for communicating with landlords and letting agents through Rent Smart Wales, but we do need to look at the wider communication strategy. This should make communicating to those groups—the landlords and letting agents—reasonably straightforward, but we must bear in mind the needs of tenants also.

So, I would urge that we have a comprehensive communication strategy, so that we get the full benefits of this legislation. I think it's really key, and, again, it makes the whole market fairer and more robust. Frankly, I think it's something that needs to be built into legislation that has a wide impact on a sector of society. Communication is key, and it is something I think we always need to have at the forefront of our minds. So, I move the two amendments under my name. 

Thank you, David. Are there other Members who wish to speak? No. Then I call on the Minister to speak.

Thank you, Chair. This amendment, tabled by David Melding, is similar to provision in the Abolition of the Right to Buy and Associated Rights (Wales) Act 2018. However, there are significant differences between the groups affected by the respective pieces of legislation. The group affected by right to buy could be directly identified through their social landlords. The private rented sector is made up of less readily identifiable groups and individuals. Furthermore, since this Bill is also targeting individuals who may only be thinking about renting, it would just not be possible to identify individually everyone affected by the Bill to inform them about changes brought about by the Bill. 

In view of this, we have chosen to adopt an approach of broad and varied communications activity designed to ensure key messages get to the broadest possible audience. I'd be happy to share further information about our comms plan with the committee before Stage 3. This will include the development of materials to inform tenants and prospective tenants of the changes that would result from the Bill. This will be done in close conjunction with groups representing the interests of tenants. 

We will also work closely with representatives of landlords and agents to ensure that they are informed effectively. They will, though, be an easier group to target, as we are able to channel information to them through Rent Smart Wales. These activities will be accompanied by more general communications to alert the general public in Wales to the changes we're making through media, social media and other channels.

I'll be bringing forward an amendment at Stage 3 to require Welsh Ministers to provide guidance for landlords and agents regarding permitted payments. This will clarify what can and cannot be charged in relation to a contract. There'll be comprehensive guidance on all aspects of the Bill, tailored for landlords, agents and tenants. Nobody should be unclear as to how the Bill works. 

These actions demonstrate my commitment to doing everything possible to ensure that the changes made by this Bill are widely known and understood. The amendments are unnecessary and risk a focus on a tick-box approach to provision of information to the detriment of what would be wide, varied and effective communications that go further than the amendment posed.

I therefore ask Members that they reject these amendments for the reasons I have given.

Okay. And David Melding to reply to the debate.

I welcome the fact that we might have some more information before Stage 3, but, frankly, I think it could have been presented at this stage, given its importance. I just simply do not accept the argument that because it's difficult to communicate with a vital sector, the most affected people, you cannot then put these requirements into law. There's a qualification of what is reasonable, but I'm generous-hearted enough to believe the Government will seek to have a communications strategy. But I think that legislation should be robust. It should be a factor that we can consider. We know it's now likely to be pretty effective, through Rent Smart Wales, to that sector of the population affected. But in terms of the tenants specifically, I think we do need to capture that, and we have a good-practice example in Scotland, where a key body was used. I dare say you may want to do it, but I think we need to require you to do it, and that's why I move my amendment.

Okay. So the question is that amendment 44 be agreed. Does any Member object? [Objection.] Okay. We will then move to a vote by show of hands. Will all those in favour please raise your hands. And all those against. And there are no abstentions. So, in relation to amendment 44, there voted three in favour, four against, and it is not agreed. 

Group 12 relates to regulations. The lead amendment in the group is amendment 45 in the name of David Melding, and I call on David Melding to move amendment 45 and speak to his amendment and other amendments in this group. David. 

Thank you, Chair. I hope it's not too indulgent of me to remind Members that, in the fourth Assembly, I had the honour of chairing the Constitutional and Legislative Affairs Committee. I've remained an avid reader of their reports, and I thought that their report on this Bill was very instructive, and I basically have sought to take their key amendments forward. So, amendments 45, 46, 48 and 49 provide that regulations made under section 7 and section 13 of the Bill are subject to the superaffirmative procedure—I'll return to that phrase later: the superaffirmative procedure.

Section 7, firstly, provides Welsh Ministers with the power to use the regulations to amend the list of permitted payments. The power is a Henry VIII power, as it will enable section 1 to be amended by subordinate legislation. The objective behind the regulation-making power is to enable regulations to reflect any unforeseen changes in landlord behaviour and practices. And the Welsh Ministers are not permitted to remove the payments of rent from the categories of permitted payment. So, the established practice has been to seek the use of the affirmative procedure for any subordinate legislation that would change primary legislation. And for that reason, the CLAC committee welcomed that the Minister has, from the outset, drafted the Bill so that the affirmative procedure will be used for regulations made under section 7. And, sometimes, Ministers don't volunteer to use the affirmative in all cases, when that should be the minimum. So, I do acknowledge the strength of the drafting in that respect. However, the committee also agreed that these regulations, which would enable the list of permitted payments to be altered, would benefit from the additional security that a superaffirmative procedure would allow—so, from affirmative to superaffirmative.

Given that the Minister has committed to full engagement with stakeholders, I do not believe that placing this commitment in statute, through a superaffirmative procedure, would be onerous. This view is also influenced by the Minister's reliance, and indeed the Welsh Government's wider reliance, on the basic 'consult where appropriate' approach. This approach lacks transparency, and may not instill confidence in those who will be affected by the changes that can be made through regulations. So, the power to amend the definition of a permitted payment could alter the effect of the overall aim of the Bill as currently drafted or, by shortening the list of permitted payments, widen the number of criminal offences created by the Bill.

Key stakeholders, and relevant Assembly committees, should have the opportunity to comment on draft regulations that would change a significant element of the legislation. The CLAC committee and I believe that regulations should be made via a superaffirmative procedure, which requires the Welsh Government to consult stakeholders in advance of laying the regulations before the National Assembly. The period of consultation would also provide time for the relevant Assembly committees to consider the regulations in draft format. So, it significantly strengthens an affirmative procedure, by requiring that level of consultation on drafts.

Section 13, on the other hand, enables an authorised officer of a local housing authority to give an individual a fixed-penalty notice if that officer believes the individual has committed an offence under section 2 or 3 of the Bill. The amount of the fixed penalty is £500, though that, I understand, will change. Section 13, subsection 3 provides the Welsh Ministers with the power to use the regulations to amend the level of fixed-penalty notice, and this power is a Henry VIII power, as it will enable section 13 to be amended by subordinate legislation. And as with section 7, the CLAC committee—and I agree with this—believe that section 13 regulations should also be made under the superaffirmative procedure, which ensures key stakeholders will be consulted before the amount of the fixed penalty is changed. So, amendment 47 ensures that any regulations made under Schedule 1, paragraph 2(4) of the Bill, are subject to the affirmative procedure.

So, in essence, I think these are important changes, potentially, to what's currently on the face of the legislation, and it requires wide consultation, both with stakeholders and with the relevant committees. So, if a future Government wanted to increase the fixed penalty from £1,000—assuming the Government's amendment goes through—to £5,000, it would be very important, I think, to consult with the letting agents and landlords on what they thought about that, and indeed, what tenants thought about it—so, key requirements. And we do not have that guarantee with an affirmative procedure, which is why, I think, these amendments may seem technical and classic CLAC work, but, actually, do go to the heart of a strong legislative process, and I so move.

Okay, thank you, David. Leanne Wood.

Amendment 20 is just a consequential amendment, so I move that.

Okay. Are there any other Members who wish to speak? No. I call then on the Minister to speak.

Thank you, Chair. Amendment 9 addresses recommendations 8 and 9 of the Constitutional and Legislative Affairs Committee's report. This means that regulations that may prescribe a limit on security deposits and those that amend Schedule 1 to change the meaning of permitted variation for the purposes of rent will follow the affirmative procedure.

We debated the issue of setting the level of security deposit over the course of Stage 1, and I've given this issue considerable thought. I recognise that the level of security deposits can be a sensitive and, at times, controversial subject. I've reflected throughout and I do not think that this is something that should be rushed. For that reason, I have held that the use of a regulation-making power in this matter is the correct course of action rather than a rigidly fixed approach on the face of the Bill.

I've also listened to discussion around issues such as the potential for variation to accommodate different circumstances, such as contract holders with pets. Reflecting on the debate thus far, I've concluded that it is right that any resulting regulation should indeed be agreed using the affirmative procedure.

Regulations to amend Schedule 1, to change the meaning of 'permitted variation of rent' in paragraph 1 would be quite limited. It's not unusual for regulations of this type to follow the affirmative procedure. It is for this reason that I have tabled this amendment to allow for the change of procedure to affirmative. I urge Members to support these amendments.

Amendment 20, tabled by Leanne Wood, relates to amendments 21, 22, 23, 24 and 25 on payments in default, which we've already debated. I've already set out that I do not think the approach set out by the amendments is workable. As I've said, I'm happy to commit to keeping the issue of default payments under review and to working with key stakeholders in pursuit of a way to address abuses of the system that also serves to protect the interests of all parties. But I can't support the amendments, as we discussed in group 3, to which this relates and ask Members to vote against this amendment also.

Amendments 45, 46, 48 and 49, tabled by David Melding, appear to seek to amend Assembly procedure for making regulations to amend the definition of 'permitted payment' under section 7 and to change the level of fixed penalty under section 13 to superaffirmative procedure and set out the procedure to be followed. I would urge Members to reject them. It is standard practice to consult with stakeholders about any changes to such regulations, either on the basis of a policy consultation or on the draft regulations themselves. The affirmative procedure also provides for regulations to be laid and approved by the Assembly. This is a proportionate level of scrutiny. The statement of policy intent, published at Stage 1, sets out that the regulations under section 7 are generally to be used to address changes of practice rather than make major overhaul to the permitted payments.

On the powers provided to futureproof the Bill, we have already discussed earlier the level at which a fixed-penalty notice should be set and the need to set a proportionate level that reflects the wider enforcement regime. I won't revisit those arguments again, but I would reiterate that we have no intention of increasing the level of fixed-penalty notices disproportionately. It would be unreasonable to do so and would undermine their use. The superaffirmative procedure in relation to these matters would introduce a disproportionate level of scrutiny and procedure that would take in the order of six months to complete.

Amendment 47 has been brought forward by David Melding to amend the Assembly procedure so that regulations to amend the Consumer Rights Act 2015, in respect of publicising letting fees, should be subject to the affirmative procedure. I cannot support this amendment and urge Members to vote against it on the basis that the regulations will be limited to what is on the face of the Bill. The regulation-making power here is very limited, allowing only for what is specifically provided for in section 18 of the Bill, which is that

'Regulations may amend Chapter 3 of Part 3 of the Consumer Rights Act 2015'

specifically

'to require a letting agent to ensure that any online advertiser publicises the agent’s relevant fees'

or

'to allow more than one penalty to be imposed on a letting agent in relation to the same breach of a duty'

in Chapter 3.

Seeking specific Assembly approval to make these regulations would not be a good use of scrutiny time, given that the provisions within section 18 will have already been considered during the passage of this Bill, and so any regulations would be restricted to amending Chapter 3 of Part 3 of the 2015 Act as set out in section 18. To summarise, then, I cannot support amendments 20, 45, 46, 47, 48 and 49, but would ask Members to vote in favour of amendment 9. Thank you.

Thank you, Minister. David Melding to reply to the debate. 

Well, if I just say, if just this is remembered from what I've said all morning: when a Government Minister says, 'I do not believe X, Y and Z would be a good use of your scrutiny time', then run a mile from what the Government is suggesting, because it's up to the legislature to decide what is suitable for future scrutiny. The superaffirmative procedure—the reason it's very effective is that under the form that's set out it would require committees—give them the opportunity to look at draft changes, and when you're talking about what might be a permitted payment or what might be a level of change in a fixed-penalty notice, they're substantial matters

Now, there may be complete unanimity of agreement that it's a sensible thing to do. Chair, I think you're perfectly experienced in the way a committee operates. It can receive the notice, it can circulate it, people have a chance to consider it, and it may be dispatched in 15 minutes of business, and all due diligence would have been followed. You have the opportunity not to give it 15 minutes' worth of attention if you feel it's very, very significant, you can do a morning session on it and ask stakeholders and all sorts, and then effectively bring the Executive to account for their proposals.

They've got every right to come to this legislature with their proposals and they've got a right to have them voted on, but they should not dictate the procedure we should apply and then follow at a fit, proper, reasonable and proportionate level that we determine. The superaffirmative allows that flexibility and extends our rights over really important matters. The fact that our Constitutional and Legislative Affairs Committee recommends that these regulations are changed to require those procedures I think is a really clear warning signal to us, and one we should follow. This is not something that I'm suggesting left, right and centre, it is based on the CLAC report, which itself is highly selective over those issues that it feels are highly salient. I so move my amendments. 

If amendment 45 is agreed, amendments 9, 46 and 47 fall. The question is that amendment 45 be agreed. Does any Member object? [Objection.] We will then move to a vote by a show of hands. Will all those in favour please raise your hands? And all those against. There are no abstentions. So, in relation to amendment 45, there voted three in favour, four against, and it is therefore not agreed. 

I move amendment 9 in the name of the Minister. If amendment 9 is agreed, amendments 46 and 47 fall. The question is that amendment 9 be agreed. Does any Member object? [Objection.] We will then move to a vote by a show of hands. Will all those in favour please raise your hands? All those against. There are no abstentions. So, in relation to amendment 9, there voted five in favour, two against, and it is therefore agreed. 

Leanne, do you wish to move amendment 20?

I move. 

The question is that amendment 20 be agreed. Does any Member object? [Objection.] We will then move to a vote by a show of hands. Would all those in favour of amendment 20 please show? And all those against. And any abstentions. So, in relation to amendment 20, there voted one in favour, six against, and it is therefore not agreed.

David, do you wish to move amendment 48?

I do.

The question is that amendment 48 be agreed. Does any Member object? [Objection.] We will, then, move to a vote by show of hands. The question is that amendment 48 be agreed. Will all those in favour raise your hands? And all those against. And are there any abstentions? No. So, in relation to amendment 48, there voted in favour three, against four, and it is therefore not agreed.

The question is that amendment 49 be agreed. Does any Member object? [Objection.] We will therefore move to a vote by a show of hands. Will all those in favour please raise your hands? And all those against. And there are no abstentions. So, in relation to amendment 49, there voted three in favour, four against, and it is therefore not agreed.

David, do you wish to move amendment 50?

Well, amendment 50 is consequential to an amendment that's already been defeated, so I don't think it makes much sense to move it, not that I have a great expectation that it would pass. But it clearly is now defunct, so I don't move it.

Okay, no. No other Member wishes to move amendment 50. Okay.

We therefore reach the end of our scrutiny session. I very much thank the Minister and her officials for their attendance. You will be sent a transcript of the meeting to check for factual accuracy.

That completes Stage 2 proceedings. Stage 3 begins tomorrow. The relevant date for Stage 3 proceedings will be published in due course. Standing Orders make provision for the Minister to prepare a revised explanatory memorandum, taking account of the amendments agreed today. The revised memorandum will be laid at least five working days before Stage 3 proceedings.

Thank you all very much for your attendance today, and I close the meeting.