Group 6 is on holding deposits. The lead amendment in this group is amendment 29, and I call on the Minister to move and speak to the lead amendment and any other amendments in the group. Minister.

Amendment 29 (Julie James) moved.

Thank you, Deputy Presiding Officer. Evidence given by tenant organisations in respect of holding deposits showed that, at times, there's been a degree of misselling on the part of some letting agents or landlords, where the offer made when the holding deposit is taken from the prospective tenant can be different to what is subsequently set out in the written contract. To a degree, this may sometimes be reasonable, reflecting, say, that after a reference check is made, more robust guarantor arrangements are needed, or another variation to the tenancy is required. However, amendment 42 aims to address a form of sharp practice where a tenant is persuaded into handing over a holding deposit, and where the difference in the final contract is not as a result of the circumstances of the tenant, but due to the letting agent overpromising or giving less than accurate information upfront. 

Amendment 42 inserts new paragraphs 10 and 11 into Schedule 2. New paragraph 10 sets out circumstances when a holding deposit paid to a letting agent does not have to be repaid. That is, if all reasonable steps are made to assist the landlord, who also takes all reasonable steps to enter into a contract, but ultimately the contract holder fails to enter the contract. New paragraph 11 provides that the exceptions in paragraphs 8, 9 and 10, which deal with repayment if parties fail to enter into a contract, may not be relied upon unless information specified by Welsh Ministers in regulations has been provided to the contract holder before payment of the holding deposit. This ensures there are no surprises when a contract holder comes to enter into the contract. If information is not provided, a landlord or letting agent cannot rely on an exception to the requirement to repay a holding deposit. Consequently, it must be repaid. 

During scrutiny of the Bill, it became apparent that there was uncertainty over whether payment of a holding deposit gives a contract holder first right of refusal to rent the property. Amendment 36 clarifies that, in relation to a holding deposit, references to a contract holder are to the person who's right of first refusal has been reserved by the holding deposit. The deposit provides a guarantee so that, as soon as the necessary checks have been successfully completed, the prospective contract holder will be able to exercise their right to rent the dwelling, subject to the contract. There have been allegations that some landlords or agents take more than one holding deposit at a time to pressure contract holders to sign a contract. The amendment reserves the right of first refusal to the person who's right has been reserved by the deposit, clarifying to whom this right has been given.

Amendment 31 has been tabled to ensure an amount of a holding deposit in excess of one week's rent is a prohibited payment. We were concerned that there may be some ambiguity about the amount that could be charged, which could undermine the confidence of a contract holder as they start looking for a home. Contract holders will know the sum they need to pay is one week's rent or less. Anything over that sum is a prohibited payment.

On reviewing the Bill after Stage 2 we considered there was a benefit in clarifying provision in Schedules 1 and 2 around holding deposits, including to whom a holding deposit could be paid. This might be a landlord or a letting agent. Amendments 29, 37, 38, 39, 40 and 41 remove any ambiguity around who a deposit is paid to and who should repay it. 

Amendment 30 is a minor amendment to reflect that a person paying a holding deposit is a prospective contract holder at the point the deposit is paid rather than the contract holder.

Amendments 65 and 66 have been brought by Leanne Wood to provide for a 48-hour cooling-off period during which the contract holder can notify the landlord that they do not wish to enter into the contract and receive a refund of the holding deposit. We rejected the same amendment at Stage 2, and I ask Members to reject this amendment again, because it is likely to be prejudicial to other prospective contract holders as well as the landlord.

The purpose of a holding deposit is to reserve the property for a short period of time to allow for checks and paperwork to be completed by the landlord. It prevents other potential contract holders from seeking to enter into a contract on the property, giving a right of first refusal to the party who has paid the holding deposit. The landlord, having taken a holding deposit, should not be offering the property to other possible contract holders—something we've made clearer through our amendment 36. If amendments 65 and 66 were to be agreed, it's possible that a contract holder could put down holding deposits on a number of properties, knowing they will get their money back. This would mean that other contract holders would be prevented from agreeing a contract on a property in which the contract holder who'd paid the holding deposit had only a partial interest.

We made the point at Stage 2 that a cooling-off period may be appropriate where distance selling arrangements apply, and a cooling-off period would give an automatic right to cancel and rescind a contract shortly after the contract is formed. However, restrictions on distance selling arrangements are made because no-one else is deprived as a result, other than the seller, and because a contract has been entered into. My concern is, where a holding deposit is paid, other contract holders could miss out on finding a home and there's no binding requirement to enter into the long-term contract.

We've brought forward amendment 42 to address concerns raised during scrutiny that misleading information was being given to prospective tenants. I consider that setting expectations of the information to be provided to the prospective tenant, via regulations, at the point a holding deposit is paid will give sufficient safeguard against any sharp practice. I hope that the arguments I've set out against amendments 65 and 66 are sufficient in highlighting their disadvantage.

Amendment 67, also tabled by Leanne Wood, would prevent holding deposits being repaid if the contract holder knowingly and recklessly provides false or misleading information to the landlord. An identical amendment was tabled at Stage 2. I stated at Stage 2 that I did not consider the amendment necessary because we'd be introducing a criminal burden of proof that would be difficult to prove—that is, whether the contract holder had knowingly or recklessly provided false or misleading information. An agent or landlord would have to prove the contract holder knowingly or recklessly provided that false or misleading information. As I stated at Stage 2, failing a credit or reference check does not give sufficient grounds to retain a holding deposit under Schedule 2. I know this has been a concern raised by many stakeholders, and I can assure Members this is not a permitted exception, as it is not a ground reflected in Schedule 2. For these reasons, I cannot support amendment 67 and ask Members to reject it.

To summarise, therefore, Deputy Presiding Officer, I'm asking Members to support amendments 29, 30, 31, 36, 37, 38, 39, 40, 41 and 42, and to reject those tabled by Leanne Wood, which are numbered 65, 66 and 67.

If I can discuss the Plaid Cymru amendments in this group, which I'm not prepared to support, because I think that balance is not well-struck between the interests of tenants and landlords. I spoke to these amendments at Stage 2, but I think it's appropriate that I air my opposition to the whole Chamber at this stage.

By implementing a 48-hour cooling off period for the holding deposit, as Plaid Cymru's amendments 65 and 66 seek to do, we undermine the purpose of a holding deposit, and adversely affect the business model of the landlord. Forty-eight hours is a long time for landlords to be, potentially, in a position where they stop the business activity on that property and hold it. They may have had other strong notifications of interest, but, obviously, because they have the holding deposit, they cannot pursue them. A holding deposit is a form of commitment, and I think that we really do need to utilise this opportunity to rebuild the trust between landlords and tenants. So, I think it's unreasonable to put that extra burden on landlords, given that we are seeking to tighten up the law here profoundly in the interests of tenants, quite correctly. But then, this 48-hour period of grace for the tenants just takes away the reasoning to have a holding deposit, so I'm not prepared to accept amendments 65 and 66.

Additionally, I won't be supporting amendment 67 from Leanne because I believe that it will add a further complexity and confusion, and be a greater burden for landlords. The burden of proving, I quote, 'knowingly and recklessly' would fall on landlords, and I don't think that adds to its clarity or balance. I very much agree with the Government's position on this.

We will be supporting the several amendments moved in this group by the Government.

Amendments 65 and 66 provide for a 48-hour cooling off period, during which the contract holder can receive a refund of the holding deposit. These amendments were rejected at earlier stages, but with the Government committed to engaging with Shelter Cymru and NUS Wales on the way forward. So, I would like to hear from the Minister what the latest is on that.

Amendment 67 is to clarify that holding deposits cannot be retained as a result of minor discrepancies on the part of the contract holder, such as a failed credit check or referencing. This was rejected as unworkable at Stage 2, but our legal note regarding this says, 'I wouldn't agree with this, but it would place the burden of proof onto the landlord to demonstrate that the contract holder had provided misleading information knowingly or recklessly.' Alternatively, you can argue that the amendment simply gives the contract holder a defence and a means of recouping the deposit if they've made a genuine error when providing their details to the landlord through no fault of their own. So, again, I'd ask the Government: what are you doing to prevent profiteering here?

I think I set out our position pretty clearly in my opening remarks. Just to reiterate, amendment 42 represents a sensible and proportionate amendment addressing concerns about sharp practices at the point a holding deposit is taken. Our other amendments are technical, to clarify how holding deposits should be treated. I won't reiterate them, Deputy Presiding Officer.

Unfortunately, I remain of the view that amendments 65 and 66, brought forward by Leanne Wood, remain unworkable and could unintentionally disadvantage tenants looking to find a home. I appreciate that's not her intention, but I think there is a possibility of an unintentional consequence. As I said, amendment 67 essentially raises the bar to the same level as for offences, which could potentially lead to more disputes between landlords and contract holders. For that reason, I urge Members to reject those amendments.

The question is amendment 29 be agreed to. Any Member object? No. Therefore, amendment 29 is agreed. 

Amendment agreed in accordance with Standing Order 12.36.

Amendment 30 to be agreed to—any Member object? Sorry, Minister, I should have asked you to move amendment 30. 

Amendment 30 (Julie James) moved.

Formally.

The question is that amendment 30 be agreed to. Does any Member object? No. Therefore, amendment 30 is—. 

Amendment agreed in accordance with Standing Order 12.36.

Minister, amendment 31.

Amendment 31 (Julie James) moved.

Formally.

The question is that amendment 31 be agreed to. Does any Member object? No. Thank you. Therefore—.

Amendment agreed in accordance with Standing Order 12.36.