Item 4 on the agenda is a statement by the Minister for Housing and Local Government, on supporting local housing authorities to secure long-term housing options in the private rented sector, and I call on the Minister for Housing and Local Government, Julie James.

Thank you, Deputy Presiding Officer. This statement provides details of the trial of a new scheme aimed at increasing the housing stock available to local authorities in discharging their housing duties, and, more particularly, their Part 2 Housing (Wales) Act 2014 duties. Local authorities' discharge of these duties has done much to prevent individuals and families from becoming homeless. However, there are still far too many whose homelessness is not prevented. This trial proposes using the private rented sector to increase the stock available to local authorities when discharging their Part 2 duties by offering tenants access to good-quality housing at affordable rents with an appropriate level of support. We are trialling the scheme in a small number of local authorities to prove the concept and provide the necessary evidence base for a model to be developed to roll out across Wales.  

'Prosperity for All' emphasises the role good-quality homes play in all aspects of an individual’s life and the importance of secure, affordable housing as a basis for improved health and life outcomes. Insecurity of tenure or poor-quality housing can, of course, cause or exacerbate anxiousness and ill health, and limit the ability of renters to engage with their local community or for their children to settle in education.

Preventing and resolving homelessness in all its forms is a key priority for this Government. The numbers of households presenting as at risk, or already homeless, in Wales has been aggravated by benefits cuts and austerity. This Government is committed to building social homes at scale and pace, but we also accept that homes are not built in a day. We are looking at additional, innovative approaches to increasing the stock of housing, and a model such as this could make a significant and important difference for Wales.

Increasingly, local authorities are looking to the private rented sector to find homes for families and the individuals they support. However, the private rented sector is increasingly a tenure of choice for a far broader range of households than in the past. Long gone are the days when renting was something for students and young professionals before they 'settle down'. Today, in some areas, the market for rental properties is very competitive. Landlords can pick and choose to whom they rent and, as a result, have pushed some of our more vulnerable households out of that market.

Many local authorities work hard to identify landlords willing to take households on benefits and to accept the low rents afforded by benefits. This hard work is admirable, but frequently only results in a short-term solution. With only six months' security and little support, we know that often these tenancies break down and the household goes back through the 'revolving door'.  

For those struggling financially, the disparity between local housing allowance rates and market rents limits access to the PRS. This problem is intensified by some of the anecdotal evidence suggesting private landlords are less likely to rent to those in receipt of benefits. Investing in and evaluating a trial focused on increasing access, quality and security for such groups is a worthy and worthwhile enterprise.

Working collaboratively with existing stakeholders we have developed a model that we believe will give local authorities a significant extra resource in helping to prevent and relieve homelessness. Finding an offer that also works for landlords has been an important part of developing this model. This is a win-win deal, it offers a good deal for those seeking a stable, good-quality home, and a good deal for landlords who want a long-term rental income stability without the day-to-day responsibility of being a landlord.

In exchange for a commitment from private sector landlords to lease their properties to a local authority for a period of up to five years, those property owners will receive guaranteed rent, every month, for the period of the lease, and an undertaking that, subject to fair wear and tear at the end of the five years, they will receive their property back in the same condition as they leased it. Additionally, property owners will be eligible for a grant and an interest-free loan to bring their properties up to a required standard, should their property not meet the minimum requirements for the trial. Interested private sector landlords will receive rent at the relevant local housing allowance rates—that turns out to be quite difficult to say—less a sum equivalent to a competitive management fee.

The minimum standard of properties accepted onto the trial will be linked to WHQS standards and, as I have said, there will be an element of grant and loan to ensure that any property participating in this trial is of a high standard. The households we are seeking to house here deserve high-quality homes and choice as much as any other household, but the incentives we will provide will also help improve the standards of the private rented sector more generally in Wales.

Tenants who live in these properties will be assured, subject to their observation of the terms of their contract, of up to five years of accommodation in the private rented sector at local housing allowance rates. Importantly, for both tenant and landlord, the households moving in will receive the support they need to help them thrive in their new homes.

As I have said, this is a win-win deal; it works for landlords and local authorities as much as it works for tenants. Tenants will have access to good-quality, affordable private sector housing with the kind of support that they would normally only have access to in social housing. Landlords can be confident that while receiving regular rent every month their property is being looked after and they need not worry about many of the day-to-day responsibilities that go with being a landlord as they will be carried out by the local authority as the managing agent. Local authorities will have the benefit of an extra resource to help meet their objectives for preventing and reducing homelessness.

We are all aware that supported, happy, settled, long-term tenants help to build more integrated communities. Tenants housed through this trial will be able to access a high level of support, should they require it, and an essential part of the trial will be promoting independence and the skills for life necessary to reduce the burden on the supply of social housing.

Local authorities are ideally placed to lead this initiative. Their private rented sector teams already have contact with a number of private sector landlords who might be interested in leasing their properties through such a model and they already know and work with the families that need these homes.

We will now be inviting local authorities to submit expressions of interest in running the trial. We will appoint three local authorities to operate the trial scheme, and these will be selected on the basis of a series of qualitative and quantitative measures. I will provide more detail on the successful areas in due course.

The goal is for this trial to provide a scaleable model that leads to a national scheme that provides significantly more affordable housing, of increased quality, with greater security of accommodation across Wales. Diolch.

I'm pleased to give a broad welcome to this trial scheme in Wales, and I look forward to receiving the continual reports on its uptake from the sector. I obviously have some questions regarding how it will operate, and I have been in discussions with the sector.

I note that the Residential Landlords Association have some reservations, particularly around the flexibility that landlords will be left with if the scheme runs, say, for five years. Are you thinking a minimum of two up to five, or what sort of range? And also, should there be some form of reasonable break in that contract for exceptional circumstances or if a landlord has to sell a property? So, I think we need to be quite clear on the nature of the obligation. Obviously, tying people into the local authority level spend is important. And for that stability, they then get three, four, five years of guaranteed rent. So, it's a real factor. But also, this is coming in at probably under the market rate in many cases. So, I think we need to be aware of the balance of the contract, but I do accept that it's an appropriate bargain to strike, and can work, as you say, for both sides and be a win-win.

I think similar schemes have been trialled in local authorities in England, so I suspect you could look to some best practice there, but obviously these sorts of schemes have been tested to some extent anyway, and whilst I accept trialling three local authority areas is a way forward, I do hope that the pilot will be a fairly brisk one, so that we can prove the concept and then deepen the partnership between the private residential sector and local government. That collaborative working, I think, needs to go deeper and we've urged you on several occasions to remember the resources that we have in the private sector. It's a much larger sector and, as you indicated, it now appeals to quite a broad range of people. So, I think rather than seeing it as a competitor we need to tap into those resources and see where they can be used.

I also think that local authorities need to be encouraged to do this, and ensure that they're having the sort of policy conversations on things like homelessness and empty housing, for instance, and the role that the private rented sector could offer, and then to remind them that vulnerable groups like ex-offenders, care leavers, and low-income households can be very stable tenants, with—which I thought was vital in what you said—the support mechanisms that are going to go into these schemes. Then, there's a real offer there. I had noted that, for instance, in Bristol, they have a bond scheme to reassure landlords—and landladies, I suppose—and that's linked to inspection and that properties are in a proper state, but that does give some reassurance as well, I'm sure, to landlords and landladies.

But overall, I do hope this is the start of a really good, active, innovative and enterprising partnership between the Residential Landlords Association and Welsh Government and local authorities, because these social problems are the concern of all of us, and I think the private sector has got its part to play where appropriate, and where bound in to reasonable conditions and due rigour. So, broadly, I welcome this and look forward to the reports on the three schemes and I hope that they progress quickly.

Thank you. As usual, David, we agree about much more than we disagree about. So, I completely agree with you that we need to have a better relationship with the private rented sector. Part of that will be of course bringing into force our new Renting Homes (Wales) Act 2016, which does give people longer security of tenure anyway, just in the normal private rented sector. But this is an entirely different scheme that allows the local authorities to discharge their housing duties under Part 3 of the housing Act in a more effective way using the private rented sector, so that's the first thing to just make really clear. 

If a landlord wants to exit the scheme, they will obviously be able to, it's their property after all, but there are several options available there. First of all, if there has been any grant or loan arrangement in order to bring the property up to standard, that will be repayable at that point, proportionally to the amount of time that they've had their house in the scheme. Also of course it will be up to the local authority to buy the house should the landlord be selling it, and I hope in that way we would actually just convert the housing into social rent, effectively. So, we want to have the three trial areas to see what kind of churn in the system there might be. 

I'm also really interested in other innovative schemes, which I'm not announcing today, but which we're very interested in doing: pursuing, for example, investors who might want to actually build for this sector—specifically build for this sector. And although they wouldn't be a registered social landlord, they would be able to give over their property for a long period of time to this kind of housing management arrangement. So, I'm very keen that we look at that.

With my colleague Lee Waters we have been looking at empty properties throughout Wales and what we can do to incentivise owners to bring those empty properties back into beneficial use, and this is another scheme to do just that. So, if you are in possession of a property in Wales and you don't have the wherewithal to do it up so that it can be habitable, this will be a route to doing that, and in return you let the local authority have it for five years, rented out, and it will be returned to you in a much better condition than you probably—usually—inherited it in.

It does mean that we can give guarantees to the landlord that will help them to understand the reliability of more vulnerable groups, because there are a lot of myths out there about the unreliability of people on benefits, and so on. And what this does, in a similar sort of way, weirdly, to what the Jobs Growth Wales scheme did for young people, is it will demonstrate to people that what they believe is not true and that, actually, people are very reliable. Lots of people are on benefits when they're in full-time employment, and so on. So I do think it will prove that concept as well.

It won't need a bond scheme because, actually, of course, the local authority will be the managing agents, and so the landlord is protected via the local authority. We do run bond schemes, actually, to allow people to get into the private rented sector where they wouldn't otherwise have the cash, but that's not part of this scheme, because the house is taken over. I'd be very happy to come back with updates regularly. I really hope that we can do this trial period really quickly. My understanding is that we will have both landlords and local authorities queuing out the door to get on to it. 

It's always been the case that the private sector is more expensive to the taxpayer than social housing, even after benefit cuts, and it remains the case that, in the long run, we need more social housing and this will be cheaper. However, your statement acknowledges that social security payments themselves limit the choice that people have within the private rented sector so, to me, it's unclear whether this scheme will introduce greater subsidy to bridge that gap, or whether you as Minister are hoping that landlords will accept lower rent in exchange for a five-year guaranteed payment. So can you clarify whether additional subsidy is being put forward here to help enable people on benefits to access more expensive private rented properties than would otherwise be the case?

The second question I have is: one of the other problems in the private rented sector is the insecurity of tenure, and this scheme sensibly tries to avoid this through the provision of five-year leases. Can you confirm that landlords won't be able to exit this scheme for a quick sale once they have leased?

And then, finally, in the long run, will you also consider allowing local authorities to buy the properties that they might acquire through this scheme, because, in the long run, more housing stock is needed? We've lost a lot of housing stock as a result of the right to buy programme, and we need to avoid schemes like this becoming yet another way for the private rented sector to be publicly subsidised. Thanks.

Yes, again, I largely agree with the premise of your questions. So, just to be really clear, what we're asking them to do is accept the local housing allowance as rent in return for a guarantee of that rent without voids or any other detriment across a five-year period. We know from conversations with the Residential Landlords Association and other landlords through Rent Smart Wales that that's an offer that many of them will want to take up. So, just to be clear, we are not subsidising a higher rent; what we are doing is guaranteeing it over a five-year period. As I said, we are hoping that it will also increase the standard in the private rented sector, because people will have to bring their property up to the required standard in order to be able to rent it in this way and, in return, again, they get the five-year guarantee.

The security of tenure is an issue. So, tenants will be given security of tenure. The local authority will have to rehouse them should, for whatever reason, they have to exit it. So they would be expected to put a plan in place to do that. But I would expect, if the exit was because of sale, that the local authority would seriously consider purchasing the property and bringing it into the social rented sector. There may be other reasons, like the landlord requiring it for themselves, for example, in which case the homelessness duties would kick in and all the notice provisions would kick in and that family would have to be rehoused within the secure tenure estate.

So, I think it's a win-win, really, to be honest. It brings empty properties back into beneficial use; it allows owners who wouldn't otherwise have the cash to bring those properties up to standard; it gives us a much-needed extra area in which local authorities can discharge their Part 3 duty to families; it gives the families security of tenure; it does, as I said to David Melding, encourage people to understand that, just because somebody's on benefits, it doesn't mean that they're a bad tenant. It ticks lots and lots of boxes, it seems to me, and I do hope that, in the way that Jobs Growth Wales showed employers that young people were worth employing, this will show landlords that people on benefits are worth having as tenants. 

I very much welcome this statement. Far too many children move home between once and twice a year. It's obviously disruptive to education that they move from school to school. High-quality housing, secure and affordable, will improve the health and life outcomes for very many of my constituents. There are two separate private rented markets: there's the high-quality and expensive market that is providing very good quality homes to very many people, all of whom are incredibly happy with the housing provided; there's also the lower cost, but not low cost, rented sector. I welcome the requirement to meet the Welsh housing quality standard to be part of the scheme—I know people living in houses that do not meet the wind and waterproof conditions, never mind anything else. And offering five-year assured tenancies would actually mean a child moving in at the age of 11 would still be in the same house going to the same school when they took their GCSEs five years later. What a tremendous advantage to those children, rather than perhaps going from two or three different comprehensive schools, having to make new friends, having to settle in, and having discovered that the school has done things in a different order, so they do some things twice and some things not at all. I think these are really important. As you know, I believe very strongly in council housing, and I hope you will join me in condemning remarks made by Jacob Rees-Mogg regarding the Grenfell Tower disaster.

I've got three questions for you. How much interest do you expect from landlords in areas such as Cardiff and Swansea, where there is substantial, often unmet, housing demand? I can see, in other areas where demand and supply aren't far off equilibrium, or even parts of some areas where demand isn't far off equilibrium, where you may well get landlords saying, 'This is guaranteed income.' Isn't it the long-term solution just building or buying sufficient council houses, where we actually have control over the quality of houses people are moving into? It will also release a lot of these properties for first-time buyers. The people who lose out most, because of the private landlords buying up housing, are potential first-time buyers who don't, in those immortal words, get their foot on the first rung of the ladder because they've already been bought up for private renting. The third question is: how does the offer of this new scheme to helping to renovate houses differ or is an improvement on the scheme that currently exists for bringing houses back into use that are currently empty?

Thank you for that series of questions, Mike, and, again, I'd broadly agree with the thrust of your questions. So, just to do that last one first, the scheme that Lee Waters is promoting to bring houses back into beneficial use means that you have to live in it yourself for five years in order not to lose the grant. What this is doing is allowing you to rent it out through this scheme, so it's just another way of bringing it back into beneficial use. We have a number of other schemes that we're looking at at the moment for people who are currently living in a house that's not up to standard. I went to visit one in the top end of Rhondda Cynon Taf only the other day, with Andrew Morgan, the council leader, where a lady was actually living in her house despite it being below standard. We were able, through a mixture of grants available from that council and care and repair, to bring it back up to standard whilst she was—well, she had to move out to live with her daughter for a couple of weeks, but while she was broadly resident in it, and that was good as well. So, this is just another way of bringing empty residential properties back into use on that one.

In terms of the Swansea, Cardiff or any heating housing market, we do think there is a demand for this, because although there's a big demand for private rented sector houses in both those places that you mentioned, and in a number of other places in Wales, what this does is it means that the landlord doesn't have to worry about voids, turnover, damage—all of the sorts of things they have to deal with. And, actually, we know from our consultation that many landlords would much prefer the steady income that they know will happen over five years than the fluctuations that they get in a volatile market. So, I think it will have a place right across Wales.

You mentioned the remarks that Jacob Rees-Mogg made about Grenfell Tower, and I'd just like to say that I join you in thinking that those remarks were deeply insensitive and very hurtful to the survivors of Grenfell and the families of those who died. I believe he has subsequently apologised, but it is remarkable that somebody could make such remarks at this time and in the face of the reports just coming out on Grenfell that we've seen. Just to be clear, the 'stay put' policy is to ensure that people trying to get out of a building are not greeted by incoming firefighters trying to come with their equipment up the same set of stairs. We know that it didn't work in Grenfell, with tragic consequences, but that was not because the people in the tower were not being sensible, or, in fact, following the instructions of the fire service, as we know from the report. So, I think that was a really shocking intervention by Jacob Rees-Mogg, but, as I say, I understand he's now apologised.

Going back to the statement in front of us, we're very keen that the Welsh quality housing standard should be the standard that houses are brought up to in order to take advantage of this scheme, and, of course, Mike, you're absolutely right about the security of tenure, and the particular need for families with children to be able to keep their children in the same school. And to give them the social support that they need in order to be able to do that is one of the prime reasons that we want to bring this scheme forward.

Can I thank the Minister for her statement? By way of background, the private rented sector currently constitutes 11 per cent of the Welsh housing stock, with 71 per cent being owner-owned and 18 per cent rented from housing associations and local authorities. We all acknowledge there's a growing demand for rented accommodation, not only from those historical groups, such as students, but also from migrant workers, both foreign and indigenous, and increasingly from households unable to afford owner-occupation. The situation, of course, is exacerbated by the restrictive availability of social housing, given years of neglect in house building in this sector.

I must say, Minister, it's difficult to criticise the contents of this statement, as it outlines a very innovative, and, we believe, very effective way of increasing private housing stock available to rent. We also agree with the concept of local councils being the best vehicle to administer these innovations. The long-term guaranteed return to private landlords should be a very real incentive to them, as well as a release from the day-to-day running duties. And a loan facility to improve the property again must prove to be a great incentive to private landlords.

Just one word of caution is that it is imperative that the price at which the rentals are set must represent a good return on the private landlord's capital investment. I do believe, as others have said in this Assembly, that the stability that this may give to families to be able to know that they're in accommodation for some five years will have huge social impacts, not just for the family themselves but for society as a whole, because we know that if families are being moved from one area to another, as Mike Hedges has pointed out, it doesn't help with their education and many other things, and, of course, the health of those families as well. So, it impacts on that side of the argument as well.

So, at the beginning, I congratulated the Government and the Minister on initiating what promises to be a sound proposition to entice private landlords to let properties to those families who may not have previously been considered.

Well, thank you for that, David Rowlands. You made two points that I think require an answer—one of which was made by Mike Hedges and I neglected to mention it, which is the issue about the supply of social housing across Wales. You will know that since the removal of the cap on the housing revenue accounts in local government, not quite a year ago now, we've worked very hard with local government right across Wales to get their prudential borrowing into a position where they can build houses at pace and scale, and I'm very pleased to say that most authorities around Wales are stepping up to that ask from us with some alacrity, so we are now seeing quite an exponential increase, really, in the number of starts in social housing, and I expect to see that grow next year as well.

You also mentioned the rental income—about it being a competitive rate. Well, just to be clear, this is at the local housing allowance rate. So, that local housing allowance is set by the UK Government. Previously, in a debate in this Senedd, I did say that Members should be aware that that was frozen in 2016 and hasn't been increased since. We do understand that the Government, before it called the election, was saying that they would review that situation next year, and I really hope that any Government that comes into power after the next election will do so, because, obviously, that's at a depressed level at the moment. But the offer is at the local housing allowance level. Just to be clear, Deputy Presiding Officer, we are not looking to subsidise rents in the private rented sector at this time.

Thank you very much, Minister.