The next item, therefore, is the debate on the general principles of the Renting Homes (Fees etc.) (Wales) Bill, and I call on the Minister for Housing and Regeneration to move the motion—Rebecca Evans.

Motion NDM6850 Julie James

To propose that the National Assembly for Wales in accordance with Standing Order 26.11:

Agrees to the general principles of the Renting Homes (Fees etc.) (Wales) Bill.

Motion moved.

Diolch, Llywydd. I move the motion. 

I am pleased to open the debate seeking to agree the general principles of the Renting Homes (Fees etc.) (Wales) Bill. The Bill will ensure that tenants will be able to search for a home in the private rented sector with the confidence that they will not be hit by upfront fees. This should make the sector more stable, more reliable and more attractive, and reduce barriers for those wishing to enter the sector or move around within it.

I'd like to start by thanking the three committees involved in the scrutiny of this Bill for their time and hard work. I would also like to thank the stakeholders who provided written and oral evidence. I very much value the evidence the committees took during Stage 1 and the amount of work they put into their reports and their recommendations.

Turning first to the Equality, Local Government and Communities Committee report, I am pleased that the committee has recommended that the Assembly agrees the general principles of the Bill. Although there are some differences regarding certain matters of detail, I welcome the committee's conclusion regarding the need to legislate. Recommendation 2 seeks to place a duty on Welsh Ministers, local authorities and Rent Smart Wales to inform tenants, landlords and agents of the Bill's provisions. Subject to approval of the Bill by the Assembly, we will be undertaking a significant communication programme involving local authorities, Rent Smart Wales and the third sector, as well as more general communications targeting a wide audience.

The duty to inform in the Abolition of the Right to Buy and Associated Rights (Wales) Act 2018 reflected the fact that the audience for that Act was readily identifiable and distinct. The much broader audience for this Bill, including anyone who may be considering renting, as well as those already doing so, means that a more general communications strategy is more appropriate. Therefore, whilst happily committing to undertaking an effective and comprehensive communications programme regarding the Bill, I must reject the recommendation.

I am, though, supportive of recommendation 3 for Rent Smart Wales to have enforcement powers alongside local authorities. Since Rent Smart Wales is the licensing authority under the Housing (Wales) Act 2014, it would, under current proposed arrangements, be possible to achieve this using an existing power under the Local Government Act 1972. This enables a local authority to agree that another local authority should discharge a function on its behalf. However, since the 2014 Act provides for a body other than a local authority to be designated, I recognise the recommendation will help to futureproof the Bill, and make enforcement more efficient. Therefore, I will consider bringing forward an amendment to provide for the licensing authority to have enforcement powers at Stage 3, once the detail's been fully considered.

I regret that it will not be possible to agree the specific amendment proposed by recommendation 4, but I do recognise the concern of the committee regarding payments in default, although I believe the recommendation may be more difficult to implement than may be immediately apparent. However, given those understandable concerns, I have tasked my officials to review how the Bill might seek to address this issue. I will write to the committee to update them on my thinking in this area and, should an amendment assist, I will consider bringing one forward at Stage 3. 

I'm pleased to accept recommendation 5, and will bring forward an amendment at Stage 3 to treat payments for utilities, council tax, communications services and the tv licence as permitted payments.

I accept in principle recommendation 6 regarding exit fees. However, I want to further explore the options to address this issue, and will write to the committee following those deliberations. 

I'm not persuaded to accept recommendation 7, as the Bill does not permit more than one holding deposit being taken at any time. An individual paying a holding deposit has a right to first refusal and, where paid, it means the contract must be granted to the contract holder. Ultimately, if issues do arise, there is already a power in the Bill to amend the definition of permitted payments. However, I'm not convinced, based on research available to us, that there is sufficient evidence to amend the Bill at present.  

Regarding recommendation 8, I recognise Members' unease in respect of the provision in paragraph 7 of Schedule 2 to the Bill relating to the right to rent under the Immigration Act 2014. I am, therefore, content to accept the recommendation and omit the paragraph on the basis that the relevant provisions of the 2014 Act are not yet in force in Wales. However, if the UK Government brings the relevant provisions of the 2014 Act into force, they could amend Schedule 2 so that the provision is made.

The Bill's enforcement has been a key consideration during scrutiny, which I intend to address by accepting recommendations 9 and 10. This means that a landlord will be restricted from serving a notice under section 173 of the Renting Homes (Wales) Act 2016, currently known as a section 21 notice, if a landlord has required a prohibited payment that has been paid and not returned, or if a holding deposit has not been repaid.

I will also bring forward an amendment doubling the sum of a fixed-penalty notice to £1,000, strengthening an important part of the enforcement regime, whilst keeping it to a level where the FPN remains the swift and effective enforcement tool it's designed to be, and reflecting its role as part of a wider enforcement regime.

Regarding recommendation 11, I've asked my officials to give further consideration to creating a banded or tiered approach when issuing fixed-penalty notices, and, again, I will write to the committee as soon as that work has been concluded.

I cannot accept recommendation 12, because it would replicate powers already available under section 36 of the Housing (Wales) Act 2014, which, I would argue, address the committee's concerns. 

Recommendations 13 and 14 would, in my view, unnecessarily complicate the Bill and would undermine our approach to enforcement, so I must reject both. 

I am, however, happy to accept recommendation 15, which will ensure that we monitor the Bill's impact on the student rental market. 

Turning to the Constitutional and Legislative Affairs Committee's report, regarding its first recommendation, I am happy to take this opportunity to confirm that I am satisfied that the Bill is housing related and does not engage any reserved matter. It's not standard practice for the Welsh Government to provide detailed analyses of competence, either in committee or during a general principles debate. Where detail is provided, it reflects unique circumstances, which do not apply to this Bill.

Recommendation 2 makes a broader point in relation to information on legislative competence in explanatory memorandums. This is an issue on which I know the committee has written to the First Minister, and a response will be provided shortly. 

Regarding recommendation 3, I am pleased that the Bill has been able to trial our new approach to integrating impact assessments, consolidating the current suite of impact assessments within a single document. The new process fulfils existing statutory duties associated with impact assessments and brings together a range of impact assessments in a more coherent framework. This reduces complexity and duplication, and so should assist the reader.

Regarding recommendation 4, this is an issue on which I know the committee has written to the First Minister, who will respond on behalf of the Welsh Government shortly. With regard to this Bill, I can confirm that a link to the impact assessment gateway document will be added to the explanatory memorandum.

I'm also happy to clarify the statements made within the explanatory memorandum and impact assessment gateway document in respect of privacy matters. Both will be amended to highlight that there will be privacy implications for a local housing authority when investigating offences and notifying Rent Smart Wales of an offence. I will ensure that the Bill's privacy impact assessment is published on the Welsh Government's website alongside the impact assessment gateway document. In addition, the explanatory memorandum will be amended to better reflect the approach that will be followed when consulting on subordinate legislation.

I can confirm that I will be tabling amendments to the Bill to make regulations made under Schedule 1, paragraph 2(4) and paragraph 6 of the Bill subject to the affirmative procedure. However, I cannot agree with the committee's recommendations that regulations under sections 7 and 13 should follow the superaffirmative procedure. I consider this to be unnecessary, as sufficient scrutiny and consultation will be provided through the affirmative procedure.

Similarly, I must reject recommendation 12, which proposes regulations under section 18 follow the affirmative procedure. That change is unnecessary, given that regulations can only deal specifically with those matters set out in the section, which effectively limits discretion as to the contents of those regulations.

Finally, I welcome the findings of the Finance Committee, particularly its welcoming of the explanatory memorandum's use of sensitivity analysis. The committee's two recommendations are consistent with my thinking on how we will assess the impact of the Bill. I look forward to continuing the debate on the Bill, and hope this Assembly will support its general principles. Diolch yn fawr. 

I call on the Chair of the Equality, Local Government and Communities Committee—John Griffiths. 

Diolch, Llywydd. I'm pleased to contribute to today's debate as Chair of the Equality, Local Government and Communities Committee following our scrutiny of the Bill. I'd like to thank all those who provided evidence to help inform our work, particularly tenants, landlords and letting agents across Wales who took time out to attend our focus groups. We also set up an online dialogue forum and are grateful to all those who contributed. 

In our scrutiny, we have considered the general principles and provisions in detail, focusing on the impact on tenants, landlords and letting agents, how the changes will be communicated and whether there is a need for a single or lead enforcement body. Having considered the evidence, we concluded that we agreed with the general principles of the Bill and have recommended that these be agreed by the Assembly. However, we have also made various recommendations and amendments where we believe the Bill could be strengthened, improved or clarified and I welcome the engagement from the Minister, as outlined here today.

Part 4 of the Bill, Llywydd, includes specific measures for enforcement. It is clear from the evidence we received that enforcement would be critical to delivering the Bill's purposes. We believe that there is a need to strengthen provisions. In particular, two main issues were highlighted to us about fixed-penalty notices, the level of the fixed penalty and how Rent Smart Wales may be made aware of notices being issued and paid. Concerns were raised by landlords, letting agents and tenants that the levels of fixed penalty would not act as a sufficient deterrent to rogue landlords and letting agents.

The Association of Residential Letting Agents told us that it supported financial penalties of between £5,000 and £30,000. We agree that it is likely that disreputable operators and the ones who are already charging high fees are the least likely to comply, and therefore, have recommended that the Minister amends the Bill to increase the levels of fixed penalties. We heard evidence suggesting that a banded or tiered approach to the levels of fixed penalties may be appropriate in order to distinguish between what may act as a deterrent for a self-managing landlord with one property and a large letting agency responsible for many. We believe that there is merit in such an approach and recommend that the Welsh Government considers how this could be implemented.

A more technical but still important issue is around the notification of enforcement action to Rent Smart Wales. We heard that there's no provision in the Bill to notify them when fixed-penalty notices are issued or paid and believe that this process should be tightened in order to help with their intelligence gathering and make the licensing system more robust. We therefore recommend that the Welsh Government bring forward amendments to require local authorities to notify Rent Smart Wales when a fixed-penalty notice is paid.

A key focus of our scrutiny was to consider whether there should be a lead enforcement body. We heard evidence both for and against. On reflection, we do not believe that there is a need for such a body, but we would like to see Rent Smart Wales given additional powers to enforce the legislation. This will reduce the opportunities for those flouting the law to go unpunished. We believe that the Bill should be amended to provide Rent Smart Wales with enforcement powers alongside local authorities.

Clearly, the impact of the Bill will be the ban of certain payments, and that will be an immediate impact, but it was suggested to us that an unintended consequence could be an increase in rents. Whilst we are not in a position to comment on whether this is likely to happen, we note from the evidence that the majority of tenants would prefer a small increase in rent, rather than having to pay upfront fees. However, it will be important to monitor rent levels as part of evaluating the impact of the Bill and we welcome the Minister's commitment to do this.

We heard some arguments in favour of a voluntary scheme with caps on fees, but were not convinced that this approach would be effective. In particular, we would be concerned that rogue operators—the ones whose practices need to change—are the ones least likely to engage with a voluntary scheme. We therefore believe that a legislative approach is the most likely way of creating a fairer market.

We are concerned that the Bill does not include provision for communicating the changes, notwithstanding what the Minister said earlier. Particularly, we are concerned that this could make it difficult for more vulnerable tenants and smaller agents and landlords to be aware of the changes. We note that Rent Smart Wales will be in a good position to communicate changes to landlords and letting agents, but we believe further consideration is needed as to ensuring tenants are aware, especially as tenants will play a critical role in alerting authorities to illegal payments. We therefore recommend that the Welsh Government brings forward amendments to require Welsh Ministers, local authorities and Rent Smart Wales to take reasonable steps to ensure all those affected are aware of the changes.

Llywydd, we recommend that the general principles be approved by the Assembly, and that the Bill is strengthened in the ways I have outlined. I very much welcome some of the Minister's assurances in response to our report, and the acceptance of a number of them, and also very much welcome the further consideration that will be given to others, as described by the Minister earlier. With regard to those not accepted, I very much hope that the Minister will continue to carefully consider our report as this Bill proceeds through the Assembly. Diolch yn fawr.

I call on the Chair of the Finance Committee, Llyr Gruffydd.

Diolch, Llywydd. I’m pleased to contribute to this Stage 1 debate to outline the Finance Committee’s recommendations in relation to the financial implications of the Renting Homes (Fees etc.) (Wales) Bill.

The Finance Committee supports the general principles of the Bill and agrees that the provisions are necessary to sustain an accessible and affordable private rental sector in Wales. However, we wish to bring the Assembly’s attention to the variation in the figures in the regulatory impact assessment in estimating the potential costs or benefits that could arise from implementing the Bill’s provisions.

The Welsh Government’s analysis has been developed through engagement with key stakeholders, including Rent Smart Wales, as well as being informed by the consultation exercise, independent research and the experience, of course, of similar legislation being implemented in Scotland. Nevertheless, the Minister told us that it has been necessary to make a number of assumptions, due to the substantial differences in practice across the private rented sector. Given the uncertainty in the central estimate presented, the Welsh Government has undertaken a sensitivity analysis, testing the impact of changes to these key assumptions.

The inclusion of the sensitivity analysis, examining the range of potential costs in the best and worst-case scenarios, is very much welcomed by the committee, although it does demonstrate a broad range of costs. For example, the 'do nothing' option presents a cost range of £36 million between the lower and higher estimates for tenant fees over a five-year period. And whilst recognising the estimated savings to tenants of banning fees, we are mindful that letting agents and landlords will recoup this lost income by other means, and we have recommended that the Welsh Government closely monitors and reviews the impact of the Bill’s implementation on rent levels.

Our final recommendation relates to local authority costs, and the costs of enforcement in particular, which will be central to the Bill’s success. We note the Minister’s view that a high level of compliance is anticipated, and recognise that local authorities will be able to retain the income from collecting fixed-penalty notices to offset enforcement costs. However, we remain concerned that enforcement activities may not be cost neutral for local authorities, and that increased rent levels could impact on local authorities' ability to discharge their duties to prevent homelessness through a private rented sector tenancy. We have therefore recommended that the Bill's financial impact on local authorities, particularly with regard to enforcement costs, should be closely monitored and evaluated to ensure that sufficient resources are available.

The Deputy Presiding Officer took the Chair.

Thank you. I call the Chair of the Constitutional and Legislative Affairs Committee, Mick Antoniw.

Thank you, Deputy Presiding Officer. We reported on the renting homes Bill on 24 October, and we made 12 recommendations. Overall, we welcomed the steps towards the creation of a subject-specific body of Welsh law relating to housing. We see this as a positive development ahead of the Welsh Government’s more comprehensive plans regarding consolidation and codification, and it should assist in the aim of making law in Wales more accessible.

Moving on, our approach when scrutinising Bills includes considering the extent to which the Member in charge has clearly explained which legislative powers in the Government of Wales Act 2006 are being used to make the legislation. It is not an attempt to undermine the Welsh Government’s or indeed the Llywydd’s assessment of legislative competence. We noted the evidence from the Minister and the information provided in the explanatory memorandum regarding legislative competence, and acknowledged that the change to the reserved-powers model may have made explaining the basis on which the Welsh Government is able to legislate more difficult. However, when we sought further information on this issue, we found the evidence produced by the Minister to be lacking in precision.

It is our opinion that the one-sentence explanation within the explanatory memorandum of how the Assembly has the legislative competence to make the provisions in the Bill lacks sufficient detail. We highlighted that the Welsh Government’s assessment of legislative competence for the Childcare Funding (Wales) Bill spans 11 paragraphs in the explanatory memorandum. While we do not suggest that a one-size-fits-all approach should be adopted, the stark difference between the approaches taken within those two Bills merits explanation.

Our first recommendation was that the Minister use this debate as an opportunity to provide more detail on the Welsh Government’s legislative competence assessment for the Bill. Our second recommendation was aimed more widely at the Welsh Government, requiring the Government, when bringing forward explanatory memoranda, to ensure that the information regarding legislative competence contains sufficient detail to ensure transparency. I've written separately to the First Minister on this point, and also in relation to Crown consent and recommendations 3, 4 and 7.

Moving on to recommendations 3, 4 and 5, we have significant concerns with the impact assessments accompanying the Bill. We were disappointed that an assumption had been made that Assembly Members and other interested parties would be familiar with the impact assessment gateway mentioned by the Minister in her evidence to us.

Our recommendation 3 asked the Minister to use the Stage 1 debate as an opportunity to provide more detail about the Welsh Government’s impact assessment gateway and, in particular, its significance to the Bill, and I look forward to the further response on this, as indicated by the Minister. We believe greater accessibility to both Welsh laws and accompanying explanatory material should be encouraged and promoted. We are concerned that the impact assessment gateway document for the Bill lacks clarity and coherence. Our recommendation 4, again, was directed more widely than the Minister, recommending that the Welsh Government ensures that its explanatory memoranda include links to all explanatory material available in regard to the relevant Bill.

Regarding the privacy impact assessment, we believe that clarification on this matter is needed, because the information within the impact assessment gateway document suggests that the assessment regarding the impact on privacy was not robust. I welcome the comments from the Minister on that. With regard to recommendation 5, we asked the Minister to explain during this debate why the explanatory memorandum and impact assessment gateway document suggest that the Bill produces no new requirements relating to privacy or the sharing of information, and why there appear to be inconsistencies between the two documents. I again welcome comments made by the Minister on that. With regard to recommendation 6, we ask the Minister to publish a full privacy impact assessment for the Bill before the start of Stage 3 proceedings, and I welcome the Minister’s comments on this point also. 

Moving on to the specific regulation-making powers in the Bill, we are content with the balance between what is on the face of the Bill and what is left to subordinate legislation. However, 'futureproofing' and 'flexibility' are not terms we wish to continually see being used by Ministers to justify the inclusion of a regulation-making power in a Bill. We are also concerned that the Welsh Government’s approach to determining the scrutiny procedure assigned to a regulation-making power appears to be based on what the relevant Minister considers to be technical in nature. However, 'technical' is a subjective judgment.

We note also that the regulations made under Schedule 1 are subject to the negative procedure, and we disagree with the argument put forward by the Minister that negative procedure regulations should be permitted to bring forward changes in future Government policy. We also disagree that changing the meaning of 'permitted variation' is something that could be categorised as technical.

Our recommendations 8 and 9 recommend the Bill should be amended so that regulations made under Schedule 1, paragraphs 2(4) and 6, are subject to the affirmative procedure.

Our established practice has been to seek the use of the affirmative procedure for any subordinate legislation that would change primary legislation—so-called Henry VIII powers. For that reason, we welcome that the Minister has drafted the Bill so that the affirmative procedure will be used for regulations made under section 7. However, the power to amend the definition of a permitted payment could alter the effect of the overall aim of the Bill or widen the number of criminal offences created by the Bill. Stakeholders and Assembly committees should have the opportunity to comment on draft regulations that would change a significant element of this legislation.

Recommendation 10 recommends the Bill be amended so that regulations made under section 7 are subject to a superaffirmative procedure. Section 13(3) provides the Welsh Ministers with the power to increase the level of the fixed penalty from £500 to an unknown maximum amount. Of course, the Minister has commented on that in the statement, with a proposed amendment. We noted that the UK Government’s Tenant Fees Bill will enable an enforcement authority in England to impose a fee of up to £30,000. We believe the potential for a significant increase in the amount of the fixed penalty should be subject to additional scrutiny.

As with section 7, our recommendation 11 recommends that section 13 regulations should be made via a superaffirmative procedure that ensures key stakeholders will be consulted before the amount of the fixed penalty is changed.

Can I say that we in the Welsh Conservative group will be supporting the motion today? Over the last decade, the private rented sector has grown both in absolute numbers and proportionality, mostly at the expense of owner-occupation levels. If the trend continues, the private rented sector will become the second most prevalent accommodation type after home ownership; it is anticipated to reach 20 per cent of total housing stock by 2020. So, we support the general principles of this legislation because the sector is becoming increasingly important in meeting housing need.

The private rented sector is diverse, providing homes to a wide variety of households, including students, families, single persons and those looking for short-term housing solutions. However, since the 2008 economic downturn, the sector is increasingly being used as a longer term housing option. Since new homes in the social housing sector are not keeping up with demand, and would-be first-time buyers are finding it increasingly difficult to access owner-occupation, the private rented sector is increasingly being used by many more Welsh households.

This Bill is just one step in the effort to build a housing market that is fit for the future. It is unfair that tenants across the country should be stung by unexpected and unreasonable costs. That's why we need to deliver on our promise to ban letting fees alongside other measures to make renting fairer and more transparent. What we hope is that the Welsh Government will learn from the Scottish ban, from what has been indicated in the committee report, and indeed the scrutiny of Westminster proposals, which is running a bit ahead of our Bill and I think has some useful lessons for us as well. That will ensure the most efficient system is put in place in Wales.

I now would like to turn to some of the recommendations that are in the committee report, but can I just say that the outcome that we need, and I think is furthered in that report, is a housing sector that is fair and works for all parties. Landlords deserve a reasonable and secure return. Reputable letting agents should be protected from rogue providers, and tenants should not face undue hardship at a time of often considerable stress.

So, with the exception of the committee's recommendation 8, which I do not agree with, I think the other recommendations add very much to the strength of this Bill. We will, therefore, obviously look at the responses that the Minister has made and also any specific amendments, but I do note that the response was fairly partial to the committee's report, and some key things have just been outrightly rejected.

Can I emphasise, Deputy Presiding Officer, the following recommendations? I'm not going to go through them all—there will be other opportunities for that. Recommendation 10 will increase, if it's implemented, the levels of fixed penalties—clear support from all sectors, and we need a deterrent and not just a system that recovers costs. I'm not sure that £1,000 is going to be enough, as the Finance Committee has already indicated. Certainly £500 was very unlikely to meet costs, but would £1,000? But we need to go well beyond recovering costs. This has to be a penalty, it has to act as a deterrent. So, I think, in our line-by-line scrutiny, we will need to look at this very carefully.

Recommendation 12, if implemented in an amendment, requires local authorities to notify Rent Smart Wales when a fixed-penalty notice is paid—not issued, when it is paid. This would definitely make the system much more robust. I though the Minister was very unclear. It seems to me to be the general card the Government sometimes plays—'Well, you know, local government have a general power to do all sort of things, so we'll do that.' This is a bit of housing legislation to make the system much more robust and fair to tenants, and it ought to be in the Bill if it is important. And it is important if Rent Smart Wales are going to act as a proper intelligence unit picking up those rogue landlords and letting agents that are having fixed-penalty notices imposed on them, and by different authorities, potentially. And you can only do that if there's a requirement for the local authorities to report. So, I thought you were very weak on that, to be frank.

Recommendation 13: the ability to charge a higher financial penalty as an alternative to prosecution, reflecting the English Bill, going up to £30,000. In effect, that's to offset a prosecution. It isn't strictly a fixed penalty. But I still think that sort of bite and that sort of alternative available to a local authority instead of going through the court system is important.

And I will now conclude with recommendation 14. We are passing legislation to protect tenants and the one thing it doesn't do is ensure that they get the illegal payment that was imposed upon them back. I really feel genuinely sorry for the poor backbenchers on the Labour benches over there who are going to have to grit their teeth and allow the Minister to get away with this. But we will oppose you every inch of the way and we will certainly seek to amend that provision so that tenants get justice. I conclude also by thanking all the stakeholders who helped us in our scrutiny. 

We'll be supporting the general principles of this Bill today, as in fact we have for several years now. Plaid Cymru, of course, tabled amendments to the renting homes Bill a few years ago that would have brought about a ban on letting agent fees. But these were, of course, voted down by the governing party, Labour, like so many other policies that they really should be backing. This time they said that it was on the grounds that more research needed to be done as to whether or not it was fair on the poorest people to be charged hundreds of pounds for credit checks that cost just a fraction of that. Shelter Cymru, of course, had done the research and Scotland had already banned letting agent fees. The Government subsequently changed their reasoning when the backbenchers queried it, instead shifting to the position that this wasn't a devolved matter and, therefore, there was nothing that could be done about it. But events overtook them. The Conservatives announced a ban on letting agent fees in England and there was a proposal to ban them in a motion here. How embarrassing for the Welsh Government.

And now that the Tories have finally introduced the Tenant Fees Bill into Parliament this summer, the current Welsh Government has been forced to act and we have this Bill in front of us today. It's about time, and had action been taken earlier, then several thousands of people wouldn't have been out of pocket in the way that they have been.

Research has consistently shown that tenants often face a bill of hundreds of pounds just for even attempting to move into a rented property, with no guarantee that they will move into that property in the end. The fees for things like credit checks can often be disproportionate to the work undertaken, a fact that the committee has demonstrated, and they act as a barrier to the market working properly. So, if, for example, a tenant finds that existing an landlord doesn't repair the property and they are stuck in poor accommodation, then they can be forced to face upfront costs of several hundred pounds for all the fees, advanced rent and other moving costs that will prevent the tenant exercising their consumer power and driving up standards. 

The committee, of course, has several recommendations that we support to improve the Bill in front of us, not least to ensure that the communication of the Bill and enforcement of it means that we don't have yet another piece of paper that just gets ignored. After all, don't we already have too many criminal offences that wealthy people seem to regard as trivial, like tax evasion, speeding, breaking Electoral Commission rules on spending et cetera? So, we have to really make sure that we aren't just adding another toothless piece of legislation to this list, and that's why we in Plaid Cymru expect it fully to be strengthened at the next stage. 

I'm very pleased to speak in this debate. I'm not on any of the committees that have scrutinised this Bill, but I think it's absolutely essential that the private rented sector is made accessible and affordable for the people who need it, and also that there is greater security of tenure. I agree with the general principles of the Bill, which are so important now that more and more people are dependent on the private rented sector. I think we all know that there are 460,000 people in Wales living in the private rented sector. Since 2001, the private rented sector has more than doubled in every local authority across Wales. I'm particularly concerned about the families with children who are dependent on the private rented sector, because in 2003 the number of children in the UK in owner-occupied housing outnumbered those in the private rented sector by 8:1 and that ratio has now fallen to 2:1 across the UK. So, the private rented sector is the place for families with children, it's needed for older people, people with vulnerabilities—it plays such a huge role now in provision. So, that's why this legislation is so important.

I welcome the recommendations from the Equality, Local Government and Communities Committee. I particularly welcome the recommendation asking the Welsh Government to bring forward amendments at Stage 2 so that landlords are restricted from issuing section 21 notices or their equivalent under the Renting Homes (Wales) Act 2016 if they have charged a prohibited fee and not yet refunded the tenant. I think that this is an important step because it does restrict the use of section 21 and my hope is that the Welsh Government will eventually abolish section 21 altogether. But I do want to say that I think this is an important step, because, of course, section 21 or the no-fault evictions means that tenants can be moved on after six months or turfed out with just two months' notice. Six-month contracts also mean that renters face the worrying possibility of rent hikes twice a year. I think this is totally wrong and we need to think about the impact of this insecurity, particularly on young families. It can be such a struggle to get children a school place, or to find a part-time job that fits around caring responsibilities, and a secure home should be the foundation of family life. It should not be what throws people's lives into chaos at short notice. So, I do support that recommendation from the committee and I welcome what the Minister said when she was commenting on the recommendations.

I know that the Welsh Government has made steps to reduce the insecurity of tenure already by ending retaliatory evictions and also ending the current practice where some landlords issue a section 21 notice at the start of a tenancy so that they can make a possession order after two months. I know that the Welsh Government has already taken those actions. However, I believe getting rid of section 21 is something that is actually vitally important for this Government to do and so I particularly wanted to speak and welcome this step, which I think is a step definitely in the right direction.

Thanks to the Minister for bringing her Bill to this stage today. UKIP agrees with the general principles of the Bill. We've spoken in the past of our wish to ban unwarranted letting agency fees and this Bill does address that issue as part of its general thrust of making it easier for tenants in the private rented sector. Yes, there are currently many unwarranted fees. Leanne Wood mentioned the issue of disproportionate fees, where tenants are charged large amounts for tasks that cost comparatively little. Perhaps even worse than the disproportionate fees is the issue of the lack of transparency when tenants are sometimes charged for things and they don't even know what they're being charged for. So, we do need to address these issues, and this Bill should make the fees in the private rented sector a lot easier to police.

We do have to be wary of excessive regulation, of course, and we do have to keep an eye on the possible unintended consequences. Other Members have mentioned the possibility of rents rising. We did hear from many different people on the local government committee in our inquiry, as our Chairman, John Griffiths, elucidated earlier. There was no clear evidence that arose during the inquiry that, after Scotland passed similar legislation in 2012, there was a rental increase that was connected to the abolition of the fees.

There were a few issues that were kind of loose ends. There was an issue over passporting security deposits, which we raised with the Minister during the inquiry, with one problem facing tenants being that they may still be waiting to get back the security deposit from the property that they're vacating while at the same time being asked to come up with the security deposit for the property they're intending to move into. So, it was raised by at least one member of the committee that, if the intention of the Government was to make life easier for tenants in the private rented sector, then developing some kind of passporting scheme for the deposits would have been a welcome part of the Bill. I appreciate the Minister has said that the Welsh Government is looking at this, but it would be interesting if she could enlighten us further on that aspect today.

We also could do with some clarity on a couple of the specific recommendations. David Melding, I thought, went into some of the shortcomings in the Bill very well, when he looked at the specific recommendations, and I agreed with him on each of those recommendations. The raising of the fixed-penalty notices—the doubling of them—is a welcome development, but, as David mentioned, that may not be enough, because if you have landlords or agents with many properties, they may not find that that's enough of a deterrent and they may deliberately carry on charging fees even if they face a possible £1,000 fine.

I think recommendation 14 is perhaps the most baffling shortcoming of the Bill, as I see it. I can't remember, Minister, what you said the rationale was as to why we couldn't have a system enforcing the repayment of unwarranted letting agency fees. I imagine, or I vaguely recall, it was some legal issue, but perhaps you could enlighten us further as to that when you speak again at the end. Diolch yn fawr iawn.

The market is broken at the moment, and therefore this Bill proposes to fix that. We need to get it right. We can't go on having tenants who are being forced to stay in damp or insecure properties just because they simply don't have the money to pay for the letting agent's fees. That is not the way in which markets operate and, at the moment, they are operating entirely to the advantage of the letting agent. The average tenancy fee is £337 and, in Cardiff, it's as much as £450, just for the pleasure of signing a contract. So, we have to rectify this. There's a particular problem in my constituency, Cardiff Central, which has the highest proportion of university students of any constituency around the UK. Young people who have never entered into a legal agreement on anything before are particularly vulnerable to being strong-armed into some pretty outrageous fees. Not only are they charged £60 or more for a credit check, which probably doesn't cost more than £5 to execute, but they're also being charged renewal fees as high as £300, which simply involves printing out the same contract with new dates on it. People have even been charged £150 per person to take a property off the market while they sort out the contract. This is what happens in a seller's market, and we need to change the balance so that it is fairer for the renter.

The only losers in this Bill are the outrageous letting agents who've been charging both the tenant and the landlords for carrying out work. They've been double-jobbing, these unscrupulous agents, and they need to be put out of business. We heard very good evidence from both the Residential Landlords Association and the Association of Residential Letting Agents that they want us to put these people out of business, and therefore we need to strengthen the Bill to ensure that that happens. There's no point in introducing an abolition of letting agency fees if we then allow spurious charges to be introduced for other matters. So, I think it's disappointing that we don't have a stronger response in terms of what constitutes an appropriate default fee. It needs to be really clear that that has to be fair and reasonable, otherwise we will have all manner of default fees for bringing in and out. 

There is a particular problem, obviously, with tenants who are unable to pay their rent on time because the universal credit has failed to make that payment. Clearly, landlords need to get their payments on time because they've got to pay their own costs, but, nevertheless, it's difficult to see how there's an appropriate arrangement for people being charged for things over which they have no control. It's absolutely appropriate that tenants should be charged for the bother of getting new keys if they were to lose them, or some other matter that requires the landlord to make special visits, but I think that one of the things we need to do is make sure that the range of fines is appropriate for the range of letting agency landlords that we have. The proverbial little old lady who simply hadn't read the legislation and wasn't aware of it who charges a fee is one thing, but a letting agent with 100 properties, it is hard to see how they could possibly not have known that they were not entitled to charge a fee.

Therefore, I'm disappointed that the Minister is still not planning to ensure that any penalty has not been discharged if they haven't returned the illegally charged fee to the tenant. We're not in the business here of creating more work for the citizens advice bureaux or other advice agencies. They've got plenty of work on their plate as it is, so I think that we simply need to ensure that the regulations are sufficiently robust that those who've done the wrong thing have rectified it before they're allowed to move on.

I think also that it's very disappointing that the Minister only wants to increase the range of fines to £1,000, when even the Association of Residential Letting Agents support financial penalties of between £5,000 and £30,000. They're encouraging us to be more radical, because they want the unscrupulous letting agents put out of business as well. I think that we have to be really careful that, with exit fees, it's entirely appropriate for a reasonable fee to be charged if a tenant is terminating the contract before the period they signed up for, but I don't think it's at all reasonable for exit fees to be charged when it's come to the end of the tenancy, the year or whatever it is. There should be no fee charged—simply both parties are moving on. So, we will discuss this matter further and I look forward to reading the detailed response from the Minister.          

Thank you. Janet Finch-Saunders.

I'm not speaking.

Right, thank you. Dawn Bowden.

Thank you, Deputy Presiding Officer. I'm not a member of any of the committees that have scrutinised this Bill, so I'm grateful for the opportunity to speak in support of the general principles of the Bill—a Bill that I believe paves the way for further improvements in housing conditions in Wales, and will enhance our efforts to tackle exploitation, especially in the private rented sector. And that is really what I wanted to concentrate my comments on and, in doing so, can I wholly support the comments made by Julie Morgan in her contribution? I think you were absolutely spot on, Julie.

I think there are two benchmarks for legislation such as this. The first is: will it help us to improve the living conditions for those people we represent? And, does it seek to tackle exploitation? I think the Bill does both of these things, or potentially does both of those things. I also welcome the impact that I think the Bill could have on the health and well-being of people. I know that many of us, from our constituency work and from the research that we do, see the health impacts of housing and that the self-reported health of adults who are private renters is much poorer than those in other tenures. So, I'm sure that reducing the financial barriers to finding suitable accommodation should make it easier for prospective tenants to gather the funds required in order to move to a property that is more suitable to their needs. That has to be a good thing. 

It will also be a good thing to reduce unexpected fees, which can cause financial distress—distress that can lead to worry and stress, and that sometimes extends to more serious mental health problems. So, I believe that the Bill has the potential to impact positively on the mental health of some of those tenants. And there are also potential physical health benefits from the removal of fees, resulting in income being saved and therefore able to be spent on food, fuel and other essential health-related outgoings.

Llywydd, you will be aware of the work that I have already championed in respect of tackling the problems around the abhorrent practice of sex for rent. Indeed, I tabled a legislative motion on that subject last year. So, can I take this opportunity of thanking the Minister for taking steps to amend the code of practice for those landlords and agents licensed under Rent Smart Wales, as one small step towards tackling this particular problem, but much, much further to go? And that is why I do very much support the Equality, Local Government and Communities Committee’s recommendation 9 on the need to tackle the problems of the so-called ‘no fault evictions’, section 21, which can be used by exploitative landlords to take advantage of the most vulnerable tenants in our society—for example, those who do little more than exert their rights to seek to have repairs in their premises, or refuse the approaches from unscrupulous landlords for sexual favours. Now, clearly that doesn't apply to all landlords and letting agents, but I believe that these are the types of changes that we must continue to make further progress on if we are to tackle the problems of exploitation.

But, I'm also looking forward to this Bill providing a basis for further action to protect vulnerable tenants, especially those in the private rented sector, which I know this is aimed at, and that includes the prospect of improving legislation around sex for rent. So, I do welcome your commitment, Minister, to move towards an end to no-fault evictions within the scope of this legislation—and I won’t repeat all of what that involves as Julie Morgan has already outlined that—but I do hope that this will eventually lead to the end of section 21 as we know it and is a further step towards securing tenancies for the most vulnerable in our society.

Thank you. Can I now call the Minister for Housing and Regeneration to reply to the debate? Rebecca Evans.

Thank you very much for everybody's contributions to the debate this afternoon. I'll try and answer as many of the points that were raised as I can in the time that I have, although I know that we'll continue these discussions in committee as well.

I'll turn immediately to the issues that have been described about the Government's response to recommendation 14 to repay prohibited payments after a fixed-penalty notice. It's important to recognise here that the route for redress for contract holders is through the courts, and they can continue to draw on support from independent expert organisations such as Shelter Cymru and Citizens Advice when making those claims. Local housing authorities—

[Inaudible.]—give way on this. Why don't you follow the practice set out in the English Bill, which does allow local authorities to do this?

Well, local housing associations do not have the developed skills in this area. The developed skills in this area and the expertise lies outside local housing authority areas, so we wouldn't want to be putting additional burdens on local authorities, who I don't think would welcome those additional burdens. The courts, however, are regularly dealing with claims of this type, and they would be able to assist a contract holder through the process. Fixed-penalty notices work because they can be used quickly and easily by LHAs. The more we add to the process the more we become in danger of LHAs being reluctant in terms of enforcement of the provisions of the Bill, and, if LHAs end up chasing unpaid prohibited payments, they're actually diverted then from the actual enforcement work of investigating offences and issuing FPNs or bringing proceedings through the courts. So, we think in this scenario it is the courts that would be the appropriate way for these matters to be taken forward.

I'm grateful to—

Are you giving way?

Yes.

I'm unable to understand why it's not possible to simply add as an addendum to the fixed penalty that evidence must be produced that the money has been repaid. It doesn't need to be anything more than a copy of their bank statement that shows that the money has been repaid.

I'll certainly consider suggestions that have been made, but I don't want to make the enforcement regime any more onerous than it has to be, because we've learnt from Rent Smart Wales that, actually, it's the simplicity of the enforcement regime there that has made it so very successful, and, of course, as Llyr pointed out in his contribution, we do actually expect very high levels of compliance with this legislation. But of course I'll be considering all the points raised in this debate.

I'm very grateful to Julie Morgan and Dawn Bowden for raising the issue of section 21. Whilst we are very much committed to working with landlords to build a vibrant private rented sector, it can't be at the expense of tenants, and how some landlords do use section 21 notices is quite rightly of concern to us. I was very grateful to Julie Morgan for convening a meeting with me, Dawn Bowden and Shelter to discuss the concerns about section 21, and, as a result of that, officials have been discussing the potential ways forward with the relevant stakeholders in the sector. I think it would be useful now if we reconvened that meeting to explore where we've got to and what steps we will take next.

Several references were made to the legislation that was being taken forward in England and Scotland and I can confirm that, of course, Welsh Government has been fully engaged with partners in other administrations, looking to learn from their approaches. Certainly, as Scotland has already legislated in this area, we're looking at the impacts that they have seen in terms of the legislation, but also looking at the evidence that England has received, and their approach there.

One important difference, however, is that in Wales we do have Rent Smart Wales as an enforcement body. All landlords and letting agents must be registered with Rent Smart Wales, and it is a huge deterrent, the fact that a landlord or a letting agent could potentially lose their licence and their ability to rent those properties. That is a deterrent that we have in Wales that they don't have in England, which I think does give a different context for the legislation that we're developing here.

I've been pleased to accept a number of the committee's recommendations, for example, the recommendation of increasing the fixed-penalty notice. So, I'm proposing to double it. I recognise the calls for taking a similar approach to the fines that will be fined in England, but, again, we need to reflect that we do have a different system and different and stronger deterrents here in Wales as well. I've also been happy to accept that recommendation about Rent Smart Wales also having enforcement powers, and to give further consideration to the banded or tiered approach, but, equally, at the same time, I'm keen to maintain some simplicity. But we'll have some further discussions about that as well.

I do want to recognise the point that Llyr made about the importance of the private rented sector in terms of being an important partner for local authorities when they're seeking to discharge their duties under the Housing Act, both in terms of preventing homelessness and relieving homelessness. This is certainly part of a wider piece of work I'm doing to explore how we can improve those relationships and reduce and remove the barriers that there are to the private rented sector being used in Wales.

I'm grateful to Dawn for her comments on the issue of sex for rent. This is certainly something that we're keen to address in Wales. It needs to be something that is tackled across administrations, but certainly within our powers we can amend the code of practice for landlords to make it absolutely crystal clear that anyone who advertises property for rent with the requirement of sex risks losing their licence to operate in Wales. And, of course, this is on top of the work that we're doing to ensure that people who are registered with Rent Smart Wales have passed a fit-and-proper-person test, and that involves but isn't limited to checking that they don't have any unspent convictions for relevant offences such as violent crime, fraud or sexual offences, for example. So, there are several pieces of work ongoing related to this Bill.

I can see that I'm out of time, but I did want to take this opportunity to welcome Leanne Wood to her new role and also to put on record my thanks to Bethan for the work that she's done on this Bill thus far and I look forward to working with Leanne in this particular portfolio.

Thank you. The proposal is to agree the motion. Does any Member object? Therefore, the motion is agreed in accordance with Standing Order 12.36.

Motion agreed in accordance with Standing Order 12.36.