The next item is a statement by the Minister for Housing and Regeneration, and I call on her to make her statement on the Renting Homes (Fees etc.) (Wales) Bill—Rebecca Evans.

Diolch, Llywydd. Yesterday, I laid the Renting Homes (Fees etc.) (Wales) Bill, together with the explanatory memorandum, before the National Assembly for Wales. I am pleased to have this opportunity to make a statement about the Bill. Members will know that we are committed to removing barriers to entering and moving within the private rented sector. 'Prosperity for All', our national strategy, recognises that people cannot live well without good quality, affordable homes. We want to make renting privately a positive choice that is widely accessible. To that end, I believe any costs associated with renting must be reasonable, affordable and transparent.

Sadly, evidence shows that the current fees charged by letting agents often present a significant barrier to many tenants. This is especially so for people living on lower incomes, including young couples starting their lives together, students living on restricted incomes, or single parents struggling to make ends meet, for example. Fees can result in individuals or families borrowing money from friends or relatives, struggling to pay bills, or getting into debt. They may become overdrawn or, in the worst cases, may turn to payday loans or doorstep lenders. We know that tenants often experience the same level of service from agents, but see wide variation in what they are expected to pay. It's questionable whether the costs incurred are consistent with the fees that tenants are required to pay. And, in any event, landlords also pay agents for lettings and property management services. The requirement to pay these fees also makes it harder to plan for a tenancy, which in turn affects the affordability and accessibility of the private rented sector. Tenants are not inclined to challenge or bargain with agents, often due to desperation to find a home in the face of competition from other tenants. Tenants are also in a position where there is almost always only one agent managing a property, meaning that they have no choice but to pay the fee demanded from that agent if they want to rent the property. 

To address these concerns, the Bill will make the costs tenants face in future significantly lower and simpler to understand. The Bill is drafted in the light of the Renting Homes (Wales) Act 2016, and therefore applies to contract holders. No longer will they be charged for an accompanied viewing, receiving an inventory, or signing a contract. No longer will they be charged for renewing a tenancy. And no longer will they see a range of services added to their contract as check-out fees when they move out. Payments will be much more predictable, limited to rent, security deposits, holding deposits and payments in default. I expect most contract holders will only ever need to think about paying their rent and finding a security deposit. The Bill also guarantees that holding deposits are capped to a week’s rent. This is the level that most tenants currently pay, but I want to ensure that the costs they face at the beginning of their rental contract are kept to a minimum. Similarly, most tenants currently pay the equivalent of around a month’s rent as a security deposit, which I think is reasonable. However, the Bill provides for a regulation-making power regarding the amount of a security deposit. This safeguard has been provided to ensure we can avoid costs rising to an unreasonable level.

Many agents and landlords will recognise the purpose of the Bill, which will ensure that we see the change in practice in the private rented sector that I know Members have been calling for. If, in future, an agent or landlord requires payments that have been prohibited—that is, payments other than permitted payments—they will commit an offence. We have also provided local housing authorities with powers to investigate offences and to prosecute people who obstruct those investigations, for example by providing false or misleading information. 

The implications of committing an offence are serious. Local housing authorities may offer a fixed penalty notice of £500 to discharge liability to a person they believe has committed an offence of requiring a prohibited payment. If the penalty is not paid, prosecution through the magistrates' court may follow. A person guilty of an offence of requiring a prohibited payment is liable on summary conviction to a fine. The Bill requires a local housing authority to notify the conviction to Rent Smart Wales, the licensing authority designated under the Housing (Wales) Act 2014, as soon as it becomes aware of the conviction. Contravening the ban on fees may mean the withdrawal of a licence to carry out lettings or property management work. Therefore, it is in a person’s best interests to ensure that they comply with the Bill. Let me be very clear: agents and landlords might be putting their business at risk if they are convicted of an offence.

It is my pleasure to introduce this Bill for scrutiny by the Assembly. I very much look forward to engaging with the Assembly and the Assembly's committees over the coming months on a Bill that I hope will prove to be an important milestone in improving the lives of hundreds of thousands of people in Wales who currently rent in the private rented sector. Diolch. 

Can I begin by broadly welcoming this legislative initiative? It follows the operation of a similar measure in Scotland from 2012, and there's proposed legislation at Westminster; I think that was launched last month. So, there's a clear public need for reform in this area of law, and the Bill will seek to create a more transparent private rented sector and market, and we do support those aims. 

The private residential sector market offers an important housing option and currently accounts for about 15 per cent of the dwelling stock here in Wales, and that has more than doubled in size since the year 2000. A recent survey of private renters suggests that nearly one in three households who rent their home privately do so through a letting agent. So, a lot of people in Wales—about 57,000 households—live in homes let through agents, so it's a very significant sector. The vast majority of these tenants will have paid letting fees. Last year, one in three tenants of letting agents paid over £200 in fees to begin a tenancy, and this means that to rent an average three-bed home, for instance, in Cardiff would require more than £1,600 in set-up costs, including rent in advance and bond. So, significant change is needed across the sector—I don't think that can be denied—and we are in a good position now to make these changes as we've also had a change to fee structures as a result of the renting homes Act, and I do think it's time to move to more comprehensive reforms. So, we are supportive of the principle.

I think it's important for the Government—and, indeed, in the scrutiny process, for the committee—to look at the experience in Scotland. I know their legal situation was different, but since an effective ban—one did technically exist before—on many of these fees came into force in 2012, by the Scottish Government's own data, there was, in the 12 months that followed the ban, an increase in rents by 4.2 per cent. So, I think we've got to be careful about how some of these costs get recirculated in the system. So, it's really important, I think, to distinguish those costs that are legitimate from those—if I can use the appropriate phrase in this context—that are rent-seeking; they are getting money out of people who are in a vulnerable position, and are therefore charged all sorts of bells and whistles when they wind up a tenancy, or whatever. So, it's very, very important that we learn from experience. 

I think there are some reasonable alternative approaches that have been raised, and I think we ought to, in the spirit of open scrutiny, look at these. Just to mention a few—and I think this has come up in other legislatures—there's the spreading the cost alternative, where those fees that are seen as legitimate are spread perhaps over the tenancy or the first six months of the tenancy, so you don't have this terrible upfront burden, which does create a really difficult situation for many households, particularly those that are in financial need, for instance. But, inevitably, in a big change in your life situation, large upfront costs are difficult to manage.

I think the Residential Landlords Association has also engaged in this process and come up with some alternatives for consideration. Some of these are ones that could be accommodated even if we have a much more regulation-based approach, but they have urged the Government to use the powers under the Consumer Rights Act 2015, for instance, so that fees get displayed more prominently, and if they are displayed more prominently I think that those that are manifestly unfair are challengeable. So, I think that's an interesting idea. I think that we should be open to those in the sector who are deeply involved, and that includes management agencies, because many of them do a thoroughly excellent job and are important for the effective working of the market, but also the landlords who are seeking a system themselves that has an appropriate level and fair costs and a market system that is reasonable to them. Because, in this reform, we are kind of trying to shift the balance to landlords seeking those costs and negotiating effective services with the letting agencies, so we need to look at that.

Can I just conclude? I think this is a very important piece of legislation. I'm sure it will get widespread support, but, obviously, we will want to examine it fully and see how we may want to develop things now the debate has started. Thank you.

Thank you very much for those comments and questions and for your recognition right at the start of your contribution that, really, there is a public need for this legislation, which has been acknowledged across the UK, and certainly a public need to increase the transparency within the sector and to allow people to move into the sector and between different properties within the sector as well, because currently the fees are a barrier to doing that.

You also recognised how the private rented sector is an increasingly important part of the housing landscape here in Wales, mentioning that the size of the sector has doubled since the year 2000, representing now 15 per cent of the housing market here in Wales, and we recognise that that is going to become increasingly important as the years move on as well. So, it's really important that we do continue the work that we've begun through our renting homes Act and other pieces of legislation and policy to ensure that the sector is an attractive one, that it's accessible and that it is fair and transparent. And this piece of legislation very much fits into the kind of approach that we've been trying to take thus far. You also gave some examples of the kinds of scales of fees that people might be required to pay in advance of accessing housing. For a three-bedroomed house in Cardiff, it's over £1,000 upfront that people would have to secure, which is a huge amount of money. It could be extremely prohibitive for large numbers of families to be able to come up with funding like that in the first instance.

So, this public need is recognised UK-wide, and we are looking really carefully at the situation in Scotland, which has passed legislation twice on this issue, as you say: once, in the first instance, which wasn't effective and, secondly, back in 2012, to tighten the rules and make it a much more stringent and tighter piece of legislation. It is a fact that, following the introduction of the legislation in Scotland, there was an increase in the level of rent that people paid. I know that there was also a scrutiny committee in Westminster that looked specifically at that and couldn't find conclusive evidence that the legislation was directly responsible for the increase in fees, but, nonetheless, it is something that we are very alive to—the fact that there could potentially be an increase in the level of rent, I should say, rather than fees, as a consequence of this legislation. However, equally, in our consultation, we understand that people recognise that there could be an increase in rent, but, actually, a small increase in rent would be more palatable to them in order to be able to plan their household budgets and so on, so it is something that we are alive to and something I know committees will be taking a close interest in.

I have had a discussion today, in fact, with the RLA about their particular concerns regarding this legislation. Clearly, they come from a strong viewpoint of representing their membership and wouldn't want to see landlords disadvantaged by this piece of legislation. It is likely that landlords' fees would be increased; that's certainly something we recognise within our regulatory impact assessment as a result of letting agents looking to recoup money from elsewhere. But, also, landlords have significant power in the sense that they can usually shop around to find a letting agent who they feel will best represent them and do so in a way that provides them with value for money. I know the RLA have also put forward other schemes such as—or other suggested schemes—an insurance-type scheme, for example. I think whichever path we take forward—and our proposed path, of course, is within the Bill—it has to be one that doesn't disadvantage people who are on low incomes, because that's precisely what we're trying to avoid.

You mentioned the the Consumer Rights Act 2015, and that, again, is one of the Residential Landlord Association's proposals in the paperwork that they've submitted with regard to this Bill. The Consumer Rights Act wouldn't be able to deliver what we believe that we need in order to make the private rented sector affordable and accessible, because transparency is one thing, but it doesn't necessarily equal fairness.

Charges that contract holders face are a significant barrier to many tenants, and the 2015 Act wouldn't be able to address the existence of large, upfront fees or renewal fees, which our legislation seeks to address as well. That said, obviously, I really do welcome the engagement that we've had from the RLA, and all of the other representative bodies in the process of getting this far with the Bill, and their constructive comments that they've made to our consultation process. I'm sure that that kind of engagement will continue as we move through the scrutiny process.

Plaid Cymru has been calling for this action to be taken for some time, and I'm pleased and grateful to the Minister for introducing this Bill and for the advance notice she gave us of this information. And I'd like to thank her for taking the time to discuss this with me last week, although I haven't read everything yet in relation to the explanatory memorandum, but I will be taking it home—bedside reading. 

In principle, this is a positive and welcomed step forward: renting is no longer a lifestyle choice, but a life necessity for many people, particularly younger people. Given the current state of the housing market and the economic condition that many people find themselves in, renting could well be a lifetime requirement for some, and what is important to recognise is that renting is not a cheap option. The cost involved with moving into a PRS home can be exorbitant. A listing this morning I saw in Cardiff alone had a charge of £318 for the first tenant, plus £18 per extra tenant or guarantor, with no mention of any extra charges for credit checks or ongoing services, and another I saw recently included a fee of 30 per cent of the monthly rent plus extra fees per tenant for credit checks. This is a major barrier for people, particularly those with no savings or access to credit.

We are witnessing a market failure, as I've already seen in your document, and when there is market failure, it needs to be corrected by Government or the sector itself, and since the sector has not been forthcoming, it requires Government intervention. I won't go through all the statistics related to the private rented sector here, as we have discussed these at length, and I'm sure we will again. So, I'd like to seek some clarity on some aspects of the Bill that I believe are unclear.

Payments in default will continue to be permitted under the Bill, which I have some concerns over. I understand that the consultation responses indicated that respondents wished these to continue, but I'm concerned that revenue lost by the removal of upfront fees could be recouped this way over the length of a contract. If someone damages a property during the contract, they should be charged to repair the damage, but how often could charges on top of repairs be levied under this Bill? What if there is a contractual obligation for the—and I quote—'proper maintenance of the property'? That could be subjective, and it could result in unfair charges, so I'd like the Minister to potentially reconsider this during Committee Stage, or at least be open to clarifying these payments and others related to the fault of tenants.

Could you clarify the arrangements relating to tenancies that fall through through no fault of the tenant? Will the landlord or agency get to keep a proportion of that deposit? I welcome the regulation powers under the Bill that seek to ensure security deposits do not rise as a result of this Bill. But perhaps you could confirm whether this will be a six-week cap or a four-week cap. It does seem clear in the Bill what the permitted charges will and will not be, but I would like you to confirm what the situation will be related to ongoing services. For example, if a tenant loses keys, or if there is a change of personal details or circumstances, will fees be permitted? I understand that it is reasonable for a tenant to expect to pay to replace a lost set of keys, however I would like to be assured that the costs related to such services will not rise or be unreasonable.

I understand the biggest worry with this legislation is the redistribution of costs to tenants. I wonder whether or not you could comment on the example from Scotland, where despite fees being abolished in 2012, there was an average rent increase of 5 per cent over the next four years, compared to 9 per cent across the UK. So, actually, Scotland was lower than the rest of the UK. Could I ask whether you expect landlords to pass on all or some of those costs associated with the abolition of fees to tenants in Wales, and if so whether or not you've considered this, particularly when it comes to people renewing a contract who will not see as much benefit in this legislation as those who move frequently?

I just wanted to finish on financial education. I noticed from the beginning of the explanatory memorandum about affordability and about people having to take on loans, and I recognise we are trying to take something away in terms of those barriers in this legislation, although there may be unintended consequences. But I haven't read it all to understand if you're going to be increasing financial education or support to tenants so that they will be able to understand this, they will be able to empower themselves to make any complaints where that needs to happen, and to ensure that they can ultimately afford the tenancy ongoing. I think where we see the possibility of talking about financial inclusion, we should do that, and I think this Bill may be another avenue to be able to do so.

I thank you very much for those comments and also recognise that bringing in legislation to this effect was a Plaid Cymru manifesto commitment. As it's something that the Conservative Party are taking forward in England, and I know it's something that UKIP have spoken about in favour of before, I think that it's good that we have cross-party consensus on this particular piece of legislation, although I fully expect the robust scrutiny that will be coming as we move things forward through the Assembly.

It might be helpful if I just outline some of the summary of costs that we have published in the RIA, and that demonstrates, really, how we would expect the removal of the fees charged to tenants to impact on other parts of the sector, such as landlords and the letting agents. We estimate the likely costs and benefits to tenants, landlords and letting agents in the RIA, over a five-year period, in order to give us a good understanding of how things might impact the various different interests.

Tenants, we believe, are expected to save between £16.7 million and £38.6 million over this period through no longer having to pay those letting agents' fees. So, the essential estimate is that £24.1 million would be saved to tenants. However, we do recognise that they may experience an increase in rent from the Bill in the first year of implementation. We estimate that at around £2.9 million. But, then, we anticipate that they'd save £7.5 million over the period from no longer having to pay those letting fees. And the net saving, therefore, to tenants is estimated to be around £4.6 million.

There may be costs to letting agents of up to £6.6 million in the first year, but these, again, might be offset by increasing the fees to landlords by about £5 million, leaving a net cost to the letting agents of £1.6 million. Costs to the landlords in the first year we expect may be £5.8 million, either from not being able to charge fees, or from increased charges that they experience from the letting agents. But these, then, may be offset by £2.9 million by increasing rent, so the net cost to landlords is estimated to be around £2.9 million.

So, it's very much one of those situations where, when we take action in one part of the sector, there are knock-on implications for the others. But we've tried to come to a good understanding of what those might be, through independent research that we've done, alongside the consultation responses that we've received as well.

In terms of payment by default, I think it is right that landlords should be able to recoup costs or to recoup money when their tenants have been found to be in breach of their contract. You gave the example of losing keys as one way in which landlords might seek to recoup some of that money from the tenants. The cost of lost keys would be on the face of that contract, so there should be really, really good transparency, in the future, for contract holders to understand exactly what the cost might be for them if they were to be in default of their contract in any way.

You asked about security deposits and how much they might be. We didn't consult specifically on what level security deposits should be set at in the consultation process, and therefore we don't suggest putting a figure on the face of the Bill. Now, that's one of the ways in which our legislation differs from the legislation in England. One of the things I'm really wary of is not putting on the face of the Bill the level of the security deposit, because we could, unintentionally, have the consequence of raising the actual level of security deposits as well, because there is—. My understanding of it is that it's around four or five weeks. So, in England, where you've got six weeks on the Bill, you could potentially be pushing up that cost, which is something that we don't want to do. It does give regulation-making powers, though, in the Bill. So, if, at a future date, we are of the opinion that security deposits are rising unacceptably and becoming unaffordable, then legislation could be brought forward, following a consultation, on that as well.

In terms of changing details, again this is another area where our legislation differs from that in England. In England, there is a charge on the face of the Bill, where there would be a £50 charge or 'reasonable costs' that could be charged for a new joint tenant, for example, to be added to the names within a tenancy agreement. It's not our proposal to add that on the face of our Bill, because we think it would be difficult to manage, both initially and over the long term, and quite what is meant by 'reasonable' could lead to disputes between landlords and contract holders unnecessarily, because it's not a huge or onerous amount of work to add a new contract holder to the details of a contract as well.

In terms of other differences between the legislation that we see across the border in England, there are some enforcement arrangements that differ quite significantly. Again, I'm sure that committees will be paying particular interest to the different approaches that have been taken in our different nations.

I think education is very important, both for the tenants—and I think there's much wider work to be done, actually, in terms of tenants and financial inclusion—but also in terms of the landlords and the letting agents who will be subject to the legislation. And this is why Rent Smart Wales puts us in a really good place, because we're now in direct contact with over 90,000 landlords and over 2,500 letting agents, all of whom are able to receive up-to-date, good-quality information and advice from Welsh Government on their responsibilities. But I think there's lots to learn in the private rented sector from the great work that's happening in the social rented sector, in terms of supporting tenants to better understand their financial responsibilities and the wider opportunities for financial inclusion activities. I've been really impressed by some of the work that we've seen going on through social landlords, in terms of supporting tenants with financial literacy, digital inclusion and a whole wide range of things that go well beyond what we would normally think of as simply a housing issue, because of the importance it places in helping people maintain and sustain their tenancies.

Thanks to the Minister for her statement today, and thanks also for the briefing earlier on. As you mentioned, we, UKIP, have been supportive of this kind of move. We did cover the issue of letting agency fees in one of our own debates last year, so it's an area where we are sympathetic to the issues faced by tenants in the private rented sector. On that occasion, all three opposition parties did support moving towards some kind of restriction in letting agency fees. So, it's good to see that the Government is now moving in that direction. 

There have been a lot of problems with things that are often called 'administration charges'—a term that is often a coverall term to cover a variety of sometimes questionable fees. Sometimes, as you mentioned in your statement, the administration charge appears to be much higher than the real cost that will have accrued to the letting agent for carrying out that particular service. Perhaps more worryingly, sometimes tenants—or, to use your own terminology, contract holders—don't even understand what they've been charged for because, at the moment, a key issue is that a lot of these charges are not very transparent. I was glad that you used that term in your statement.

On the other hand, we are also mindful that there has to be a balanced approach, and you've mentioned that the Registered Landlords Association were heavily involved with the consultation, which I think is good, because I suppose, in a way, there are two sides to every story. We need to have a private rented sector as more and more tenants are actually drawn, sometimes by financial imperative, into this sector, and also by the lack of alternatives. So, we need to have a private rented sector and we don't want to make the regulations so onerous that landlords and letting agencies cannot flourish, as long, that is, as their charges are legitimate and they are transparent. So, we have to be wary, as we proceed with this Bill, of unintended consequences. I know a couple of people have used that phrase today already.

The obvious one, I guess, is that, as charges are banned, rents will rise instead. I know Scotland is the ready example, given that they've already moved to restrict letting agency fees. So, it's interesting that there's already this slight contention over the narrative from Scotland over whether the rents have increased there as a result of letting agency fees being restricted. Or is it more the case that they haven't risen as much as they have in England? So, I think we do need to look closely at the evidence from Scotland because it seems to already be in dispute what the evidence actually is.

The upfront burden on tenants was mentioned by David Melding, and one of the things that the RLA have called for is some kind of insurance scheme over deposits—one problem being that tenants are often charged a deposit for moving into a new property while they're still waiting for the deposit to come back from their old property. The RLA see the possibility of an insurance scheme so that these deposits could be transferred between the landlords. So, I wonder what thought you've given to that precise proposal.

The RLA are also calling for more flexibility over bonds where tenants, for instance, have things like pets. I think this is becoming a big issue. Lots of people want to keep pets, which is fair enough, and lots of landlords won't accept tenants with pets. We need to make sure that people with pets can get into tenancies. So, sometimes it may be the case that landlords need to be able to charge extra in terms of the bond to cover things like the cost of cleaning up when the tenancy finishes, because clearly, if you do keep a dog, then it probably is going to impact on the cost of cleaning. So, I think we need to look at that kind of aspect with this legislation.

Bethan Sayed raised the financial education issue, which she has often raised, and I think that you mentioned that that could be incorporated with Rent Smart Wales. So, I'm very interested in how the information is going to be disseminated, if you could give that more thought going forward. I know you seem keen on it, but I'd like a bit more detail on it going forward. Thanks very much.

Thank you very much for those comments. It might be helpful if I returned to the issue of what we've learned from the Scottish legislation in terms of our approach here in Wales. It is a fact that rents did rise in the first 12 months following the introduction of the Private Rented Housing (Scotland) Act 2011. That amended the Rent (Scotland) Act 1984, which I previously referred to, and it essentially banned all charges made to tenants other than rent and a refundable deposit.

However, the evidence that rents rose directly as a result of the change in the law isn't conclusive, and that issue, as I said, was examined by a House of Commons inquiry into the private rented sector in Scotland in March 2015. That was unable to find strong enough evidence to explain such an increase. The committee did identify wider factors as having a possible influence on the increase, including population changes and a lack of supply of properties in the private rented sector. The operation of the market at the time—so, the numbers of agents operating, the length of tenancy, changes in how agents were operating, rules around deposit protection, and increased health and safety standards—were all considered to be relevant considerations as well, and they couldn't be disentangled from the 2011 Act.

So, I'm sure that the experiences in Scotland and the legislation that is currently making its way through the process in England will be something that committees will want to scrutinise. But, it is—just to reassure Members—the case that we've also been looking very closely at both the Scottish experience and the committee process in England, and we've looked closely at all of the evidence that has been submitted to the English legislation proposal as well, because we are keen to learn from the best of the evidence that is available to us.

In terms of the impact on cost of renting, again, it's interesting, when you look at the current market, that there's no real differential between the cost that tenants are expected to pay to landlords who let independently or those who let through letting agents. There's no real difference in terms of the kind of rent that people pay, whether they are paying huge extra costs or no or very few extra costs. So, there isn’t that kind of clear differential there either.

In terms of enforcement and the provision of information, that will be done through Rent Smart Wales. As I say, we've got really good data and good relationships with the sector now, thanks to that. That also sets us apart from England as well because they don't have any kind of equivalent body. So, as a final stop, if you like, if landlords and letting agents don't comply with this legislation and they don't pay a fine, should they be subject to a fine, the ultimate sanction here in Wales would be that they would have their ability to rent homes removed from them, and that is a severe disincentive in terms of not complying with the law as well.

So, the legislation, as laid before the Assembly, does have some really strong focus on enforcement, as you'd expect. It also allows the local housing authorities to be able to keep any money that they are able to secure as fines to reinvest in their enforcement activities. Again, that's a difference between our approach here and the approach in England. We are asking local housing authorities to be the enforcement bodies for this, whereas in England it is trading standards. Again, we think that this best reflects our particular levels of expertise, the particular relationships that we have, and the fact that local housing authorities are, in our view, best placed to be the ones who are enforcing housing legislation here in Wales.

I don't want to make things more onerous for landlords, and I don't want to make things more onerous for tenants. What we want, really, is to ensure that we have a system that is transparent and as easily understood as possible. I think that we can certainly do that by working closely with the people who represent the landlords and also through Rent Smart Wales.

I very much welcome the Government's statement today. It always surprises me the number of people—especially younger people—who have ended up moving into the private rented market who, one generation, two generations or three generations ago, would quite naturally have moved into house purchase. I think that's a change in society that is not necessarily for the better.

Like many colleagues here, I have been calling for the ending of letting fees for several years. There are not many things that could unite Gareth Bennett, Bethan Sayed, Jenny Rathbone and me, but this is one of them. I think that that really does show the breadth of opposition to letting agent fees within this Assembly. They are unfair, unjust and paid by those often least able to afford the cost. I fully support the proposal to end letting agent fees and make it an offence to charge them. 

I’m very pleased that the Government have given up what I considered their ludicrous, economically illiterate objection, voiced last year, that ending letting fees would increase rents and it has now stopped being put forward. Of course it won’t increase them. Yes, there have been increases in Scotland, as David Melding said, but I think that Bethan Sayed summed it up quite well: there have been increases in London, in England, and in Wales as well. House rents go up every year. It’s nothing to do with whether you have letting fees or not letting fees; they go up because of the shortage of housing that exists. And that is where the problem is: that there is a shortage of housing.

But if people really believe that letting agent fees are the solution to decreased rents, why don’t they support that when you’re buying a house, you pay the estate agent’s fees? That’ll move the prices of houses down, wouldn’t it? If that logic follows, then, obviously, the estate agent’s fees should be paid by the buyer not the seller. But, no, people aren’t going to suggest that, because the people who are buying houses would not buy. People who are selling would be unable to sell. Unfortunately, in the private rented sector, people have to pay, otherwise they end up homeless.

So, I really welcome the provision for enforcement arrangements via local authorities and the fixed-penalty fine. I have one question: has the Government considered a fine escalator for those who continually breach the law? Because one of the things that I’m afraid of is that some people will see this as a price worth paying. It’ll happen only occasionally. It’s a bit like those people who park where they shouldn’t and accept a parking fine as part of the cost of parking where they shouldn’t. People do break lots of laws when they don’t get caught very often and they don’t get fined very much, and when you balance out the cost, it may well be economically advantageous to do it. So, can we have an escalator on there? So, it may well be one price for the first time they’re caught, but if we double it the second and then double it the third, a bit like they do with people who fly-tip, and they get a fine, but if they keep on going back, they keep on getting a fine escalator, and whereas the first fine may not be very much, by the time they get to the third or fourth, they realise that fly-tipping is exceptionally expensive. So, can we have an escalator?

Thank you very much for those comments and for the question as well. 

I thought the comparison with asking house buyers to pay the estate agent’s fees was quite an illuminating kind of comparison. Certainly, it puts it into perspective as well. And, as Mike Hedges perfectly correctly points out, these tenants' fees are fees that are paid by those who are usually least able to pay. And, as others have said, the private rented sector is going to become increasingly important in terms of meeting housing need, but also in terms of reducing the severe pressure that is also on our social rented sector as well.

In terms of that enforcement action, it has been modelled in line with the arrangements that are currently in place for non-compliance with licensing requirements under Part 1 of the Housing (Wales) Act 2014, and, to date, there have been relatively few breaches of licensing arrangements resulting in penalties. So, that does suggest that there is a sensible balance that has been struck in our approach so far. And it’s well worth recognising as well that the vast majority of landlords do work within the spirit and the letter of the law, and almost all agents and landlords are now registered under Rent Smart Wales. So, once the Bill comes into force, we would expect similarly high levels of compliance.

We consider that there will be a significant impact, not just from the financial penalties in the Bill, but the consequences for an agent or a landlord if they are convicted of an offence. Convictions for breaches of housing or landlord and tenant law are included in the criteria for Rent Smart Wales as the licensing authority, designated under section 3(1) of the 2014 Act, and that's something that must be taken into account when considering whether a person is a fit-and-proper person to be licensed under Part 1 of the Act. So, that is a really, really strong deterrent in terms of contravening the Bill. However, I'm sure that the committee will be giving close scrutiny to the level at which we have set that fine within the legislation, and I'll be interested to hear committee recommendations in terms of any escalator of fines.

Thank you, Minister.