We are now going to move on to the short debate. I call Jenny Rathbone to speak on the topic she has chosen—Jenny.

Thank you, Deputy Presiding Officer. I’d like to acknowledge the research support I’ve had from the National Assembly’s staff, including very clear legal advice. I’d also like to thank Catherine Iannucci, a final year student who did an effective day’s work gathering information about Cardiff Lettings agency, following up recent work done by Shelter on the state of play with letting agencies across Wales. In light of the Shelter report, I’m slightly surprised that no other Member has requested to speak, but I’m very happy that so many of you seem to be wishing to stay.

On my way here this morning, on my bike—today is Cycle to Work Day—I was delighted to see an advert on the back of a bus telling landlords that they need to register by the 23 November deadline. That’s one innovative way of getting the message across that will hopefully educate both landlords and tenants on this topical and important change in the law, but I fear it’s unlikely to be sufficient to capture all the people who need to know about this, and 23 November is not very far away.

How well is Rent Smart Wales, who’ve been tasked with covering the registration and licensing of landlords for the whole of Wales, or any other agency of Government, making clear the changes now required by the 2014 housing Act? By mid June, nearly 13,000 landlords had registered. By 1 September, 19,500 had registered—so far so good, but that’s out of a potential number of somewhere between 70,000 and 130,000 private landlords operating in Wales. So, we still have some considerable way to go. Are landlords not aware of the change in the law? Are they planning to ignore it in the hope that there’ll be no comeback, or are they just going to leave it to the last minute, which, of course, they are entitled to do, but it could delay the issuing of their licence? If thousands of landlords and letting agents leave it to the last minute, I hope we will not see any relaxation of the assessment by Rent Smart Wales that they are a fit-and-proper person to whom it is appropriate to grant a licence.

This is not a minor regulatory matter. After owner-occupancy, private renting is the second biggest type of housing tenure across the UK. The Joseph Rowntree Foundation estimates that nearly 40 per cent of all young people will be living in private rented accommodation by 2020, which is just round the corner. This, of course, reflects the failure of successive Governments over the last 30 to 40 years to build enough social housing and to assume, in the boom years of easy money, that anyone and everyone could aspire to own their own home. That mirage came crashing down in 2008, and we’re still paying the price in terms of the huge cost to the public purse of housing benefit. Let’s remember that most of the homes bought by tenants under the right to buy eventually end up in the hands of the private rented sector, not happy householders, making it ever more difficult in estates to identify who is responsible for noisy neighbours or disrepairs.

The cost in terms of the well-being of families living in private rented accommodation is often being forced to move every 12 months. Private landlords can evict without giving any reason, using what’s called the section 21 notice. The impact on children is particularly awful. The combination of a seller’s market and the cap on housing benefit makes it almost impossible to find suitable alternative private rented accommodation in the Cardiff area, if that’s where they come from; that is my experience as a Cardiff representative. Being forced to move every 12 months, even if you are model tenants, exacts a huge price in preventing families putting down roots, making and retaining friends and being able to complete your education at just one primary school and just one secondary school. Other families, I acknowledge, have rented for many years in the same property from a good landlord with whom they have a good relationship, but suddenly they find their home is being taken from them because the landlord’s got into financial difficulties and needs to sell. The tenant is the innocent victim. There is no security of tenure in private rented accommodation.

In theory, private renting is fine for young people who are on the move and yet to settle down, but the age when you turn to the local authority to be housed once you have children is crumbling under the weight of underprovision of supply over demand. Local authorities are being forced to use the private sector to discharge their duties to house homeless people as they simply don’t have enough social housing properties to discharge those duties. So, the housing Act is an important first step in regulating the private rented sector to ensure that there is a minimum of quality standards there when we are referring vulnerable people to be housed by them.

In the past, all sorts of amateur landlords have piled into the private rented sector, encouraged by the tax breaks that are on offer and the attractive returns compared with other ways of investing savings. If you bear in mind what you can get from putting your money into a savings account at the bank, you can see why people are investing in bricks and mortar, never mind into the manufacturing industry. Too many have had little regard to their obligations as landlords in exchange for the privilege of assuming rent. Registration will, hopefully, force these people to raise their game or get out.

I've dealt with landlords who’ve not thought it a priority to provide a front door that locks, or who ask contractors to fix the roof on four-storey buildings without any scaffolding, in terrifying contravention of health and safety regulations. Registration should at least allow us to find out who these people are in a timely fashion, as they have to provide the name and contact details, including their phone numbers. This should put a stop to landlords or letting agents who simply fail to provide meaningful contact details. An e-mail address is simply not sufficient if the water’s pouring down the walls as a result of a burst water pipe, or there’s no lock on the front door. Equally, letting agencies that publicise a phone number but never answer it are just as bad. From November, anyone who does not register will not be issued with a licence, and if you don't have a licence, then, obviously, there are very severe consequences.

Is this going to drive out the modern-day Rachmans from the landlord business? Hopefully. These amateur or absentee landlords who are not in a position to meet the licensing obligations can appoint a letting agent to act on their behalf; otherwise they simply will be refused a licence. And if you haven't got a licence, you can be fined—not a very large fine, £150 to £250—but more significantly, you will not be entitled to issue a no-fault eviction notice against your tenants—what I've previously referred to as the section 21 notice. In the most serious cases, you can also be subject to rent stopping or rent repayment orders. So, we have to assume that there will be a strong incentive to comply, as the landlord, or to appoint a letting agent to comply.

I want to spend the rest of my time just looking at the role of these letting agents, which are potentially going to get the lion's share of the business as a result of this Act. They need to comply with a code of practice as part of the licensing arrangement with one of four approved organisations, which include the Royal Institution of Chartered Surveyors, which includes enabling you to get a discount. That's a quick way of ensuring that at least they've got a tenancy deposit guarantee scheme, so that that money doesn't disappear if they go bankrupt, and a complaints resolution process. But signing up and complying are two different things.

What role might these approved agencies play in raising standards amongst these letting agencies? For example, I spent the best part of a week trying to get hold of a letting agency called Pinnacle about trying to retrieve a former tenant's unpaid deposit, which has been outstanding since the end of June. Two people, perfectly polite on the phone, but neither is the right department for dealing with the matter. I've been informed, as a result of that phone contact, that they are a member of something called the National Approved Letting Scheme. The National Approved Letting Scheme website assures landlords and tenants that their members all have a complaints procedure that they adhere to, and that they respond to correspondence in a timely fashion. Has the National Approved Letting Scheme’s chief executive responded to my phone calls and correspondence? Sadly, not yet. The royal institute, RICS, does pick up the phone, but they readily admit that they are only going to be inspecting agencies that benefit from their badge of approval every three years, and only a limited selection of those agencies. So, I fear it will fall on Rent Smart Wales and local authorities to deal with the people who are either not complying or simply not adhering to the terms of the Act.

At the moment, the biggest concern I get is from widespread abuse of the issues around fees and charges. For example, landlords and letting agents must return the deposit within 10 days of both tenant and landlord agreeing how much they'll get back, but the loophole is that there’s no specified time in which they have to agree how much they'll get back. And, I think, in particular, students are particularly vulnerable to sharp practices. Remember that when they set out to sign these letting agreements, they are somewhere between 18 and 19 years old, this is the first time they'll ever have entered into a legal agreement, their first time away from home, and many of them absolutely not aware of their rights. Shelter, in their research on letting agencies across Wales, did find one letting agency in Rhondda Cynon Taf that they said was a model of exemplary practice, and that’s completely excellent, but none in Cardiff. My research of 30 letting agencies in Cardiff is that none of them, unfortunately, meet that standard.

There is an organisation called the Cardiff Student Letting Agency, which is owned by the Cardiff University Students’ Union, and they could be a model of exemplary practice in Cardiff, but one of the problems they possibly face is they don’t have enough properties to meet the demand from their student bodies, never mind anybody else, to ensure that their practice of not charging fees becomes the norm.

Looking at the Shelter report and the testimonies I get from constituents, few letting agencies are complying with their obligations under the Consumer Rights Act 2015, in which we asked the House of Commons to include something on this when it was going through. They’re not complying because they’re simply not displaying their fees, and students or anybody else only find out rather late in the day what eye-watering fees they turn out to be. So, one student told me they would charge £150 to each tenant in agency fees, and that was just to take the property off the market ‘while we sort out the contract’. So, in a six-member household, that is £900 for 10 minutes’ work. In another agency, in the small print of the contract it was revealed that they would take £65 from each of the tenants for professional cleaning at the end of the contract, regardless of the condition of the house. This individual was outraged because the house that they inherited was in such a poor state that clearly this professional cleaning had not been carried out after the previous tenants left. Frankly, such activities, if they are going on systematically, are fraud.

‘So, how is it possible to say there was professional cleaning done if the kitchen is leaking and rotting, and that the ceiling collapsed within a week due to an upstairs leak, and the bathrooms reeked of mould and piss?’

Many people argue that the fee is the worst aspect of the relationship that they have with the letting agencies, and the legal advice I’ve had from the head of the legal service here in the National Assembly is that we do indeed have the powers to follow Scotland’s lead and outlaw letting agency fees. It should be the landlord paying the letting agency, not the tenant. Now, I know that the Welsh Government in the past has argued that this comes under consumer protection, which is not devolved, but that’s not the legal advice I’ve had. They say there’s a very strong argument that letting agency fees are devolved, so that the Assembly could pass a Bill including banning them. Following on from the success of the Agricultural Sector (Wales) Bill, which was adjudicated on in the Supreme Court, it is clear in his view that

‘The relationship between a "Landlord" and a "Tenant" forms a long-established and well-understood branch of the law' as being a service rather than a consumer relationship’. So, I would urge the Minister, not least because you need to recall that those on housing benefit end up having to pay the letting agency fee from their income support, because the housing benefit is already being applied to the max to cover the rent. So, that is causing a huge amount of hardship, and, frankly, the letting agencies are getting away with simply not providing a service in exchange for the fee. I think it’s something that needs to be stopped as a matter of urgency.

Thank you very much. I call the Cabinet Secretary for Communities and Children to reply to the debate. Carl.

Thank you, Deputy Presiding Officer, and thank you, Jenny, for your contribution this evening. I welcome the opportunity to update Members on the approach to modernising the private rented sector, which has played an increasingly important role in meeting people’s housing needs.

As Jenny says, rogue landlords come in many forms. A rogue landlord may be someone who fails to comply with the law through ignorance, someone who lets a property legally but pays no attention to its condition and potentially the dangers it may pose to its tenants, or somebody, indeed, who ignores the law and uses bullying and threatening behaviour to get what they want. There are many good landlords in the private rented sector, but its reputation has been damaged by the rogue element that the Member alludes to. I am pleased to say that the measures that we have introduced under Part 1 of the Housing (Wales) Act 2014 will help to address all these types of landlords mooted.

Rent Smart Wales will, for the first time, ensure that there is a comprehensive record of which properties are being let in the private rented sector and who has been licensed to manage them. It will be an offence for an unlicensed person to manage or let properties.

The first year has been deliberately light-touch, concentrating on raising awareness of the requirements of the new legislation. By the end of August 2016, around 20,000 private landlords had already registered, with some 34,000 landlords and agents having opened accounts, which is the first step in the registration and licensing process. Any landlord or agent wishing to let or manage properties has to also pass the fit-and-proper-person test. If someone cannot be considered to be fit and proper it means no licence. No licence means it’s illegal to manage or let properties. It’s as simple as that.

All landlords, agents and employees involved in letting and managing will undertake a training course, which will remind them of their obligations and signpost them to the resources of help. Of the people who have taken the course, 96 per cent of those who have completed the required training say that it has made them a better landlord. This means that Rent Smart Wales will not only tackle rogue landlords, but it’s helping to make all landlords better landlords. Being part of the scheme will ensure that they’re updated on laws relevant to renting out a property.

Once a landlord or agent has obtained their licence, a mandatory condition is compliance with the code of practice; the code sets out many of the statutory duties that landlords or agents are required to undertake. If they fail to comply, their licence will be at risk. Any landlord or agent who hasn’t complied with the legislation by 23 November risks breaking the law and being classed as a rogue landlord. We are therefore hardening our approach on non-compliance. Naturally, someone who is at the point of clearly taking action to comply has nothing to fear. However, landlords who do not comply, or fail to, will be subject to enforcement action.

We launched the second phase of our publicity campaign earlier this summer, and we are now widening the communications and activities with our partners. I’m glad that the Member saw it on the back of a bus while she was cycling in today. It’s obviously working.

In November this year I will bring into effect the enforcement regulations, which means an increasing focus on compliance, and an even sharper focus on action to tackle rogue landlords. Any landlord or agent who breaks the law will be liable to a fixed-penalty notice or a fine. If they remain non-compliant, they could face a rent repayment order and/or, indeed, a rent stopping order. Plus, they could lose the right to serve an eviction through a section 21 notice on a tenant. I will shortly be introducing the secondary legislation to make that happen.

We are working with Rent Smart Wales and local authorities to ensure that resources are available to fully enforce the legislation, and I pay tribute to the work that has been put in today by all our local authorities, but our action does not stop there. Retaliation eviction is an example of rogue behaviour by some landlords, and I’m pleased to say that this is also being addressed under measures taken and contained by the Renting Homes (Wales) Act 2016 should a landlord seek possession through the court. Following a complaint of disrepair by a contract holder, the court may refuse to grant the possession order should it consider that it was retaliatory in nature.

Contract holders will be provided rights within the contract that a landlord cannot take away or change. This will make it far easier for contract holders to hold landlords to account should they not adhere to their obligations in the contract. I recognise fully the issue that Jenny raised about making contacts. Sometimes, a disused e-mail address or a fraudulent phone number are not helpful at all in the middle of the night when the ceiling’s coming through, and this is part of the registration process.

Her final points: I note the suggestion that Wales should follow Scotland again around a ban on agents from charging fees to tenants. I’m still to be persuaded on this argument, not because I don’t agree with the Member’s intent, but I do worry about the serious risk involved in the process of simply transferring the landlord’s—. The agents will just simply transfer the fees to landlords and that increases the rent of the individuals that the Member refers to. So, agents are now legally obliged to publish their fees and face a £5,000 fine and potentially the loss of their licence if they fail to do so. But what I will do, and I’m grateful for the Member’s—the points that she raised today. And around the ability for Wales to legislate that, I will take some further legal advice and maybe the Member would like to share her legal advice with me. But, certainly, I will look at that again, and I will look at the perceived risk to tenants in this procedure should that transfer, because I wouldn’t want to see the fees—extortionate fees in some cases—just being transferred to the tenant. It would be just a misnomer in terms of the way we operate.

I would like to learn more from the evidence, from the experience, in Scotland before deciding whether these measures are necessary, but I’m grateful, again, for the Member raising such an important issue with us here today, and I will take this up with my team, and, hopefully, I can have some further discussions with the Member, who’s brought this short debate today.

Thank you very much, and that brings today’s proceedings to a close. Thank you.

The meeting ended at 18:31.