Item 7 on the agenda this afternoon is a statement by the Minister for Housing and Regeneration on changes to the park homes commission rate, and I call on the Minister for Housing and Regeneration, Rebecca Evans.

Thank you, Deputy Presiding Officer. Shortly before recess, I published the summary of the responses to our consultation on the park homes commission rate and outlined my intention to reduce the maximum rate. I am pleased to be able to provide Members with further details about the pace and rate of change and of the wider actions I propose to take to support the park homes sector. I'd like to thank everyone who took the time to respond to the consultation and the financial analysis work—there were almost 400 responses. I would also like to thank the site owners who shared financial information with our independent financial analysts.

Members will be familiar with many of the arguments on both sides of this debate. I am sure that we all want to ensure viable, well-managed sites and see them continue to offer an attractive lifestyle to people who choose to live in a park home. The issue of commission rates on the sale of park homes is one of those issues that remain polarised. It has been debated for as long as people have used park homes as a permanent residence. In the 1960s, rates were typically around 20 per cent, reducing to their current rate of 10 per cent in the 1980s. Over the last 40 years, the sector has been transformed; park home living today bears little resemblance to park home living in the 1960s.

Establishing a consensus about the way forward has not been possible because views are so polarised. And gathering sufficient evidence on which to base a balanced decision has not been easy. I've deliberated long and hard, and I have challenged my officials and the sector to provide more and better evidence and analysis to ensure that we find a balanced and proportionate way forward that best supports park home living.

The evidence that we now have supports the view that the value of a park home is a combination of the value of the home plus the pitch on which it is sited. A park home on its own costs less than one already sited, particularly if sited on a well-run, attractive site with good facilities in a sought-after location. The costs to site a home can be significant. This has been a fundamental part of the argument in favour of the commission rate over the years.

It is clear that the current commission rate impacts significantly on people who own a park home. For some, the loss of equity from the sale of their homes is becoming a barrier to being able to sell and move on to alternative accommodation or accommodation that is more suited for them. Commission may also be deterring potential buyers from purchasing a park home, as they worry about the implications of losing 10 per cent of its value if they need to sell in the future. All of this poses a risk that park home living might become less attractive and cease to offer an alternative lifestyle choice.

The independent financial analysis carried out for the Welsh Government shows that commission is an important element of income for site owners, and especially so on smaller sites. Any decision about changes to the commission rate must therefore balance the potential benefits and risks to both parties—park home owners and the site owners. If a site was to become no longer viable, the owners would need to consider how to change their business model in order to make it sustainable, usually by seeking an increase in pitch fees. The ultimate risk is that if an unviable sites close, it will leave park home owners without a pitch and having to relocate their homes. This can be a complex and costly arrangement, and homes without a pitch can have a reduced value.

I am committed to ensuring everyone can access suitable, good-quality, secure and affordable homes. Reducing the maximum commission rate will help to remove the financial barriers for residents who want or need to sell. It will also help to ensure that potential buyers are not put off buying a park home because they're worried about how it will affect them, should they need to sell in future. However, I am mindful of the need to avoid placing sites at risk of closure, whilst also seeking to protect residents from steep and sudden increases in pitch fees. It's my intention to reduce the commission rate to a new maximum level of 5 per cent. This will be done by reducing the commission rate by one percentage point each year over a period of five years. 

The Llywydd took the Chair.

The regulations to achieve this will be subject to the scrutiny of this Assembly by the affirmative procedure, and I will bring forward regulations at the earliest opportunity in the new year. I believe that this approach strikes a reasonable balance in protecting the interests of all parties. Reducing the commission rate gradually will help reduce the risks to the viability of some sites by providing site owners with time to adjust their business models to reflect this change, and I do accept that this adjustment may include increases in pitch fees for some. I have considered carefully the calls from some to use powers in the 2013 Act to restrict any potential increase in pitch fees, but I've decided against this course of action.

This process has highlighted a range of much wider issues relating to alleged poor practices by some site owners and variations in the implementation of the Mobile Homes (Wales) Act 2013. I intend to issue refreshed information about park home living, focused on delivering accessible and clear guidance to all parties. Working with the sector, I will develop best practice materials and will look at how we can strengthen the role of LEASE in providing advice. I will work with local authorities to ensure that they adopt consistent approaches to site licensing and enforcement. We have a fantastic example of collaborative working in the private rented sector with Rent Smart Wales as the lead authority. I will explore what we can learn from this model that might benefit the residential park home sector. 

Llywydd, we all want to see viable, well-managed sites that offer an attractive lifestyle choice for those who choose park home living. I believe that a phased reduction in the commission rate, supported by improvements in information, advice and support, and consistent standards and adherence to the current legislation, can help deliver just that.

May I begin by commending the Minister for a careful and thoughtful approach to developing public policy in this area? It is a complicated area, as you've suggested. We clearly need a strong business model for park home owners. At their best, park homes and park home owners create a pleasant environment in which to live. Investment in facilities such as roads, grounds, common areas, needs an income flow that is reliable.

Generally, I think the Welsh Government's study of this area has been rigorous and even-handed, though there are still evidence gaps, as you indicated, Minister. I feel that the Welsh Government is proposing a way forward that could, at least in the Chamber, gain a consensus, because we do need to strike a balance, it seems, between commission fees at the moment and pitch fees, and this needs to be based on transparency, fairness, accountability, business viability and flexibility, and there have been some encouraging signs of progress here, in terms of the co-operation you've had with the sector and their more candid approach to revealing costs, because that is very important. I would say also that some form of flexibility in the future, where people may want to commit to a commission fee or a set fee when they sell, and then not face, perhaps, an increase in the pitch fee to reflect the general service costs that many people, say, in rented accommodation will be quite familiar with—. And I think we do have to remember that up to 80 per cent of the resale value achieved on park homes is because they're in a park home site, and if those mobile homes were not there, then they would lose a very substantial part of their current value. So, these issues are complicated.

So, we will support the Welsh Government's proposals, subject to their regular review. This is likely, in my view, to shift to higher pitch fees, and that will need careful monitoring to ensure that they're fair, and, as I have said, they need to be accountable and transparent, and also consult with the mobile home owners—very, very important. So, I have this question anyway: you say that you will issue refreshed information about park home living, and I just wonder whether it would be possible to go further and issue formal guidance so that it would have greater strength in regulating the key actors in this area, from the park home owners but also the local authorities that have enforcement responsibilities. But, in general, I do want to acknowledge that a lot of hard work has gone into this, and I do think you've come forward with a viable solution—certainly one that can now be fully tested—and the way you seek to introduce it by a 1 per cent reduction over five years, I think, again, is prudent. So, in general, I would give a welcome to your statement this afternoon.

Thank you very much for your welcome for the statement. When I said in the statement that I had given long and hard deliberation to this issue, then I was absolutely serious because this has been a very difficult issue in terms of gathering the information that we need, in terms of both evidence and the views of the sector, which are so polarised that it has been very difficult to find a way forward that is fair and reasonable and proportionate, bearing in mind all of the different concerns that have been raised. But I think that we have found a way forward that will not be everything that everybody wanted, but, when you have such polarised views, it is very difficult to get to that kind of place.

It is important that we consider the role of pitch fees. I did decide against restricting pitch fees within the measures that I intend to take forward, and that is because I think that there are some important checks and balances already in place to ensure that pitch fee increases are proportionate. Any rise in pitch fees should be agreed between the site owner and the park home owners and the residents in the first instance, but if that agreement can't be arrived at, then the issue can be taken to the residential property tribunal for a determination. I think that is an important backstop, really, both for the site owners, should they need to increase pitch fees, but also to the residents as well to ensure that any increases in pitch fees are fair. Generally, an annual pitch fee review should not impose increases that are exceeding the relevant rate of the consumer price index without the residential property tribunal being engaged. So, again, there is that backstop, should there be any above that CPI level increases proposed.

You also mentioned the wider package of reforms, really. Actually, at the start of your contribution you said that, at its best, park home living can be a very attractive thing, and that's absolutely right, but, in our consultation and the work that we've done engaging with the sector, actually we've heard of stories and examples where park home living is not at its best by any stretch of the imagination. Many park home owners are excellent people, doing an excellent job for the people living in their park homes, but equally we have heard of some stories where the park home owners, despite the fit-and-proper-person tests that exist, are not providing the kind of service that we would want. That's one of the reasons why I intend to work with each of the local authorities in Wales to establish whether or not there is an appetite to create a voluntary lead authority amongst the local authorities in Wales to provide leadership and oversight on the issue of park home licensing. Officials are already starting to have those conversations with local authorities, and I'll certainly give further consideration to the suggestion that we introduce strengthened guidance as opposed to simply strengthened advice and information, in terms of the next steps forward.

The park home issue is an issue that does divide opinion, and I remember this well from my time on the Petitions Committee, where we had quite a debate at the time, a few years ago, from those who were park home residents and from those who run park homes. This is where we're at now, I think, in relation to this statement. So, there is a direct conflict, I think, between those running the park home sites and those who want and expect not to be penalised by choosing an alternative lifestyle. I want a healthy sector for the residents, but I also want that for the site owners and to try and resolve any issues in a civil way. I think all of us here today want to try and strike the correct balance in relation to this particular issue.

I do have some questions relating to the statement, and it's already been raised, I think, which is the biggest concern—the worry you express regarding pitch fees and any increase, which is probably potentially more than a possibility, I think. I do believe we have to guard against this prospect and any exorbitant and excessive fee increases. So, I'd like to ask you whether or not, from the financial analysis completed, you do expect a pitch fee increase and if you've made any estimate of what that might be. Given that you seem to expect a pitch fee increase in the statement—correct me if I'm wrong—is there any reason that you've decided not to use mechanisms available to limit fee increases now? I know, and I've heard your response to other Assembly Members, about the fact that there are talks that can happen between park home owners and those who run them, and there are legal avenues. But, of course, if this statement is going to potentially lead to an increase, then any thoughts that you have had on that spike and how that will affect the sector would be useful to hear or to be expanded on here today.

Again, like I said, I think it's important that we strike a balance, and I appreciate that some park home sites do rely heavily on commission sales, and it's in our interests to ensure that they don't close, obviously. Could you perhaps commit to revisiting this issue next year, if necessary, to make a decision on the nature and size of any pitch fees, if those are increased across the board as a result of any changes that have been announced here today?

Finally, could I ask you to outline how you expect local authorities to increase or improve inspection and licensing regimes? I note that, in your statement, you said that you would like to promote better working. So, could we have an idea as to how that would look in practice? You do reference Rent Smart Wales. How can that be used as a way to ensure that this area is more successful in how they work, ongoing?

Thank you very much for those questions. During the consultation process, there were various issues that did come to light that were not directly related, necessarily, to the commission rates, but they were issues that local authorities need to be very much aware of in considering, as we move forward with this issue. Lack of information and understanding, even, about the mobile homes Act was a clear issue amongst people who were living in mobile homes, and also, confusion about who should be paying the fee to the site owner, confusion about where to get information, uncertainty about what local authorities can and can't do, uncertainty about where the level of responsibilities lie, and also confusion amongst some park home owners about what their own responsibilities were as well. So, I think there are several issues there, and several avenues for us to be pursuing.

In terms of what we would expect local authorities to do, I'll be working with local authorities to understand better their experience of the implementation of the mobile homes Act, to explore again: is it better guidance that is needed, or is it a more co-ordinated approach? I would hope that local authorities would have the discussion with officials about the idea for a lead authority. I think that would be helpful in terms of applying some kind of consistency across Wales. It's not something I would seek legal powers to do, but I think that it is something that can be agreed through local authorities. We do, as you say, have the example of Rent Smart Wales, which I think has been successful in terms of changing the landscape of the private rented sector, changing people's understanding of roles and responsibilities, changing people's understanding of who can be held to account and how, and so on. So, there's lots that we can learn there from the Rent Smart Wales experience, in terms of how we move forward with the issues about park homes.

Something that's become clear to me, actually, is that commission rates are only a small part of the issue, but they have become very much a focus for people's discontent in the sense that people who are, particularly, living on park sites where they don't have a good relationship with the park site owner feel extremely resentful that 10 per cent of their asset will be going to that individual or the individuals whom they don’t have a good relationship with, should they need to sell.

Something as well that we've been very mindful of is that many people who live in park homes are older. They see it as a great retirement option. Many people—not all—on park home sites are also vulnerable people. So, there needs to be an improved level, I think, of understanding about how we can better protect people who are living on park homes sites and work with them. I would encourage them to consider setting up residents' associations, where they are not already there, in order to pool their collective bargaining power and their influence power. That's something, again, that we can provide information on.

It surprised me, when I first became aware, that when you buy a park home there's no conveyancing involved in the way that there is when you buy a house. People can buy a park home with almost less information than if they were buying a second-hand car, which is a big worry in terms of the kind of commitment that people are taking on when they do buy park homes and don't necessarily have the information that they need in order to make that purchase.

So, I think that there's lots to do in terms of making park home living attractive, and it's important that we do that, because park home living actually can provide relatively affordable homes within some of the very high-cost areas of Wales, and they can also provide wonderful communities in which to live as well. We’ve had some fantastic examples in our consultation and our engagement of park home sites that are genuine communities, which people are very evangelical about living in. So, again, we balance that with the bad stories that we hear of poorly managed sites as well. So, there’s plenty to do in terms of working with those local authorities and in terms of ensuring that people have the kind of information and advice and support that they need when entering into these kinds of engagements, or agreements, I should say.

Thanks to the Minister for your statement today. I appreciate, from what you’ve said and from what the other contributors have said, that this has been something of a long-running issue. As you mentioned, opinions have tended to be polarised, particularly on the one particular issue of the commission rates. So, it has been a difficult job for you. I can see that that would be the case.

Now, you’ve stressed the need for balance—the need to strike a balance between differing interests—in your statement, and I think that’s of paramount importance, so I agree with you that that was what you needed to do. There is a need to protect the interests of the whole park home community. After all, we don’t want well-run parks to close down. You mentioned that many of the people who live in park homes tend to be older people. Well, there is already a shortage of suitable accommodation for older people in society in general, so we don’t really want to exacerbate that problem with contributing to well-run park home sites actually closing down. So, we do need to be very mindful of that danger.

I was made aware of some of the issues around park homes about a year ago when I was invited to visit one near Culverhouse Cross on the western fringe of Cardiff. So, I went on a bit of a tour of the park. I had fairly free access to various residents—they weren’t by any means hand-picked for me to speak to—and, in general, the residents seemed to enjoy living in that community, and they seemed to very much value the village-like feeling that they had from living there. So, we do need, again, to be aware that there are many well-run park homes where people are enjoying that particular kind of lifestyle. Now, I appreciate that that isn’t the full picture. There are probably homes that are not run as well, and you alluded to differing experiences that people have. I’m aware that there are poorly managed homes too, so we need to address that.

Now, the financial elements are interesting, because you’ve stated that you were given a lot of access by the site owners—they very much co-operated in allowing your independent financial analysts to look at the accounts. So, you did have those accounts available, and that was helpful in leading you to make a more informed judgment. So, I’m interested, actually, in your reasoning for lowering the commission on the sales. Now, I appreciate that you’re saying it’s going to be done over five years, so that is better than something sudden, but all the same, it is lowering the rates, and I wondered at the logic of it, given some of the other factors that you’ve said in your statement. You’ve pointed out that the average in the 1960s was around 20 per cent commission and that’s gone down to 10 per cent already. You’ve also mentioned a crucial factor: that the value of the homes is to a large extent made up of the pitch itself. So, by that logic, it’s sometimes puzzling to wonder why you might want to reduce the commission, because you’ve said that there’s the issue of the pitch fees, so if the site owners are now reasonably free to raise the pitch fees, the danger is that the residents could be facing increases in pitch fees, so that is then going to have to be managed as a separate problem. And if pitch fees aren’t raised, because they do have to go to these tribunals if they go above the consumer price index, then the danger, which is actually in your statement, is that many homes will actually not be viable and will close down. And also, when people lose their pitches, they could actually lose more equity in their home because they're having to leave their pitch. So, I wonder at your overall analysis of all these factors in deciding to reduce the commission. So, I would wish you to put a little bit more light on that.

I agree with you that residents' associations are always a good thing if they don't have them, so encouraging that is good. And your ideas about having more guidance are good, because I thought—now, this is something where you did educate me today—that these were relatively visible fees. I thought that this was not similar to things we've discussed recently here, like hidden freehold charges and access road charges. I thought that people, when they entered into these financial agreements, understood that it was 10 per cent commission, but from what you've said, there may be a lack of knowledge and people may be entering, again, like with these other issues, into financial agreements when they're not fully aware of what they're signing up to. So, I totally agree with the need to perhaps educate these people, and if you can put any more light onto that, I'd be grateful. Thank you.

Thank you very much for those questions. I'll start where you finished, in terms of the visibility of the requirement to pay the commission rate that people agree when they enter into their contract. Well, it is within the contract, but this goes back to the kind of issue I was talking about in response to Bethan Sayed, where there is no conveyancing. This is essentially laypeople, in most cases, entering into what is a very serious contract about one of the largest purchases, or the largest purchase, I imagine, that they will make in their lifetime, but they don't have the kind of legal advice that people who are buying a non-park home house would certainly expect to be seeking out. So, there's certainly an issue there. I mean, I've heard of cases, through the consultation period, where people only became aware of the commission rate, actually, when their friends sold their properties. So, this is something that many residents are not aware of.

In terms of why we want to reduce the commission rate, really it's about making and ensuring that park home living does continue to be an attractive choice for people. Again, that's partly about ensuring that we have affordable accommodation for people in what are often expensive rural areas where people who are often retiring into these homes would be priced out of the market. Park homes are often really suitable for people, as they get older as well. It's very rare to find bungalows, for example, on the market. There's a big lack of bungalows within the sector when people are trying to purchase homes, whereas park homes can often be really suitable for people as they become older. So, it's about helping people, really, move in and out of the park home sector, and keeping it a vibrant offer for people in terms of where they would like to live.

Bethan Sayed also mentioned the financial analysis work, as you did. Originally, we had 17 businesses offer to open their books to us, and I think that that is fantastic and it shows how far we've come in terms of the kind of relationship that we have been building up with the sector over many years. In the event, we were able to look at the books of 10, for different reasons—businesses changing hands in some cases prevented us from looking at the books, or the owners being unwell and so on. But having 10 was really good. What I will say, though, is that those 10 weren't necessarily representative of the sector as a whole; they certainly represent the micro and small end of the park home sector, and don't give us the picture, really, of what's happening in those park home sites that are much larger. But what the evidence did suggest strongly was that these smaller sites do rely on their commission fees in order to be sustainable, which is why we've taken such a phased approach over such a long period—five years—in order to give businesses no kind of shock to the system, but the ability to plan over that period.

Some businesses may look to alternative or new sources of income in order to increase the income of the site and may decide not to increase pitch fees, but there is that reassurance there that any pitch fee above the CPI would have to be agreed by taking it to the residential property tribunal. There would be an opportunity there for all of the issues to be considered—the viability and sustainability of the site, the views of and the affordability for tenants and so on—and all of these issues will be taken on a case-by-case basis by the tribunal. So, the tribunal will not make a ruling for Wales, across Wales. It will be certainly on the individual site basis.

I think I've managed to answer all of those questions that were raised.

Can I thank the Minister for your statement today? Following extensive consultation, as you said, on the commission rates for park homes and the impacts for park home owners and park home businesses in Wales, I've had strong representations regarding the current 10 per cent commission rate for park home residents who often find themselves constrained by their financial circumstances, as residents of park homes, in terms of resale costs. So, I welcome the measured way you've responded to this challenging situation with a reduction to 5 per cent over a period of five years. I also welcome the emphasis you've placed on the wider issues regarding park homes, which are critically important in terms of the engagement I've had over the years with park homes, in terms of best management, facilities, monitoring and inspection.

But, concerns have also been raised with me by park home residents regarding the impact of this reduction—for example, concerns that park home residents could be subject, as has already been said, to unacceptable rent increases, and whether those who paid the 10 per cent commission will be transitionally protected from those rent increases.

I thank you very much for those points. I certainly know that you, for many years, have been a champion of the park home residents within your own constituency. I know we've had meetings to discuss the concerns that your constituents have been raising with you as well.

I do hope that the fact that there is this backstop of the residential property tribunal will give some assurance to people—those people who are managing sites, and the owners of the sites, but also owners of the park homes as well—that any increases in pitch fees will be reasonable and proportionate, and certainly anything above the consumer price index would be something that would necessarily have to be taken to the tribunal.

I think it's important to remember that CPI was agreed when the Mobile Homes (Wales) Act 2013 came into force, and it was chosen as CPI because we realised that many residents are on fixed incomes from pensions or benefits, and those themselves are linked to CPI. So, that decision was undertaken in the first instance in order to be fair to the residents. Again, we have the five-year period now in terms of moving down to the 5 per cent, which will be halving the commission rate, and it will be, certainly, the lowest commission rate in the UK. So this will give businesses time to adjust, but also home owners time to consider their options as well.

Finally, Joyce Watson.

Thank you. Diolch, Llywydd.

I thank you for your statement. We know that there are about 5,000 people in Wales living in park homes, and that the sector is heavily concentrated in Mid and West Wales, having around half of the country's sites in that particular region. So, for that reason, during the consultation period, I set about visiting and meeting owners and residents and it does need restating that there are considerable divides between the opinions whether you're a resident or whether you're an owner. It's not only a deep divide, but it's a long-running one, and it's been rumbling on for years and years. I remember sitting on the Communities, Equality and Local Government Committee and scrutinising the 2013 Act that gave more rights to residents, but of course didn't remove the 10 per cent. I was also a member of the Petitions Committee that Bethan talked about earlier.

I do welcome your phased approach, and I think that most people will do that. But I think the things that perhaps need addressing now—and I'm not going to ask you to reiterate the answer that you've given about the potential for increased rent—the question I'm going to ask, because you've mentioned it several times, is the right to be able to go to a tribunal, and whether that is cost-effective for people who might find themselves in this position, and, if you don't know the answer now, what the price of going down that road might be for a resident who might already be struggling.

I did see sites that were incredibly well run—I have to say that. I didn't visit any that were badly run, but I do know that there are sites that are badly run, and I do know that they have absent owners and poor management usually. So, I suppose my question there is about trying to enforce the rules that we already have. I do remember the fit-and-proper persons within that Act, whether it was an owner or a manager or an agent, that they had to meet that criteria as a fit-and-proper person to run that site. I know that the oversight of this, if I remember it right, rested with the local authority. So, I suppose that, in order for us to say that we've got legislation in place that ought to deal with the issues that people are already concerned about, we also need to know that that is working in the way that we hoped it would at the time of passing that Act. So, whether we've got any update on that would be useful. If we haven't, if we could look forward to having it any time soon.

Great. Thank you very much for those comments. Again, I know that we've met to discuss the concerns that you've heard from residents in Mid and West Wales, both from the perspective of the people who are park home owners, but also from the perspective of the people who own the sites as well. So, you've certainly, I know, heard both sides of the argument and recognised, as I do, that there isn't any point really at which those views will come together. Overall, there is that clear and consistent divide. Most residents, of course, as you can imagine, would support the reduction or abolition of the fee, whereas all of the site owners who contributed to our consultation wanted to see the site fee maintained or the commission rate maintained at 10 per cent. So, there is that divide.

You're absolutely right that it has been some time now since the start of the implementation of the 2013 Act, and I do think that now is the time to be having those conversations with local authorities and others to understand really, in terms of monitoring and the implementation of the Act, what more can be done to ensure that people in park homes are getting the fair deal that they expect, and are being treated with respect and being treated with fairness by the people who own those park home sites as well. So, this is something that officials have already started their engagement on with local authorities who have been doing that, but certainly some of the experiences that we've heard through our consultation process do certainly make me think that actually, on some sites, people are not getting the kind of service that they deserve. That issue of how efficiently the fit-and-proper-person test is working for people needs to be something that we should be exploring in greater depth, and we'll certainly be doing that.

In terms of the costs for tribunal, I was desperately trying to put my hands on the table that includes all of those costs, which depend on the number of parties involved, but I will certainly write to you with the detail of that.

Thank you, Minister.