Group 7, then, is default payments. It's the next group of amendments. The lead amendment in this group is amendment 32 and I call on the Minister to move and speak to the lead amendments and other amendments in this group. Minister.

Amendment 32 (Julie James) moved.

Thank you, Deputy Presiding Officer. I've listened to concerns raised by Members and stakeholders regarding the need to make provision to prevent the charging of excessive or unreasonable charges in the event of a default. In particular, I'm aware of evidence provided of sharp practice in relation to daily charges for late rent payments, leading to significant debts being incurred by tenants. Amendments 27, 32, 33 and 34 seek to address this issue by making it an offence for an agent or landlord to charge a sum in excess of the prescribed limit set out in regulations provided for by amendment 35. I appreciate that Leanne Wood is seeking to also address the same concerns but cannot support her amendments as I do not believe they achieve the same policy objective.

A regulation-making power to set a prescribed limit and specifying descriptions of default payments under amendment 34 provides the flexibility to respond to changes in the private rental sector. Unreasonable default charges do not appear to be widespread but they do vary depending on the property and the circumstances of the landlord and tenant. Members will rightly be concerned about late rent payment charges and that will be our focus in setting a limit that prevents any exploitation of contract holders. Therefore, a flexible approach, using subordinate legislation, is more appropriate than attempting to stipulate a one-size-fits-all provision on the face of the Bill. This is particularly the case as we may want to amend the prescribed limit at some point in the future, particularly as the sector adapts to the broader reforms brought about by the Bill.

In proceeding with the regulations under amendment 34, we will ensure that we know all of the facts before prescribing what payments, if any, would be reasonable to require coming about as a result of an action of a tenant. It will also ensure that all evidence is presented to Members before they can consider whether to agree to the regulations I or any other Minister bring forward in the future. We will consult upon the policy to test the proposals with stakeholders and intend to do so as soon as possible after the Bill completes its passage through the Assembly. Leanne Wood's amendment is too narrow and will prevent us from establishing what may rightly be chargeable by a landlord in the case of a breach of contract by a tenant. Overly restricted in this way, more unscrupulous landlords may seek devious routes to recover money resulting from a perceived default, such as payments for late rent. This could undermine the wider reputation of the private rented sector as a whole.

I also think it is a reasonable expectation that tenants who are late with rent and perhaps sometimes consistently so may have to pay a charge for that. My amendment will put in place, through regulations, the necessary safeguards in this area. We know some landlords are also tenants themselves or have mortgages to pay. If they are not paid rent on time, they potentially cannot pay their own rent or mortgage, leaving them also open to potential default charges or even putting their home at risk.

Leanne's amendment 59 mirrors my amendment 27. The purpose of both is to ensure that any regulations brought forward to set a limit on default payments will be subject to the affirmative procedure. I'm sure that Leanne won't mind if I ask Members to vote for my amendment over hers as they achieve the same aim. I would also ask that Members do not vote for Leanne's amendment 63 as I have achieved our shared aim through my amendment 34. The amendment ensures that Welsh Ministers may prescribe through regulations a limit on payments required in the event of a default. Regulations follow the affirmative procedure. It therefore makes it possible for Welsh Ministers to prescribe a limit on default payments, ensuring that any excess is a prohibited payment. 

Amendments 32 and 33 give effect to amendment 34. They ensure that restrictions set out within the regulations on the treatment of a payment in default are made consistent with this subsection of the Bill.  

Can I again place on record why we'll not be supporting Plaid Cymru's amendment 62 in this group? Again, I don't think it strikes the right balance between tenants and landlords, and, as I said previously, trying to build a housing market that is fair to everyone ought to be central to what we are doing. By defining default fees as specifically as this amendment does and by deleting a breach in the terms of the contract from a qualifying default, I think that this would leave landlords vulnerable to actions that could be the clear and deliberate fault of the tenant and leave the landlords without any effective means of response. 

As the Government said at Stage 2, there may be other legitimate situations where the contract holder is at fault and where a landlord may seek repayment from the contract holder over the course of a contract, and these may differ from contract to contract. Such a restrictive limitation to a contract as the Plaid amendment suggests would be harmful to the relationship between contract holders and landlords. And landlords may be extremely reluctant to let their properties in this way with such a restriction.

However, if I could talk to the other amendments in this group, both Plaid and the Government have put forward similar amendments in relation to the prescribed limits on default fees. In this regard, I will be supporting Plaid Cymru's version, namely amendment 63 and its consequential amendment 59, because I do think that any prescribed limit that is set in regulations should be subject to the utmost scrutiny.

It remains a concern to us that default fees have not been defined by the Welsh Government. As you're aware, the committee in its Stage 1 report asked the Government to bring forward amendments at Stage 2 to put on the face of the Bill that all default fees should be fair and reasonable. Our amendments seek to both restrict default fees to only include late payment of rent and lost keys and to put an upper limit on the amount payable. 

At Stage 2, the previous Minister said that these amendments could be unfair to landlords but would engage with Shelter Cymru on the issue. So, I am interested to hear whether the new Minister has engaged with Shelter Cymru on this question and to hear what the outcome was. We are still concerned that landlords and agents will use the default fees to generate revenue now that they won't be able to charge fees. It's a potential loophole. 

The Minister to reply. 

I agree with the concern that Leanne Wood expresses—I agree with it, but we think that our amendments put a better regime in place, subject to the affirmative procedure of the Assembly, to ensure that we have a complete list of default fees that are prohibited, which can be updated as time goes by and which can take into account all other issues that arise. So, for example, the Tenant Fees Act 2019 in England allows for default payments only in a case of late rent or loss of keys, that's true, but it also, where the tenancy agreement contains any provision that has been breached, allows for the recovery of a payment. And so we wish to head off any suggestion that the contracts themselves could be adapted in order to disguise default payments of that sort, and we think that our amendments achieve that in a more satisfactory fashion. 

Thank you. The question is that amendment 32 be agreed to. Does any Member object? Amendment 32 is agreed.

Amendment agreed in accordance with Standing Order 12.36.

Minister, amendment 33. 

Amendment 33 (Julie James) moved.

Formally.

The question is that amendment 33 be agreed to. Does any Member object? Therefore, amendment 33 is agreed. 

Amendment agreed in accordance with Standing Order 12.36.

Leanne Wood, amendment 62.

Amendment 62 (Leanne Wood) moved.

I move.

Move. The question is that amendment 62 be agreed to. Does any Member object? [Objection.] Therefore, we'll proceed to an electronic vote. Open the vote. Close the vote. For the amendment nine, three abstentions, 36 against. Therefore, the amendment is not agreed. 

Amendment 62: For: 9, Against: 36, Abstain: 3

Amendment has been rejected

Minister, amendment 34.

Amendment 34 (Julie James) moved.

Formally.

Object.

Sorry, was that an objection? 

On 34, we object.

Object. Okay, thank you. Therefore, we'll proceed to an electronic vote. Open the vote. Close the vote. For the motion 38, one abstention, nine against. Therefore, the amendment is agreed.

Amendment 34: For: 38, Against: 9, Abstain: 1

Amendment has been agreed

Leanne Wood, amendment 63.

Amendment 63 (Leanne Wood) moved.

I move.

Move. The question is that amendment 63 be agreed to. Does any Member object? [Objection.] Therefore, we proceed to an electronic vote. Open the vote. Close the vote. For the motion 18, two abstentions, 28 against. Therefore, amendment 63 is not agreed.

Amendment 63: For: 18, Against: 28, Abstain: 2

Amendment has been rejected

Leanne Wood, amendment 64.

Amendment 64 (Leanne Wood) moved.

I move.

The question is that amendment 64 be agreed to. Does any Member object? [Objection.] Object. Therefore, we proceed to an electronic vote. Open the vote. Close the vote. For the amendment 45, one abstention, two against. Therefore, the amendment is agreed.

Amendment 64: For: 45, Against: 2, Abstain: 1

Amendment has been agreed