Local Government and Housing Committee

Welcome, everyone, to—. A welcome to our further witnesses for our next evidence session. So, joining us here, then, in person—. Would you like to introduce yourselves, starting with Steffan, perhaps?

Yes. Bore da. Good morning. I'm Steffan Evans and I'm head of policy, leading on poverty, at the Bevan Foundation.

Hello, I'm Debbie Thomas. I'm head of policy for Wales at Crisis, the homeless charity.

Good morning, all. I'm JJ Costello, I'm head of services at Shelter Cymru.

Okay. And joining us remotely?

Hello, I'm Darren Baxter-Clow. I lead the housing and land programme at the Joseph Rowntree Foundation.

Okay. Thank you all very much. Let me begin with some general questions about Welsh Government's vision for the private rented sector in Wales. Do you believe that Welsh Government has a clear vision for the role of the private rented sector in Wales and what that role should be within the housing system generally? Steffan.

I think the short answer is 'no', and I think you could broaden that out to housing more generally. If you look at what's happened to housing over the last 20 years, you know, we have seen a growth of the private rental sector, looking at the census data. So, the number of households in the private rental sector is up 155 per cent over the last 20 years. But actually, I think that's largely driven, maybe, by external factors, changes in the lending market, you know, a lot of stuff like that, rather than necessarily a clear Welsh Government plan. And, yes, I'm not really aware of any document that sets out what sort of housing tenure mix the Welsh Government wants to have, where do we want people to be living over the next 10, 20, 30 years. And I think what really brings that home is we often—and why it matters—is we often hear the Welsh Government talk about unintended consequences of certain changes to legislation or certain changes to policy, and it's always hinted at that the unintended consequence there is landlords leaving the sector. So, that implies that the Welsh Government wants a private rental sector that's at least the same size as it is now, or larger, but that point is never explicitly made. So, I think, actually, being explicit about what sort of mix we want does matter because it does give us the ability to actually measure the effectiveness of potential policies in line with what the Welsh Government wants to achieve.

Okay, Steffan, thank you very much. Any of our other witnesses like to add anything to that?

Yes.

Debbie, yes.

So, I would say that—. I'd agree with what's been said about needing to have a clearer picture of housing supply. That's one of the main issues that we have at the moment as to why homelessness presentations are increasing so much—that we just don't have the housing supply there. And I think having improved data—I know you've heard it from a lot of people—about what we have in terms of supply, both in rental and in social housing, and then setting out more of a vision about what we need in terms of supply would be really helpful. But having said that, I also think that there are elements of a vision; it's not that there's a complete lack of a vision. I mean, the Renting Homes (Wales) Act 2016, I know it's had its difficulties as well, but it's brought in a lot of really important protections. And some of the proposals within the White Paper really link in with those protections within the Renting Homes (Wales) Act. So, the idea of bringing in the six months' prevention, for assistance for homelessness, fits and dovetails with that really neatly, as does the idea of having support for people to retain a tenancy. So, I don't think there's necessarily a total lack of vision, I just think that we need to do much more and bring it all together, looking at housing supply, looking at difficulties for homeless people in accessing the private rented sector as well, which I'll come on to later, I'm sure.

Okay, Debbie. And JJ.

Shelter Cymru's view would be that, 'No, we haven't had that vision.' We've drifted into the current situation more as a result of market reactions than policy intention. I think we'd make a key point about joining up housing policy, that you can't really change one part of the housing sector without impacting on other parts of the housing sector, and that that vision has to be integrated across housing. At Shelter Cymru, last year, we saw 4,500 people from the private rented sector looking for help with their accommodation. That was about half of everyone we saw. That's a lot higher than the PRS makes up in terms of housing tenure, so they're very much over-represented. And within that, a very high proportion of low-income households—about half of those—weren't working, and about 40 per cent had children. So, there's a real growth in families, low-income households, who, arguably, the private rented sector isn't best suited for. So, I think we do need that unified, integrated vision, and I think, probably, the right to adequate housing is the right objective to thread through approaches to the different sectors, to generate that cohesive housing vision.

Thank you for having me join online—childcare issues meant travelling in was difficult. I just wanted to build on something I think a couple of the other responses have alluded to, which is that in Wales, as is the case across the UK, the private rented sector has grown as big as it has not because of policy intent or because we thought this is the best way to house people on low incomes or households who are increasingly making their homes in that tenure, but because we have a fiscal, regulatory, macroeconomic environment that has made it really profitable to invest in property, and we've seen a sudden explosion in individual investment in property. That has been incongruent with delivering on things like the right to housing and ensuring that people have affordable, secure, stable housing.

We've seen a similar number of people renting over the last however many decades. What has shifted is whether they're renting in a secure publicly or socially owned tenure or whether they're renting from in insecure, often low-quality and more expensive private rented sector. What we'd want to see in Wales, as across the UK, is a much greater focus on having a smaller, more secure, more professional, higher quality private rented sector and policy gearing towards that. I think, as well as not having necessarily a vision, if you look at Welsh policy as it pertains to the private rented sector and compare that to, say, the regulatory environment in Scotland or the emerging regulatory environment in England, Wales appears to be lagging behind in the protections it offers to private renters. I think that is indicative of, perhaps, a lack of vision around the purpose of the sector and if and how it can meet the needs of the people living in it.

Thank you very much. Before we move on, would anybody like to add anything to what they've already said in terms of what the vision should be, in your view?

I guess just to echo the point Darren made there in terms of that the private rented sector does have a role. It offers that flexibility, maybe, that the social housing sector or owner-occupation can't. But I think there's a risk, as we've heard from everyone, that it's drifting into becoming something broader than that, and actually people are in the private rented sector because they just can't find anywhere else to live. Maybe having that focus shift back, as Darren mentioned, I think, would be a key component of any clear vision.

Thank you very much. We'll move on. Sam Rowlands.

Thanks, Chair, and good morning, everybody. I appreciate you being here with us. You probably would expect me to ask this question around supply and demand. Perhaps I'm being too simplistic, but would many of the issues that you're describing and the challenges you're describing be resolved through more houses being built of all sorts of different tenures and types?

Who would like to begin the response?

We've actually just started on a project looking at how to speed up the supply of housing, with a particular focus on social housing. We're working with Shelter on that, and Housing Justice Cymru, and Cwmpas as well, and we think social housing is where maybe the focus needs to be in terms of boosting that delivery, given where the pinch points currently are within the system and we know that's a tenure that has that affordability focus. And as part of that work, we're going to look at stuff around land, around financing et cetera. So, we are going to take quite a broad approach to that, and I'm sure there will be lessons from that as well into other tenures.

But I think you're absolutely right—supply is something that is fundamental. Part of the reason why we've got over 11,000 people living in temporary accommodation is that there is nowhere else for people to move to. Part of that as well, I guess, is we also need to manage the supply we've already got. So, stuff like Airbnbs, for example—that we make sure that we don't lose some of the existing supply into other tenures. I guess there's the twin track there—boosting supply, but also making sure that we don't lose the stock we already have into sectors that don't house people in the longer term.

Perhaps before others respond, I'm also considering not just those in temporary accommodation at the moment, but the relationship between landlords and tenants. If there was a much larger supply out there, you'd expect the relationship between landlords and tenants to change as well, because there would have to be a stronger relationship, I guess, because landlords could lose some good tenants if there's better supply out there. Is that something you'd expect to happen or not?

I think there's definitely a point there. One of the messages that came across to us when we were doing work on the local housing allowance was around tenants having legal rights but being nervous to use them, because they knew finding another property would be very difficult. So, even if a tenant has legal protections for six months, say, they know that, at the end of that six-month period, finding another property at the same price is going to be very, very challenging. Even where legal rights are there, tenants are reluctant to use them. So, if there was more supply, in theory, you would think that that would give tenants more confidence to exercise their legal rights as well.

Does anybody else want to respond to those points at all?

I'd agree with what Steffan said, and build on that as well. I think you've heard evidence from others about how housing is so interconnected, so if we can build supply in social housing, then we alleviate pressure elsewhere. The ending homelessness national advisory board has made a really strong recommendation around that and said that supply just isn't there, that's why we've got so many people waiting so long in inappropriate temporary accommodation, and we really need to look at building more social homes.

But we know, although social homes is the answer for a lot of people, that the PRS does give another choice and another option, which works for some people. At the moment—it comes back to what you said, Sam, about the supply and demand—because the supply isn't there, certainly in terms of properties available at lower rents, we find that there are members that we work with who are struggling to get into the PRS. We have members that have been on waiting lists for social homes for months and months and months. They really want a social home. They are fed up with living in temporary accommodation, they haven't got the amenities that they need, and so they start to try and look at the PRS. But because there's so few properties available at lower rents, and where there are there's a lot of competition, what we find is that a lot of our members tend to get filtered out of the process. So, although 'No DSS' isn't necessarily put up on the advert, when people come to write their application form, they're asked about their employment status, they're asked whether they claim benefits, and then they get filtered out and they don't get to see those properties.

I think looking at ways to increase supply, yes, in social homes, but also looking at what we can do in the rented sector, is really important. And you know we've got the leasing scheme, which does help, but only 16 out of 22 local authorities are signed up to that, so is it time to look at that again and see what more can we do to make that more attractive? Certainly, that's tied to LHA rates, which we know are going up, but not necessarily in the longer term, and there are issues around that as well, in terms of how much they're going up, and under 35s. So, it would be really helpful, I think, to look at how we can make that more attractive, and also to look at continuously keep under review other schemes, like empty homes—how well are those performing? Because we do need supply, both in social homes and in the PRS.

I saw Darren's hand up as well, Chair.

I think more supply would absolutely help in alleviating the pressure on both the private rented sector and the homelessness services et cetera. There are, clearly, really positive and quite stretching targets around social housing delivery in Wales. We could talk separately about the various different ways in which you might meet some of those targets and use additional reforms around land and planning that might make it easier to deliver on those things. And, yes, more private housing as well is positive.

I think, on this question of does that competition inherently improve the private rented sector, it potentially helps in that it takes some of the pressure off, and that might ease pressure on rents and things like that, but whether it improves the offer available, I think I'm a bit more dubious about. I think what you need is regulation to do that. When we've seen a greater supply of private rented homes in England, for example, we've not seen a commensurate increase in the quality or the stability or the security of those homes. And I'm also slightly dubious that, if you were to flood the market with private rented landlords to the extent that it drove prices down and increased competition, those landlords would stick around and continue to provide at a lower yield or a lower return. I imagine they'd be fairly sensitive to selling up at that point. So, I think, really, if you want to achieve that aim, yes, we need to increase supply for social housing, for people to own their homes to live in, but you also need additional regulation if you want to improve the quality and drive standards up.

We're talking about markets here, aren't we, and the private rented sector in Wales is a dysfunctional market. It certainly doesn't work for lower income households at the lower end of the market. Certainly, if we increased supply at the premium end of the market, that would lift some of the pressure off the remaining, the build-to-rent investment ideas. However, I think we can say that, over 30 years consistently, the private rented sector hasn't delivered on conditions, it hasn't delivered on securities, and the pressure is now particularly on rents and affordabilities. I think we have to recognise that social housing is affordable by design. It is designed to be affordable. Private rented accommodation isn't; it moves around. At times, it is more affordable than at other times. But, certainly, for a proportion of the people currently looking to the private rented sector for accommodation, they need security, affordable rents and good conditions that the private rented sector hasn't provided, despite the increasing raft of regulations. So, in that consideration about where we put public investment, I think we have to recognise that social—. Well, an organisation like Shelter Cymru is interested in those that the markets don't work particularly well for, and I think that's where the public investment needs to go, which, in this case, is in social housing.

Thanks. I'm conscious of time, Chair, so I might try and jump on to another theme, and I know colleagues will want to perhaps ask questions a bit later about regulation as well. Because I have a nervousness, as you may expect, that with this continued focus on regulation, people will find ways around it—that's the way it works. There's this scope of ideas that will actually improve the situation, I think. So, I share some of that nervousness around regulation alone.

Just a question on the quality of supply in the private rented sector at the moment: I'm just wondering what your thoughts might be around the Welsh Government's roles or priorities for reducing some of those environmental hazards in particular in private rented housing. Are there any things you think the Government should be doing more of, to ensure that people are living in accommodation that is, at least, appropriate for them?

I'm happy to jump in. Of the 4,500 private renters that we saw last year, 24 per cent complained of dampness and disrepair, and the impacts on health are well documented. For us, the issue is less one of rights, because the rights are there to protect you from poor conditions; the issue is one of enforcement. It's also one of awareness of rights, but it is one of enforcement. Environmental health departments, being one of the arms of enforcements on conditions, are particularly under pressure, and our caseworkers find that there are significant delays in them getting involved in a situation due to their capacity. Similarly, the lack of tenure security means that, often, contract holders or tenants don't want to risk taking action for disrepair, because they think it will result in the end of their tenancy, despite the new retaliatory eviction provisions. It's a major disincentive. So, there is an issue of enforcement, and there is an issue of the way in which the lack of security of tenure dissuades people from taking action on their rights.

Thanks. I saw Darren's hand up, and then perhaps Steffan could come in.

Darren.

I'd really agree with what JJ said there. For rights to work, people need to know about them, and then there needs to be enforcement of those rights. And I think that, when we look across councils, there is often a mixed approach to how proactive individual councils are, and there's also just a question about the level of investment in those services. The other way to look at that, I think, and the way in which, ideally, we would move with ensuring that the standards are brought up, is moving from a system where you have rights and those rights are enforced, to a system where you push that more onto the landlord to prove that the property that they're about to rent out is of sufficiently high quality. So, at JRF, we've talked about an idea that initially came from some work from the academic Julie Rugg at the University of York, where she called for a property MOT, whereby, once a landlord brings a property to the market for the first time, they have some sort of survey that proves it meets whatever standard you set. In this case, it could be those environmental minimum health and safety standard risks or the environmental standards. You could also have a more stretching target—something like the decent homes standard, or a minimum standard for decency. And then, after that, at various points, you would have to have it recertified. And then that would be a precondition for renting the property in the first place, and that would move from a system where you're playing catch up and chasing down people who are flouting the rules to a system where it's the responsibility of the landlord as part of their general compliance to be able to prove that those homes are compliant, and do the work before they actually rent them out in the first place. And I think that that would move to a system where you much more quickly drive investment in the housing stock and improve standards, rather than looking again at rights.

Okay. Thanks, Darren. Steffan.

I guess I just wanted to flag one concern we've been thinking about internally, about future issues in this space, and that's around maybe the move to decarbonisation and fuel poverty. Some of the models that were proposed in the housing Green Paper on rent control, for example, had provisions in there that, if you invested in your property to improve the energy efficiency of a property, you could charge higher rent for it. And whilst, from a market incentive provision, I understand the logic behind that, our concern is looking at other things that have gone on in the past—it's those tenants on the lowest incomes that will remain in the poorest quality homes, which are most expensive to heat. On the work that we've done on the local housing allowance, and this is going back a couple of years now, one local authority officer told us that the properties available at LHA rates were the 'toilet-end of the market'. That was the language that he used. So, that's something, I think, that we all need to be aware of, in that, as we increase our investment in decarb, it's how do we do that in a way that those on the lowest incomes actually benefit most from it, rather than tenants who can afford it having homes that are cheaper to run, actually, potentially, even with higher rents than those on the lowest incomes who are going to be locked out from it.

Mabon.

Thank you. I'll be contributing in Welsh. What Steffan was saying just now has led on to my question. In the Green Paper, the Government has proposed looking at regulating rents. Steffan mentioned there one type of rent control. What's your view in general on the principle of rent control, and do you have an idea of the kind of system that could be introduced in order to control rent if that was introduced in Wales? Perhaps we can start with Steffan as he mentioned this.

I think this goes back to the question right at the beginning in terms of what we want to achieve in terms of the vision for the private rented sector, because if what we want is a sector that is the same size or bigger than what we've got now, there would be a need for a different version of rent control. If what we want in the long term is a private rented sector that is smaller, with more people in the public rental sector or owning their own homes, then having a rent control system that places a hard cap for a short period of time while we increase stock would work better.

But if we want a private rented sector that's the same size as what we have now, that could create these unintended consequences that we hear about from Welsh Government. So, in a way, it's difficult for me to answer the question in the Green Paper regarding the weaknesses and strengths of the different models without knowing what they're trying to achieve by introducing that. So, there are strengths and weaknesses to them all, but it all comes back to what we're trying to achieve in the first place.

Thank you. Does anyone else have a view on rent control?

Yes, I'll come in, just to say that, at Crisis, we have concerns—we've seen what's happened in Scotland—about hard-and-fast rent controls—as much as there's a good intent behind them, they do hold some really bad unintended consequences. They can drive up rents. They can push people to put eviction notices in where they might not have done otherwise. So, we really feel that there needs to be a lot of research in this area before anything comes in, which I know you've heard from others as well. From a Crisis point of view, we think that it would be really beneficial to do some more work in looking at what can be introduced, and the potential to tie rent controls to an inflationary measure, perhaps wage growth.

Clearly, rents are increasing significantly at the minute, and there is freedom to set the rent wherever the market will support it. We are disappointed about the absence of the ability to refer to the residential property tribunal for new lettings in terms of challenging unfair rent increases. In terms of introducing rent controls, again, we're extremely cautious. We're also cautious about addressing the symptom of a problem rather than looking at the root cause of the problem, which is one of housing supply. We do recognise the benefits of bringing in some rent stabilisation. We think, though, that there are some other conversations that need to happen in parallel to considering rent controls, and that's around banning no-fault evictions. So, in terms of managing the risks to the size of the sector from introducing rent controls, putting the work in place to ban no-fault evictions would be one. The other one would be stepping up the acquisition of private properties for social rent, which happens piecemeal at the moment. But if that was strengthened, those would be two potential mitigating approaches to limit the worst unintended consequences of rent controls.

Thank you. I don't know whether Darren wants to come in.

Yes, briefly. We've said—I think one of us has said—and I would echo in various different ways, I think there are a just a few thoughts. One is on geography. So, the fair rents consultation acknowledges that the level of rents and the level of affordability varies across Wales, and there are clearly pockets of high rental costs and areas where rents are lower. Affordability might still be an issue in those areas where rents are lower, but it’s probably not going to be solved by rent control. So, I think there’s a question about whether you would need a national or a local approach, and I think we’d lean on the latter.

I would definitely agree that there’s a wider infrastructure that’s needed to roll rent control out, including grant security, much better data on rents, et cetera, to be able to make this work, so it’s clearly not an overnight fix.

But then I think, just stepping back a bit, when we talk about whether rent control is a good thing or not, we often go back to the logic of the market and what the root cause of this is. We recently commissioned some work looking at housing subsidies over the last four or five decades, and what you find is that, at no point, regardless of the level of supply, regardless of the house-price-to-income ratio, and the rent-to-income ratio, we’ve always subsidised housing costs, and we’ve used various different measures, whether it’s cash transfer, whether it’s social housing, whether it’s rent control, and, at various different points in time, there has been a balance between those things. So, I think we should get away—. When we talk about rent control, we think of it in a way as dealing with a core problem, and while that is true, as I say, we’ve always had some level of subsidy. So, if you’re not going to do rent control, then we need to think about dialling up in those other areas, whether that’s building lots more social housing, whether it’s a much more generous cash transfer system. And we rightfully worry about the distorting effects of policy, and we should do, but we should also remember that the housing market is wildly dysfunctional, the rental market is wildly dysfunctional, so we’re not starting from a place of perfection that we might break. We’re starting from quite a broken market, and the reason rent control is discussed is because of that dysfunction, and that should give us more confidence to be interventionist, whether it’s down the route of rent control or other policy approaches.

Okay, Mabon.

If I may move on to the next question, there’s been much mention in Wales over the past few months in preparation for the budget for the housing support grant, and the value of that when it comes to helping vulnerable people is evident. JJ, I think, mentioned earlier some vulnerable tenants within the PRS sector and, indeed, in general. I just wanted to probe a little to hear your views on the role of the private sector when it comes to helping vulnerable people, people with needs. The public sector, obviously, has a clear role in that respect, but there are no responsibilities in that respect in the private sector. So, I just wanted to hear your views in terms of the role of the private sector when it comes to caring for people’s needs.

Again, I think that comes back to the first question. Given that we’ve drifted, so to speak, towards the private rented sector providing more homes for people who, possibly, have extra needs, we haven’t developed that sector in a strategic way, maybe. We’ve done it in a demand or responsive way, so there’s a question there about standing back and thinking about what exactly we’re trying to achieve there.

And it also comes back to the question about what we want to do in the long term. Clearly, there is a need for that support in the short term. There is a need for public bodies and social housing to work with the private rented sector in the short term, but I think we’re all agreed that, in the long term, there needs to be housing available in the public sector for people with needs. We also need to make sure that we are making that investment at the same time, and not just as a sticking-plaster solution, which tends to be what has happened in the last few years. Perhaps we're putting some more money into support for people now, but the demand will increase unless we also increase the availability in the social housing sector. So, increased investment in the short-term needs to go hand in hand with increased investment in building social housing to reduce pressure in the long term.

Does anybody else have an opinion?

Yes, please. From Crisis's point of view—. This time last week, we ran an event with the National Residential Landlords Association, for landlords who were interested in helping to support people who are experiencing homelessness to find a home. So, I think that there is some willingness out there from some landlords, who want to support people with vulnerabilities, but need help and assistance to do so. I think there are quite a few things that could be done in this space. Certainly there's more that could be done in terms of Rent Smart Wales training, support and advice, to give people that confidence. The HSG, as you've mentioned, Mabon, plays a massive role as well.

But it also, for me, links back to the White Paper on ending homelessness, which we really need to get over the line. So, there's a really important new duty within that White Paper about local authorities providing support to people to retain accommodation. I think that would really, really help people who are struggling in the private sector, for a multitude of reasons, whether they need support with budgeting, whether they need support with access to mental health, to keep them in the private sector and to be able to retain their accommodation. Obviously, it's relevant for social housing as well, but I think it's equally relevant for PRS and landlords being able to provide that support.

The other thing I would say about the White Paper is that it was informed by recommendations made by an expert review panel, from all corners of the housing and homeless sector in Wales. And I think there were a couple of recommendations that the panel made that didn't get taken through to the White Paper, specifically with regard to landlords and the support that they can provide. I think there was a reluctance to carry them through, because there's this perception that we don't want landlords to leave the market, we don't want to scare them off, but I actually think some of the recommendations that the panel made would be of equal benefit to landlords, tenants and local authorities. So, in particular, there was a recommendation in there around Welsh Government looking to introduce—and it goes into the technicalities of various ways that you can do that—duties for landlords to make a referral to local authorities when a tenancy looks to be at risk. It's a real shame that that hasn't carried through to the White Paper, because I think that's a key part of linking that support for tenants and landlords together.

Thank you.

Okay, Mabon. Thank you very much. Carolyn.

Thank you. That leads me on quite well. Do you think there's more potential for partnership working between private and social landlords? And have you any suggestions of ways to improve this partnership working?

Okay. Who would like to offer us something on that?

I think I'd just echo—. Oh, go for it, JJ.

If I can pick up on the last point and lead it into this one. Out of necessity, we're looking at what more private landlords can do to support vulnerable people, but it's necessity, rather than good design. And, yes, there are some great individual examples of that working well, but the make-up of the private rented sector—70 per cent owning one property—means they are not well placed to identify people with support needs. If somebody already has support in place, that's one situation that can work quite well, but they are not well placed to identify people with support needs; to have the working relationships with the support providers; or to be large enough to exercise restraint over seeking possession where there are issues, to give a window of time for support to be put into place. Again, social housing, by design, is both affordable and supportive.

In terms of partnerships more widely with private and social landlords, the Welsh Government leasing scheme has been positive. We've seen some success, but it's faltering slightly in terms of its attractiveness to private landlords, and the link to local housing allowance rates is a major disincentive. So, I think there is a review needed there to look at how we get that going again, and get it as an attractive proposition.

There are some really great initiatives with the local authority homelessness prevention teams and private landlords in terms of saving tenancies, whether that's through providing mediation, intensive support or covering rent arrears. That's worked extremely well. That really relies on the communication and the landlord forums and the effectiveness of those. I think, as I mentioned before, on the acquisition of properties from private landlords by local authorities when they want to exit the market, we've seen some good individual examples of that, but it's not widespread and the economics of it aren't overly attractive to local authorities. So, there's a question there of making it more of an attractive and widespread option.

Okay, JJ. Any of our witnesses want to add anything to what we've just heard?

I think I'd just echo the point about buy-backs as well, as a potential for collaboration, especially if we've got a tenant who may have support needs and the landlord is looking to sell that property. There are opportunities there perhaps to avoid that, and it brings that property back into the social housing sector and avoids that tenant going through the stress, potentially, of either going into temporary accommodation or having to move, et cetera. There is some interesting work going on. I know Cyngor Gwynedd, for example, are doing quite a lot of work buying back properties at the moment. So, there is some interesting stuff going on, maybe at a smaller scale, but that is something that we might well look at in the project that we're working on, increasing supply in social housing more broadly.

Okay, thank you for that. Carolyn, I'm afraid because we've little time left we're going to have to move on at this point. So, we'll move to Jayne. Jayne Bryant.

Diolch, Cadeirydd. I just want to touch a bit on regulation. We have covered that a little bit this morning. I think Debbie mentioned in an earlier question some positive things for the Renting Homes (Wales) Act 2016. Perhaps you can just say a little bit about both the positive and negative impacts of the Renting Homes (Wales) Act and how effective you think the protection against retaliatory eviction is.

I can certainly jump in with some sort of intelligence and examples from the casework that Shelter Cymru does. So, the provisions are welcomed. They are a step forward in encouraging and requiring good conditions in the private rented sector. Having said that, we're still seeing a number of cases where the requirements aren't met, whether that's the carbon monoxide alarm, the gas safety and energy performance certificates, protecting the deposit. It is still relatively common, in the cases that approach us, that these requirements haven't been met.

In practice, that provides a useful defence to possession proceedings, and it's really in that context where people are being advised and are understanding their rights and are raising their rights. But, clearly, that's not the end where it's intended. The intention is that those things are there from the start. So, there is an issue about awareness of those rights and enforcing those rights.

There is a view that there's little appetite for people to seek compensation for, for example, the absence of the required written statement at the start of the letting. There's a cost associated to it. There's the unpleasantness of legal proceedings. There's the risk of going onto bad terms with your private landlord. So, individually, there's not much appetite for people taking action over them at the front end of their tenancy. Once proceedings are ongoing for possession, then they are cropping up and they are being used as a defence.

Similarly, in terms of the fitness for human habitation obligations, this is being raised as a defence in a number of possession proceedings. But we are seeing a little bit of side-stepping. We are seeing actions being discontinued where we're providing evidence of unfitness, and then landlords are serving notice on the no-fault basis, as an alternative to being held to account on the disrepair.

In terms of retaliatory evictions, we haven't had a single one yet that has gone to trial. The majority have settled and, largely, they've settled with the contract holders leaving the properties; they haven't wanted to stay in the properties, the relationships with the landlords have broken down so badly at that stage, or the property conditions are so poor and the time it would take to put them right, people have been keen to leave the properties, with some agreement, usually, over rent arrears or compensation.

Okay. Does anybody want to add anything?

Yes. I would add that, you know, the housing health and safety rating system, there haven't been many inspections, the number of inspections around that has been decreasing. We feel that the tribunal process is quite off-putting for a lot of people as well, so it comes back to that lack of awareness of rights and that awareness of what support is out there to push forward on your rights as well.

We're hearing from Crisis Skylight, who work directly with people who are homeless, that there are masses of scams out there as well, in terms of illegitimate properties being advertised that actually don't exist. So, the properties that have been advertised that don't exist, people are phoning up and are being scammed into giving a holding deposit, which then never comes good. So, I think, we're being told from our landlord liaison officer who works in the Skylight services, that this is happening about once a week in Swansea; this is quite an issue. So, we wonder whether there is more that Rent Smart Wales could do in terms of its enforcement arm. We'd really welcome that being part of the review that's just been kicked off, looking at whether enforcement and Rent Smart Wales could be increased.

And linking back to other areas where we feel that regulation is needed, we would definitely welcome a regulator and, like I say, we feel that there are issues with people being filtered out of the system by the back door, just by the very fact that they rely on housing benefit.

Okay. Thanks very much. Jayne.

Thank you, Chair. Just on the enforcement mechanisms, how effective do you feel that they are in tackling non-compliance with legislation by landlords and agents?

I think Rent Smart Wales is really good for recording people who want to do things by the book, but what we need to do is look at how we can catch those who aren't doing things by the book. I feel that that should be part of the review, seeing whether more can be done in that space.

I don't know if anybody else has any—

Okay, Jayne. Yes, thank you all very much. Joel James with the final question.

Thank you, Chair. Yes, just one final question, really, from me. We've heard from the evidence sessions we've had in the past—and I imagine your responses are going to be very much similar—about the lack of data in the private rented sector in terms of not really knowing how many properties are there at any one time. We've heard, Rent Smart Wales, you know, when you become a landlord, you register, but then, if you leave two months later, you don't deregister and that information is only updated about five years later. And also, Rent Smart Wales have said that they don't have any data in terms of how many landlords aren't registered with them. Obviously, there are other data issues as well, and I just wanted to get your views on that lack of data and what sort of priorities, if any, the Welsh Government should have in terms of improving it, really.

Okay. Steffan.

I guess, from our end, rents would be the No. 1 priority, both in terms of if you're talking rent control, you actually need to know what the rents are to be able to do that, but also maybe more importantly for the short term is around the local housing allowance. So, obviously, it's great that the local housing allowance is being uplifted from a couple of weeks' time, but the way that that data is currently collected, it's a voluntary system. So, what we don't know is whether the 30 per cent, at which the LHA rates are being set at the moment, is actually 30 per cent of the market, or if it's 30 per cent of a subset of rents whose data has been shared. Because the point that was shared a lot with us during that work on LHA was if you're a landlord who's operating at the top end of the market, why would you take the time to share that information with Welsh Government? What's in it for you from doing that? So, I think there are two reasons why you'd want to do that, really, and also, just broadly, for us to understand what is the market in Wales, what's going on with affordability.

So, we were really pleased to see that mentioned in the Green Paper. That's something that we would like to see taken forward and put into legislation, that kind of requirement of landlords to share that data. We had previously argued to work with Rent Smart Wales to deliver that. The Green Paper is less specific in terms of who will be collecting that, but I think that actually touches on the previous point on regulation as well. At the moment, we've got lots of different people doing the regulation, so, actually, trying to streamline that in one place would, I think, help people make sure that their rights are being acted upon and would make it easier for landlords as well, then, in terms of where they need to share such information, but rents would definitely be the place we'd focus on in terms of getting raw data.

Okay. Are you all happy with that, or do any other witnesses want to add anything?

Can I add something? In terms of data, I completely agree with what Steffan said and I think we should be looking at having annual information on rent to rent officers in Wales. But I want to be cheeky, because I know we skipped over a question that is actually quite important to us at Crisis as a homeless organisation, around barriers, diversity and discrimination. I completely agree with what others have said, that we need to build our social housing, and that's the key, one of the massive things we can do to end homelessness, but in the meantime, we can't build social housing overnight, and we really do need to look at making our PRS more accessible.

There are a lot of barriers that people face in accessing the PRS in terms of discrimination, so people who have got a criminal record, no-pet clauses—there are so many no-pet clauses out there, and a lot of our members have been through significant trauma. One of our members wasn't able to take a place purely because it had a no-pet policy. She has a dog that has been her only companion through the most difficult time in her life, and she actually chose to sleep in a car, rather than take a place. So, I think it's really important to look again at what we can do about no-pet policies. I know that there is an intention to do that in the social housing sector, but whether there's something that we can do in terms of the rented sector around those barriers that we know are big blockers. Another big blocker is guarantors and large deposits, and whether there's more that could be done at the local authority side in terms of looking at having insurance policies and linking with more rent guarantee schemes. Sorry to be cheeky, but I wanted to get those points in there.

Not at all, Debbie. Thank you very much for that. It's all very useful evidence for us.

Okay. Well, thank you all very much for coming in to give evidence to committee today here in person and Darren online. You will be sent a transcript to check for factual accuracy. Diolch yn fawr. Okay, committee, we'll break very briefly for five minutes until 10.55 a.m.

Okay, we reach our seventh evidence session, then, on the private rented sector in Wales, and I'm very pleased to welcome, joining us here today, Steven Bletsoe, Wales operations manager for the National Residential Landlords Association, Timothy Douglas, head of policy and campaigns for Propertymark, and Richard Rowntree, mortgages managing director for Paragon Bank.

Before we begin with questions, could I just give the apologies of Mabon ap Gwynfor who unfortunately had to leave committee because he's got competing commitments today? But he did ask me to give his apologies for this particular session and the next one.

Just to say that, as ever, time is limited, so please feel free to give full answers, but if somebody has already said something, obviously there's no need to repeat that. And similarly, with committee members, we'll all have to be concise.

Okay, let me begin, then, with an initial question on policy and vision of Welsh Government and your view, really, as to whether Welsh Government has a clear role for the private rented sector in Wales, and is there anything you think is lacking that Welsh Government should include in its vision, if it has one. Who would like to begin? Steven.

Of course. And thank you, Chair. I have watched all of the evidence sessions so far, and I think you've opened with that question every time, and I think the different answers that you've received have shown that I don't think there is a clear strategy. I'm sure that the politicians, the Ministers themselves, will have an idea of what they want the PRS to be, but as a country, as a sector, I don't think that's very clearly relayed, and potentially, most importantly, to those who provide the service. Due to the nature of my job, I spend a lot of my time in rooms with landlords, and other than feeling vilified and demonised for providing a service to the country and to the residents that live in their properties, they don't know what the Government wants from them. They constantly question—they see new legislation coming out, they see consultations, they see all of these, but they don't know where the Welsh Government wants to take the PRS. They're willing, they're happy to go on a journey, but they don't know where that journey is taking them.

Okay, thank you very much for that, Steven. Yes, Timothy.

Yes, thank you, and thank you, Chair, and the committee, for the invitation to give evidence today. I think we would, at Propertymark, agree with that, as would our property agent members across Wales. There needs to be more of a vision from the Welsh Government. I don't think there's a strategic document that perhaps we can all refer to, as has been alluded to in the various sessions. There is not necessarily an ongoing housing survey where we're collecting data and seeing those trends.

And I think there probably is frustration, and now relief, post Renting Homes (Wales) Act 2016, that we should potentially see a cooling-off period in terms of the intensity and complexity of that legislation. But I do think there was frustration in the years leading up to implementation, if you think that it was passed and then the sector had to wait six years for implementation; it was changed, amended, and there have even been some changes to the contract. So, it's obviously important that we get legislation right, but I think we need to see more of a clear vision and should learn those lessons of implementation of the most recent significant change we've seen in Wales.

Okay, thank you very much. Richard.

Good morning, Chair, and thank you for the invite. I would just add to that, along with the missing data around the property market, the more general demographic changes we're seeing in terms of an ageing population, more students that have been welcomed to Wales and Welsh excellent universities and colleges, and also the fact that people are living increasingly more alone, so under-occupancy of properties as well. So, all of those factors are bringing increased demand. And I think what we'd like to see is a more strategic approach across all tenures rather than specifically looking at social, private or owner-occupied.

And I think, although well intentioned, often the demand side intervention has not been backed up with supply side, which is exacerbating the issue here, but wraps in that lack of data. So, we'd love to see a Welsh housing survey, equivalent to the English housing survey, which would also give more confidence to lenders to help support whatever the size and shape of those tenures need to be.

And just to give you some sort of context in terms of Paragon's lending in Wales, we are the pioneers of buy-to-let lending, going back to 1995, so we've had decades of rich data. Some of that is very limited in Wales; we do lend into Wales. Over that period, we've lent £933 million, of which, £407 million is still open today—up to 2,000 landlords across 10,000 loans. But that is heavily concentrated around Cardiff, Swansea and the coastal areas, and that tends to be because of data black spots, certainly in rural Wales, where we can't get comparisons, we can't get strong rental demand numbers. So, we certainly want to be part of the solution in terms of how we can support here, but would welcome that working together to improve the data.

Okay, thank you very much. Thank you, Richard. We'll move to other committee members, then, and firstly, Sam Rowlands. Sam.

Yes, thank you, Chair, and good morning. Thanks for being with us this morning, it's really appreciated. Just picking up your point on the supply side, there are acknowledged issues around there not being enough supply of housing generally, and specifically around private rental build as well. I'm just wondering if any of you think there may be specific Government interventions that would help that supply side at the moment, and any specific interventions for greater supply in the private rental sector.

I think, initially, a review into all taxes impacting private landlords and the sector would be welcome. I think, in an ideal world, we'd want to see a reduction in the higher rates for purchasing additional dwellings under the land transaction tax. It's not quite as high as the 6 per cent in Scotland, but it's obviously higher than other parts of the UK.

So, we looked at that and did a tax paper last year, and if you take the average property in Wales of, say, £215,000, a landlord can expect to pay just under £10,000 in land transaction tax, whereas, obviously, there's a zero rating otherwise. That, coupled with other costs we've seen in the market—a change to the wear-and-tear allowance, the mortgage tax relief changes—. So, yes, these are things coming from Westminster, but I think they need to be taken and looked at in the round. So, I think, certainly from Propertymark agents, that supply would be looking at the tax and the costs that have been put on landlords in the last five years and a review of that land transaction tax in order to reduce that 4 per cent is the key issue we hear back from members. Thanks.

To agree on that, many of you will have read our 'State of the Welsh Private Rented Sector' document that we released a little while ago, and in that we also called for a review of land transaction tax, because we believe that we need a vibrant PRS in Wales. And what does 'vibrant' mean? Well, 'vibrant' isn't one that makes millions of pounds for landlords, it's one that supplies properties to those who need them and allows the landlords to have a progressive taxation system. So, outside of your control, obviously, we've got section 24 in London, which stops the interest rates being claimable. We do have the 4 per cent land transaction tax, and we have been making representations to have that reviewed back to the other level. And whilst we accept that that does mean a decrease in revenue income, we believe that the benefits would outweigh them because of your ongoing costs from your revenue budget as a Government.

But when we're talking about supply—. We were asked to do a news article for Good Morning Britain when the consultation on fair rents came out. And we all know how journalists work—the request was, 'Can we go to Cardiff and stand out on a street with lots of "to let" signs?' The journalist couldn't find one. That's the truth of where we are in Wales at the moment. We're talking about rent controls. Landlords don't set rents, markets do. There is a drastic shortage of properties in Wales at the moment. We're back to that word, having a vibrant PRS.

We have development control committees around all of our local authorities, with planning departments that are understaffed. We have the phosphate issues. We have developers who are ready to put spades in the ground but can't because of licensing on the phosphates issue. We have to look at this. Overall, we have a shortage of houses, and the Welsh Government does have to act, because, if we build houses, we'll have people stopping living in hotels, in temporary accommodation, which is exempt from fitness for human habitation. So, when we're saying about people living in rooms, there could be damp in them, because they're not under the Renting Homes (Wales) Act 2016. That only gets addressed when we build more houses and we have a progressive taxation system that encourages people to diversify their investments. Seventy per cent of landlords have one or two properties. These aren't multimillion-pound property developers; they are people providing a service that benefits the tenants as well.

Thanks.

I would just add that we are due a couple of significant reports, which I can follow up with the committee at a later point, the first one being around the homes we need, which is a UK Finance report that is looking more strategically at how the tenures interact. I think that will help with some policy recommendations on the supply side here as well. And also PricewaterhouseCoopers are, this month, due to launch a review around the private rental sector, and specifically around Wales that will show the gross value add to the Welsh economy is £1.6 billion—of the private rental sector—supporting 14,000 jobs. So, it's a much wider piece here and, as I say, I'll follow on with the evidence and data as they're published.

Thanks. And just in terms of going back to improving that supply side, and, Steve, you raised a couple of specific points that are preventing supply at the moment, there are probably opportunities out there for institutional investors as well, especially in terms of build to rent. Is there anything that Welsh Government could or should be doing to attract those institutional investors more into Wales? Is there anything specific, or is it a general tone or a message that, perhaps, Welsh Government should be considering when it comes to attracting that investment into Wales?

I think, broadly, on the point around build to rent, we have property agents within membership who do carry out build to rent. So, I think it's important that we have a—. The property agency housing market is a broad church, and I think build to rent does have a part to play. Why can it play that part? Well, many renters encounter issues, say, in the traditional PRS—so, short-term leases or maybe complaints around rents unfairly increasing or landlords slow to do essential repairs. So, build to rent has that benefit of often offering tenancies up to three years, a dedicated onsite manager, purpose-built communal spaces. However, it comes with a premium price tag. So, it's not going to work everywhere and not everyone's going to want it. And often the developments of build to rent target certain demographics—so, young professionals or over-55s. Pets as well are a big thing that built to rent have focused on. So, I think it's important that we have a healthy housing mix for everyone, but it needs to be part of supporting, I suppose, the traditional landlord and then looking at where build to rent can come in and facilitate those parts of the market that want it.

And in the interests of brevity, I agree with everything. Just to finalise it, that it fits into that strategy: where does build to rent fit in within the strategy of the overall PRS in Wales? Because without that clear message on what the strategy is, then we don't know where that fits. And it's obviously a big thing at the moment, but what will it be in five years' time?

Yes. Richard, anything from a lending point of view that would be helpful?

We support build to rent, it has a role to play, but I would echo the point around it is a premium product. In terms of where we are seeing the demand/supply imbalance at the moment, those that find it the most difficult to access the private rental sector are those with the most limited budgets, those that are the most vulnerable, so I think it doesn't really support that general demand piece.

Sam, just before you continue, Carolyn Thomas would just like to come in. Carolyn.

Yes. I want some clarification on a few things. So, Steven mentioned that damp homes will only improve if more homes are built; the PRS doesn't know what Government want of them. Well, surely it's a home that's adequate to live in. And the private rental sector is a premium product, I just heard as well. But, to me, the private rental sector is—. I mean, it's changed, hasn't it? It's shifted because we haven't got enough social homes, but it is about having a home adequate to live in. So, just hearing that, you know, alarmed me a little bit, that damp homes will only improve if more homes are built. So, I just would like you to—. You know, for the record, really, if you'd like to come back on that. Thank you.

Of course. And what I mean by that is, if a local authority has the choice of two houses to put somebody into temporary accommodation, one of them has damp and one of them doesn't, the local authority will put that person into the house that doesn't have damp. But if there's only one house available and it has damp, then they can only put them into that house. So, what I mean is, if you have more houses, you will raise the standard by having the choice available to you. And that's across—. So, I'm not just meaning the local authority there; if you are a tenant and you have a choice of five or six houses all at the same price, you will choose the best house for you. If you don't have it, then you will take the only one that's available. And my point around temporary accommodation having mould in it is from personal experience; I've seen it myself. It's either that or nothing, because the supply isn't there to contra the nothing.

Chair—. Yes, Carolyn, I'll just come in on the premium price. I think I was alluding to build to rent specifically in terms of saying that, you know, it's a higher rent; there's a premium price tag on build to rent because of the additional facilities, the on-site management, the communal areas, the often high spec that they're built to. So, I think that just needs to be part of the thinking around bringing that into the market and having a healthy private rental sector and housing market that caters for all. It's part of the solution, but it's not just the solution, I think. That's what—. Hopefully, that helps to clarify.

And I would just add to that, Carolyn, from a lender's perspective, the checks and balances that are undertaken by a lender in the buy to let process are a force for good for standards across the private rental sector. So, just to bring that to life with regard to our own experience, we decline, overall, 12.7 per cent of all applications for lending in Wales. A third of those are due to condition, and, often, there will be damp or category 1 hazards. Now, not to say that they don't get lending elsewhere—this comes back to that data point—there could be other reasons why that is declined, but the minimum standards are not really where we set; it's a minimum of good for lending against that. And we have seen, if you look across the private rental sector, improvements in standards. In 2006, 46.7 per cent of the PRS was non-decent. That's reduced to 21.1 per cent in 2022. Now, still work to go, but I think there is evidence that this is improving.

Okay. Sam.

Thanks, Chair. To continue this theme around quality, and, I guess, at least healthy standards of living for people as well, I was wondering what you think might be the top priorities or the biggest things that Welsh Government could do to improve quality and remove hazards or ensure hazards are removed within the private rental sector. Is there something obvious that Welsh Government could or should be doing that they're not doing at the moment?

I'll start off on that, and I think it's been referenced in terms of a property MOT. I think that type of approach could be positive if it's done in the most appropriate way. Across the Renters (Reform) Bill in England, they're looking at a property portal, so I think something along those terms could work really well, if we can get an evidence base that allows multiple parties, including lenders, to have access to that, to help inform, as well as pool data in terms of that property MOT approach, and to continue that analogy you could then have some sort of driving licence for landlords to make sure they're fit and proper, because although standards are increasing because of the checks and balances from a lending perspective, two thirds of the private rental sector is still a cash market, and there are fewer checks and enforcements there.

Yes, sure. Okay. Does anyone else—?

And enforcement helps. We have 'fit for human habitation' under the Renting Homes (Wales) Act, but we need an adequate enforcement mechanism for those properties—for non-members of the NRLA, because we're proud to represent good landlords, who take the training. We offer training programmes. We offer documentation. We encourage all of our members to provide properties that are compliant with the law. But we all, in this room, know that there are landlords who don't operate within the Renting Homes (Wales) Act and don't provide properties that are fit for human habitation, so the support for the enforcement must be there. When reports are made, and rogue landlords provide properties that aren't up to adequacy, then enforcement is essential. And the support for those mechanisms has to be there as well.

Sure. Is there anything you wanted to add, Tim?

I think, overall, the elephant in the room, perhaps, when we're talking about supply, quality and affordability is 'avoid rent control'. I think that is the clear message from Propertymark. It's the clear message from what we've seen in Scotland through the cost-of-living legislation, which introduced a rent cap on in-tenancy increases. And what's it caused in Scotland? Well, landlords have actually started—. Whereas rent wasn't really—. I think landlords are quite lazy in raising rents, and actually it wasn't necessarily a thing that they concentrated on. But, actually, what we've seen is landlords increasing rents in between tenancies to cover costs, or anticipated costs, because we know from the arrangement with the Scottish Government there that they are wedded to a national system of rent control. It failed to acknowledge the financial burden and costs that landlords have increased, through mortgages, the cost of maintenance and anything like that. And actually, the Scottish Government introduced that policy in the October and at their December budget increased the additional dwelling supplement to 6 per cent, almost giving people a reason to become a landlord and then put that money onto the rent. So, investment has stalled and the landlords association in Scotland estimate, from their findings with members, that 22,000 homes could have been lost in the last 12 months in the private rental sector in Scotland. And actually, if you look at Zoopla's figures, I think rents in Scotland are now the highest. They've seen the highest increase, of 13-odd per cent, across the UK. So, it really needs to be avoided. And I think the other issue is—. Wage growth, the wider economy—. Rent control wasn't talked about 10, 15 years ago. So, we need to sort all these supply and demand things, or is it purely an ideological decision that Governments are wedded to? So, avoiding rent control is a must.

Okay. And Steve, you wanted to come back in.

Yes. If we're moving into rent controls, we carry out quarterly surveys, and a lot of the information that we provided in our written supply may have changed, and we're obviously open to provide more up-to-date information. But the worrying thing in relation to rent controls is that, for 10 years, Wales had the lowest rising rents in the whole of the UK—10 years consistently suppressed. Two actions happened. The implementation of the Renting Homes (Wales) Act and the consultation on rent controls. Wales is now higher than any other part of the United Kingdom, because those lazy landlords, who don't put up rents during a term, suddenly thought, 'Well, if you're going to control me going forward, I'm going to realign.' Rent controls went up over 10 per cent in Wales the month that the consultation on rent controls happened. We're back to this clear messaging, the strategy, what we're wanting the landlords to do, because that scared a lot of people into either putting their rents up above inflation or exiting the market completely. This is back to the demonisation of landlords. They're not people who're running around with suitcases full of £50 notes. They're very small businesses who've diversified their investment. So, if we're going to bring in rent controls—and we're all looking forward to the new paper in the summer—if that happens, be prepared for more landlords to leave the sector who haven't already, and even less supply and even more problems, very genuinely.

And I think, if I could just add, the key thing it comes into is that the private rental sector is now, I think, in all parts of the UK, the second largest tenure outside of owner-occupiers, so let's speak of landlords and agents in the private rented sector as key housing providers. I think that goes back to the crux of that vision, that strategy. It's a key housing provider. But across the tax regime, the economy regime, energy efficiency, welfare support, are we looking at it in a holistic way, are all Government departments getting together and pulling together in order to nurture this sector, which is, as we know, often doing the job that the social rented sector did in lots of parts of the market, and, with wage growth and the economy as it is, people can't afford to buy? So, we're not looking for special treatment, and we're not looking to be demonised either, but I think we need to change the narrative. Landlords, agents, the private rented sector is a key housing provider, but does that come through in our policy making? I think that needs to come through and to have a fair conversation about that.

Perhaps one last point, Chair, if I may.

Go on, Sam.

On the point around rent controls, do you think there's anything that should be done at all to mitigate any extreme spikes in rents at all?

Improve the supply. This is as close an analogy as I can have: if you have a specific car that you want and you can find seven of them on the market, you dictate the purchase price. If you have a specific thing in mind for a property or a car, and there's only one available, you'll pay whatever it takes. So, if you increase the supply, and I mean the supply of good-quality properties, the market dictates rents. Governments don't need to intervene; the market will dictate it. So, if you build more, you make more available, you have those progressive taxation systems that encourage more people to provide PRS properties, you won't need to artificially control them; they will be controlled through their availability.

Okay. Anybody else want to come in?

Well, a temporary reprieve on the 4 per cent, for a short period, could balance things out in order to—. A lower rating or zero rating to encourage that. So, I think, yes, as Steven said, it's about supply, but there are existing levers the Welsh Government have got through the tax system that they could use in short-term measures, as well as looking at it in the long term.

Yes, sure.

Can I say—? Sorry, it's just because you've prompted something and I’m going to forget it otherwise. You have to think across the board. I watched the previous evidence session, and there used to be a rent assessment committee that looked at high spikes. You got rid of that in the Renting Homes (Wales) Act 2016. So, you had the mechanism, as a Government, and you got rid of it. So, you need to be thinking about the ramifications of implementation of legislation.

Of course. Richard, do you want to say something?

If I could just add to that, and it's linked to that point, in that there will be a limit in terms of the relationship between wages and rental inflation, and we are starting to see other regions coming off that peak, in terms of what we've seen over the COVID pandemic and this restriction. Clearly, the demand/supply imbalance is still the key factor, but also, if you look at the Scottish experience, tenants staying put reduced that supply even more because they were worried about a rental increase during that period, and also we started to see evidence of Scottish landlords buying in England, which, again, exacerbated the problem even further.

Okay, thank you. Thanks, Chair.

Okay. Joel.

Thank you, Chair. Thanks ever so much for coming in this morning. It's actually been quite illuminating, and, if I'm honest, I agree with a lot of what you've said—I think if we just increase housing stock, the free market will take care of the rent prices, and it's frustrating that others don't necessarily see it that way.

You touched upon some of the challenges that the private rental market suffers from, and I know from when I speak with constituents who are landlords that many of them have inherited a property that they've wanted to rent out or, previously, they've switched their mortgages to a buy-to-let and then bought a bigger property, and, obviously, that situation is just not favourable for them now. Indeed, it's something I've looked at as well, and I was advised, basically, not to because you'd just be paying so much tax it's just not profitable anymore. And I just wanted to get an idea of any other challenges that you'd like to highlight that you haven't mentioned yet.

But, also, what sorts of lessons could be learned elsewhere? One of the markets that I've been looking at a lot lately is what's happening in Ireland, and the private rental market there is in a disastrous state. I know the housing Minister last year said that they estimate that they've lost, in the last five years, about 40,000 landlords, which is a lot of private landlords to be leaving the sector. I just wanted to get your views there as well. Are we in danger of going down that route then, as well?

We have such a large private rented sector in Wales, in my opinion, because there have been decades of underinvestment in social housing. There are people living in the PRS who should be living in social housing and get all of the support that they should get through a social housing landlord. So, the person that you've just described—somebody who's inherited a property—is now a social worker, a debt management company, a facilities manager. All of those roles have a designated place in a social housing structure, and some of the people with complex needs have those. So, when you have a landlord who has to be all of those, when you have fuel prices going up, and somebody falls into debt on their rent, then, suddenly, a small business landlord is a debt adviser, and they don't have that support network in place. And when you have things like the Renting Homes (Wales) Act and consultations on rent controls, it's the straw that breaks the camel's back—'I'll go somewhere else. I will go and invest my money somewhere else'—because the returns aren't there. LHA has now been unfrozen, but it was suppressed for a very long time. We have created this perfect storm in Wales that does not encourage investment into the PRS that it needs, because it is there at the moment to support the social housing structure that isn't there.

I think the Republic of Ireland introduced rent controls, didn't they, and they introduced them on, I think, existing tenancies or—. Essentially, what it did was that all the landlords who were already in the market and weren't raising their rents were penalised against new entrants, who could raise the rents, and it was completely disastrous. So, again, I think it's another thorn in the side for rent control.

In terms of challenges and solutions, well, as I alluded to at the start, hopefully now, post renting homes Act, we'll have a period of calm, potentially, and I think there should be, seriously, to allow the complexity of what's been introduced to bed in. But, uncertainty over rent control, uncertainty over energy efficiency—. Yes, it's a UK Government competency, but if we go back again to the costs, that legislation was going to introduce a cost cap of up to £10,000, to get to EPC C before you could then register an exemption. So, again, it goes back to that issue of, 'You're a new buy-to-let landlord, you've got to pay your £10,000 land transaction tax'. If the property's not a C, which we know a lot of them aren't, across Wales, you'd have had to fork out another £10,000. So, before we start, you need £20,000 as a landlord, and where's that money going to go? As we've alluded to, for the landlord or agent, it's not necessarily lying around. So, that's where the tax, the economic system, has to be built in—the impact of those costs has to be built into housing policy.

There's building safety as well. Obviously, the Welsh Government are looking at that, and we've had some positive discussions with them. Enforcement, I think, is an issue. We need to support local authorities and Rent Smart Wales to do that. But I think the final point is that the Welsh Government have got professional bodies, like us, that they could utilise. To be a member of Propertymark, you actually have to have a qualification. We personally don't think, at Propertymark, a day's training course to be a property agent, under Rent Smart Wales, is sufficient. So, you have to have a qualification, ongoing training, continuing professional development. We do audits, compliance and a whole myriad of webinars and training. So, let's utilise the role of professional bodies as well to support all of this stuff, going forward, and, ultimately, use a professional, qualified property agent if you're not willing to do it yourself.

I would just add that the costs for landlords have significantly increased over the last 18 months to two years, mainly driven by 14 base rate rises, from 0.1 per cent to 5.25 per cent, and the knock-on impact that that has had across the cost of finance. Most loans are on an interest-only basis, so there's a bigger increase in terms of landlords' costs. And, of course, for professional landlords, this is part of their business and they're in this for the long term, so they weather those costs and they carry that. For those who've only got one or two properties or are non-portfolio or amateur landlords, that's led more to be uneconomic and them potentially leaving, which is why those numbers are reducing and likely to increase at this point.

And linked, then, secondly, to the EPC point, there is a consideration around needing to raise the standards of energy performance of these properties, and that is happening. If you look, in 2012, only 20.1 per cent of properties were A to C rated; this year, that's risen to 44.9 per cent, which is actually higher than owner-occupied. So, landlords are investing, looking to create a better experience for their tenants, but also to reduce that energy cost as well. And, at the same time, you're seeing that the risk-free rate—so, the cost for somebody who is choosing to put their money into property rather than into a savings account—has narrowed, so you can get a 5 per cent return now on an instant access savings account without all of those added complications of renting property.

If I could just come back, Chair, on the energy efficiency, there's no doubt about it, we certainly see the housing market playing a key part—with the percentage of emissions that come from buildings and homes, we have to do our part. And we've done a lot of guidance and work with agents, to work with their landlords, in order to take advantage of any grant funding that's available and do all the quick wins at the property, regardless of the new proposals. But new proposals will come back. Just a quick point on those new proposals, and it might not necessarily be in the competence of this committee, however, why is it that, for the 18 different archetypes of property that we've got across the country, every one has to be a C—a one-size-fits-all C? It's not going to work. We're going to lose additional property, there is going to be a fallout, unless there's a really good exemptions regime, unless there's really good grant funding that's linked to the EPC and a proper road map to do those changes. Surely, we must be looking at making every property as energy efficient as it can be, not just this one-size-fits-all approach, which isn't going to work for large parts of the buildings that we've currently got across the country.

And just for the record, those are from the English Housing Survey, those stats that I've just quoted. So, this just comes back to that data point that we need to see the same for Wales.

And again, Joel, on your question, there needs to be better communication between organisations like us and the Welsh Government, because we represent those good landlords who you want within the sector. So, when you're asking about what the challenges are for landlords, well, the challenge for a landlord was, if they issued an incorrect occupation contract to their tenant, they could either be fined or they could have rent withheld. Now, that occupation contract has been written by the Government in such a way that no tenant reads it. I think we can be honest: it's an 80-page document and, when a landlord presents it to the tenant, they don't read it, they sign the bottom, because they don't understand it. We've taken very basic tenancy agreements and made them into an extremely complex legal document, and the problem is that the model occupation contract that's available through the Welsh Government website is in contradiction to the Act itself. So, we're expecting landlords to do a job that Welsh Government has had trouble doing, with all of their lawyers. And that scared a lot of people out—they're not legal, they're not support workers, they're not all of these people that we're expecting landlords to be, and we are forcing them out of the market.

You mentioned there also—and it's an issue that's highlighted with all the evidence, as you've probably seen yourself there—that lack of data. If you had a direct line to the Welsh Government now—as we all wish we had, I suppose—what should they be prioritising in terms of that data collection then, in terms of just actually getting an idea of rent prices around the country, or how many landlords are actually leaving the sector? And this is an issue that has been brought up with me by landlords—they have to register with Rent Smart Wales, but then they don't have to deregister. So, we don't actually get an accurate view of the rental market, really. I just wanted to get your views on that.

You'll find agreement from all of us, I think, on the fact that the Welsh Government needs to hold accurate and up-to-date data on the housing market, which includes the PRS. And more importantly than having that is to not rely on inaccurate information. We've been shouting for as long as we can be heard, 'Landlords are leaving the market', and every time we say that, we're told that our evidence is anecdotal and that the Rent Smart Wales evidence shows that there are more landlords and there are more properties than ever. That information, as you've just said, is not accurate. Because I speak to many people—. Part of my role within the organisation is to understand why people leave a membership organisation that represents private sector landlords. Over half of the people who leave the NRLA tell us they're no longer landlords. I speak to landlords all the time who tell me that they're leaving the sector. I met a gentleman in London last week who showed me the text update from the Rent Smart Wales app to update, and he said, 'Well, why would I do that? I sold them three years ago.' I've got another member who tried to register a property two weeks ago, to be told by the Rent Smart Wales website the property was registered to somebody else. It's not just that we don't have data, it's that we rely on incorrect data. Everybody knows the data is incorrect, and I think that people are starting to come round to the idea that the way that Rent Smart Wales register them and monitor them is not accurate, because, as you've said—. They are required to say when they've changed their properties, they are required to tell them when they've left the sector, but they don't, so we can't rely on that data. That data is skewing the honest conversations that need to be had around the PRS in Wales, because when we come into this building, or when we lobby, and when we do all of that, and we say that people are leaving the market because we know they are, we can't keep being told that they're not because of inaccurate information, and that's currently the state in Wales.

I think we would also welcome a Welsh housing survey. There's obviously the national survey for Wales and the housing conditions evidence programme, but I think, as has been alluded to, they're inadequate. The methodology behind the English housing survey is questionnaires in a physical survey, so it is quite robust. But it's not just info we want on the private rented sector, as I think Richard was alluding to—it's owner-occupiers, vacant dwellings, mortgages, first-time buyers, energy efficiency, wellness, even, and that type of thing, damp and mould, and obviously how the fitness for human habitation element of the renting homes Act has come in and is working.

So, I think it does need to happen—we do need a basic data set. But just quickly on the rent levels, I think we need to do more to support Rent Officers Wales. They actually go out and they play an important function in collecting data in Wales on the PRS, particularly rent data, which then feeds in, often, to the housing element of universal credit, local housing allowance. That goes into advising Ministers on valuation, property matters and benefits. We've actually met with the rent officers and provided information to our agents, because they will come in to our agents' offices and ask for information, so we've tried to standardise that and improve it.

I think there's probably a bit more to be done around the trust issue—what's happening with that data from agents and landlords—but that is a port of call that we certainly need to resource and utilise Rent Officers Wales for. Whether that, dare I say it, could be linked into the licensing conditions of Rent Smart Wales—it could be. But there is a mechanism out there and I think we need to utilise it, and there's some more thinking to be done on that.

I'll just add one point. I would agree with the point that bad data is often worse than no data, but something that is robust that I can point to is that UK Finance data shows that only 2,000 properties were purchased in Wales last year with a buy-to-let mortgage. That's down from 4,000 the year before, so it is a lead indicator on this decline. And if you go back to a more normalised period—say, 2014—that long-run average was about 3,500. So, you are already starting to see that that supply is likely to get worse rather than better in the short term without intervention.

We'd better move on, Joel. Carolyn Thomas.

Thank you. I just wanted to come in about rent caps again before you leave. You said that rather than have rent caps, we need to have more supply, but it's going to take a while to build that supply. So, what about people that can't afford the rents? Are you suggesting then that benefits need to increase to be able to cover the rent? I just want to ask you about that. The local housing allowance is set by the UK Government. The Welsh Government don't have any control over that. They're having to increase the housing support grant to try and cover. But just your views, really, on behalf of the tenants.

My experience is that every organisation that works in the PRS in Wales was supporting the increase in local housing allowance, and the fact it was frozen for so long was disgraceful because it has knock-on effects. Again, in a previous session, you've asked about the leasing scheme. If you're asking landlords to lease a property to a local authority for five years but you're not going to give certainty over what the income could be for those five years, then you're not going to get people to buy into that in any way at all. So, you're absolutely right—there needs to be a clearly defined long-term plan for what local housing allowance will do over a five-year period so that people, organisations, local authorities and small landlords can plan, because only with planning will you get the buy-in on that.

Thank you. Are there any other suggestions for how social landlords and private landlords can work together in partnership to try and help tenants and make things better for them, and for landlords?

I'm happy to come in on that. I think from Propertymark's point of view, the thinking we've done around that is local authorities—yes, we know all local authorities are under-resourced—if they could better understand the housing stock, as it were, in their area across the social rented sector and private rented sector in terms of their database, the types of property, perhaps a property that's had adaptations to it through the disability funding grant in the private rented sector, then I think they would be able to then look at the needs of people and where could they better be placed. It may be that it’s the social rented sector for someone who’s vulnerable, for example, but if they know what type of property is in the private rented sector as well, and had some form of database, then I think they would perhaps find better and quicker solutions for people.

Secondly, in terms of landlord forums in Wales, we did a freedom of information request across the countries of the UK, and Wales came out on top. Out of the 22 local authorities in Wales, 18 responded and only three had said that they hadn’t had a landlord forum since 2021. Obviously, we’ve had COVID, and that’s pretty impressive. So I think there are the foundations there within the local authorities in terms of that communication and partnership, but I think they need to better know the type of property that’s available and then I think they’ll be better placed to support vulnerable people, perhaps.

Can I just go on to pets? We're hearing from animal shelters that among the many reasons why pets are handed over is because landlords are unwilling to accept pets. How do you think we can encourage more landlords to accept pets? I think there was a suggestion in a previous session about perhaps insurance. Have you got a view on this?

I've got lots of views on pets. It has been a policy area that has really dominated my work, Propertymark’s work and the portfolio of policy. I think in Wales, you’re in a fortunate position. You don’t have a deposit cap. Do not do away with the deposit cap. Keep the no deposit cap. Do not introduce a deposit cap, because all that has done in England is heighten the risk. Whether that’s an anticipated risk or not, it has heightened the risk, because there’s a view that the deposit isn’t enough, and they won’t be able to reclaim the damages. So, in Wales you are in that fortunate position.

I think from our point of view, we’ve done a lot of guidance and work with agents in the sector to move to a position of ‘pets considered’ when advertising a property. We don’t want to see blanket bans, because ultimately it’s about suitability, and a decent professional agent should be working with a landlord and a tenant to say, ‘What is the best suitable property I can find for the needs of this person?’, whether it’s with a pet, or no pet, children, et cetera. It really is bad for business by just having those blanket bans. We’re trying to encourage that ‘pets considered’, and we’ve produced extensive guidance on that. But I think policy makers have got to recognise there may be a legitimate reason why a pet’s not suitable. You might already have a pet in the property, if it's a house of multiple occupation. There might be allergies, or just generally the property isn’t suitable—big dog, no garden, second-floor flat. I think all of that has to be brought into the thinking.

On the issue of pet insurance, I think you’d have to amend the Renting Homes (Fees etc.) (Wales) Act 2019 to allow it to be a permitted payment. The issue on pet insurance is that, if the landlord takes it out—. Well, first of all, are there enough pet insurance providers in the market? I think the question is specific to that. We don’t know. How would the premiums work moving between properties, like on cars? We don’t know. We don’t know if there’s a market for it. But fundamentally we’ve got to be careful. Obviously, if the landlord takes out pet insurance it becomes a permitted payment, and it needs to be reasonable and charged to the tenant, but we’ve got to be careful that the tenant doesn’t take out pet insurance in month 1, cancel it in month 3 or 4 because they might have come into financial difficulty, when it’s needed in month 12. So, the insurance product itself has to have that bridging loan in order to fund any missed payment.

So, there are solutions, but if you take all of that in the round, I think moving to ‘pets considered’ and taking a reasonable additional deposit to cover those costs should suffice in Wales.

I think making it reasonable is the issue, because sometimes it's quite high, so quite a lot will just say 'no'. The perceived risk isn't really there, but they believe it to be.

Steven, I think you might know this. Before the Tenant Fees Act 2019 in England, and when it was looked at in Wales, I think agents and landlords had an additional two weeks' rent, perhaps, for a pet. Was that the norm, would you say, Steven?

Yes. Landlords are not anti-pet, they're anti-risk, and pets provide a risk to the integrity of the property when the tenant leaves. So, any opportunities to mitigate the risk are there, and, obviously, the fact that there's no deposit cap here allows the landlord to mitigate that risk. But there's not a load of landlords out there who hate cats and dogs; it's purely about the risk to the property.

I'll just add that, from a lender's perspective, there's no restrictive covenants or terms and conditions there, and we're pretty agnostic on this—we're supportive of whatever the landlords are looking to do.

Thank you. We will move on to Jayne Bryant.

Diolch, Cadeirydd. Just a few questions around regulation, really. We heard from local authorities that they'd like some more power to permanently exclude persistently non-compliant landlords from the market. Do you have any thoughts on this, or do you have any suggestions for other ways to improve enforcement within this area?

We're privileged in the fact that we represent good landlords, and we believe there is no place for a bad landlord in the sector. Any moves that can be made to remove bad landlords from the sector are welcome. It's been part of our message around the Renting Homes (Wales) Act 2016: don't force good landlords out of the market, because they provide the important service. The NRLA would support any moves, through any enforcement, that would remove bad landlords from the sector.

I would echo that. We have a lot of data from our in-house valuers that step foot in every single property that we lend on, so we do see good, bad and indifferent, as you can imagine. Having some sort of repository to feed that information into, whether it would be a property portal, or some sort of link to landlord licensing, we'd support. We have no tolerance for rogue or poor landlords.

I think we'd agree; we'd support that. We've already alluded to the fact that local authorities need that funding for the enforcement. But ultimately, is Rent Smart Wales the single licensing authority? And if they've not got the teeth to do it, then who has?

Thank you. In your written evidence, you've included a number of suggestions of how to improve and develop Rent Smart Wales. Can you tell us what improvements you think should be a priority?

I think, from our point of view, Rent Smart Wales is a good start. As I alluded to when I was discussing our membership requirements, we don't think that a day's training course is enough for a property agent, and would prefer more of a qualification and that ongoing continued professional development. What we hear back from our members is around that reporting function, perhaps the scrutiny that Rent Smart Wales is under—does it annually come to this committee, or any committee, in terms of what it does? And I think, probably, some greater financial transparency around the money that's raised from the licensing, what it's going towards and what it does, would give more confidence to landlords and agents. I think it links back to the previous point about being that ultimate licensing authority and having teeth to take action.

Again, it comes back to that clear message that we had—it's full circle here: what do you want Rent Smart Wales to be? Because the landlords certainly see Rent Smart Wales as the stick in the carrot-and-stick scenario here; they don't feel listened to. And let's not forget that, in the run-up to the largest legislation change in the history of this building in relation to the private rented sector, Rent Smart Wales closed their phone lines—that wasn't a great move. So, what relationship do the Welsh Government want between Rent Smart Wales and the providers of the service? What is Rent Smart Wales? Is it a tenant representative organisation, is it licensing for the landlord? What is it? Because there are many landlords out there who just feel that they are the brick wall that they run up against when they're trying to provide the service. And there's the point raised about where the money raised goes. What does it do? What is it used for? What it is, in the benefit of the landlord, for? We have this evaluation coming up. The contractor has been appointed. It's going to be a very interesting document, and I'm sure a lot of people will take part in that evaluation process. But it is very much a case of what do you want Rent Smart Wales to be and what do landlords expect it to be.

Just finally, the housing expert panel suggests a statutory 'scores on the doors' rating scheme for letting agents, to help tenants and landlords make decisions when choosing an agent. Do you think this type of scheme would be beneficial?

I think with any rating system, in theory, yes, but we've got to be careful with the scoring, the methodology, how it's worked. If we look at any Trustpilot review, one bad review online can scupper a whole annual of good work. So, I think we just need to be careful of the scrutiny behind the rating system and the methodology. But, ultimately, I think we would say, 'Well, there's already a body, ourselves, that's doing that rating system.' If you're Propertymark protected, you're already going higher than the Welsh law, the Rent Smart Wales requirements. We've got five company obligations, there are 10 individual declarations you must make through membership, we do audits, we ask for financial accounting reports. So, again, I think it's about utilising the good practice we've got in the sector. So, in theory, yes, but can we please look at the methodology? Because you don't want to go down the road of, 'Well, let's have a tenant rating system', and that's ultimately what we'll get back from our members. So, we've got to have a sensible conversation about that.

Brilliant. Diolch. Diolch, Cadeirydd.

Okay, Jayne. Joel, do you want to ask the final question? I know you wanted to ask about the Renters (Reform) Bill.

Yes, thank you, Chair. Thanks for coming back. I just basically wanted to get your ideas on what's happening in England with the Renters (Reform) Bill and the impact that's having there and any ripples it's having in the Welsh market, then, and what concerns you have about it that might be implemented here or what you would like to see as being implemented with that here, if that makes sense.

I think the ultimate one for the Welsh Government and I think all devolved Governments to think about is the requirement for landlords to have redress, because I think, yes, that's a good thing, but our discussions with the UK Government are: what that looks like, who potentially is going to be the provider and that it could potentially have a knock-on effect. For example, we've got members in Jersey and Northern Ireland—it's not mandatory to have redress in those countries as an agent, but they are part of the property ombudsman. If the property ombudsman merges, perhaps, or the landscape of redress changes, it would have a knock-on effect. Obviously, the redress schemes provide redress for sales agents as a mandatory requirement as well. So, I'd just keep an eye on perhaps who's the provider, because that could change the redress requirements in Wales for property agents, which is a mandatory requirement. So, I think that's something we are trying to work through, and hopefully the UK Government are going to utilise the two existing schemes, because they know the sector. Fifty per cent of landlords in England use an agent, so obviously 50 per cent of landlords are already connected to an agent with redress, but that's to be looked at.

Apart from that, we've got big concerns around the removal of the fixed-term tenancies, which you didn't do in Wales. Moving to make this open-ended again swings the pendulum too far, perhaps, towards protecting the tenant. We know agents have tenants with children or work placements, nurses want to have a fixed-term period to rent. But ultimately, in the new world, after the first six months, a landlord could use a ground, and actually on the second day of the tenancy the tenant in England would be able to give the landlord I think two months' notice and then leave. So, I think the pendulum has switched.

Ultimately, it doesn't cover the regulation of letting agents. We're pushing hard for that. But at least, as I said, in renting in Wales you've got that footing. We'd like it to go further and we'd like all property agents across the UK to be qualified, licenced, and working to a statutory code of practice.

The major thing in how the Renters (Reform) Bill will affect Wales—. The beauty of devolution is that I have to say to members, 'Renters reform won't affect you, but it will because not everything's devolved.' The major thing is obviously the inability to discriminate when advertising a property, but then we're back coming full circle again to supply. If you were a landlord and you had 10 tenants put in front of you as possible contract holders, you'll choose the best one for you, so you may well use an element of discrimination in who you choose. Now, whilst the renters reform will say that, on the advertising, you can't say, 'No this, no this, no this', when you have a number of people who are applying for the property, you will automatically choose the best person for you, so you will automatically discriminate. So, we're back to supply again. If renters reform and that element of what isn't devolved is going to be effective, tenants have to be able to choose the property where they will live. I'm here representing landlords, that's what I'm paid to do, but the reality of saying to landlords, 'You can't discriminate in adverts', will mean that they will still choose the best tenant when they have the people coming forward for the property. So, we're back to supply. We have to increase supply.

But that's also about the welfare system as well. We don't condone discrimination, it shouldn't be happening, and where it is, it's completely wrong. However, I think where it has happened, it has been, perhaps, a symptom of the way universal credit works in arrears, agents understanding those difficulties, LHA not meeting market rent. So, I know the Welsh Government has lobbied the UK Government on that. It's only 12 months. We all need to do more on that welfare, because it comes down to affordability. You can put 'no discrimination...', but it's not going to change the credit check. It's not going to change the credit check, so they're going to do the credit check, and the affordability, the economy of that individual, is going to come back, and that's the crux of it. So, we've got to get the economy working, we've got to get wages working, we've got to get welfare working in order for it not to be an issue to start with.

Paragon support all of the sensible recommendations within the Renters (Reform) Bill. If you're looking to strengthen the no-fault evictions here in Wales, I think the only consideration, like we do have in England, is around court capacity and the concerns around that. That would be the only point I would raise.

Okay—

The only note of caution if you're going to look to get rid of no-fault evictions, is that, again, the consequences of that are, if a landlord has to reserve the right to be able to issue an eviction notice, whether it's no fault or not, if you're going to take that away, again, you're going to stop people investing in it, or you're going to find people who are using the abilities that they have. So, 50 per cent of the eviction notices in Scotland at the moment are for vacant possession. So, there will always be a way to get a possession notice on a property. If you're going to say to landlords in Wales, 'We're taking away your no-fault evictions', you have to think about what the long-term ramifications for that are as well.

Okay, thank you all, all three of you, for coming in to give evidence to committee today. You will be sent a transcript to check for factual accuracy. Diolch yn fawr.

Okay, then, our final evidence session of the day on the private rented sector: I'm very pleased to welcome a further three witnesses. Would you like to introduce yourselves for the record, please, starting with Annabel?

Hi, I'm Annabel Berdy, senior advocacy and government relations officer for Cats Protection.

Hello, I'm Billie-Jade Thomas, senior public affairs manager for RSPCA Cymru.

Hi, I'm James Hickman. I'm the head of outreach projects at Dogs Trust.

Okay. Thank you all very much for coming in to give evidence. We'll begin our questioning, then, with Carolyn Thomas. Carolyn.

[Inaudible.]—are there for pet owners who are looking for homes to rent, and what impact is this having?

We missed the start of the question, but I assume it was—

Do you want to repeat the question, Carolyn, please? We just lost the beginning of the sentence.

Okay. Sorry. I was just saying: can you tell us what barriers there are for pet owners looking for homes to rent and what impact that is having on them? And why, in your opinion, do landlords choose not to let homes to pet owners? Thank you.

I'll begin. So, the barriers can actually start for pet owners from when they first begin to look for rented properties, so when they first go on websites such as Rightmove or Zoopla, they might be faced with advert after advert that states, 'No pets', or there may be adverts that don't state one way or another. So, while the legality of such statements is questionable under the Consumer Rights Act 2015 and the Renting Homes (Wales) Act 2016, they are undeniably common nonetheless. Obviously, being faced with such adverts once can be very disheartening, but then, for those who actually enquire about a property only to then be told that pets are not allowed, it could perhaps be even worse. Obviously, unfortunately, we know that some letting agencies may choose to actively not manage pet-friendly properties at all or may advise landlords not to offer such flexibility. As such, some renters may find themselves unable to commit to pet ownership, despite the many well-established benefits that pet ownership offers, and we've even heard of some having to desperately hide their pets. Obviously, this could lead to eviction from properties if they're found out, with finding another property that's pet friendly likely to be challenging.

Another barrier is that in Wales landlords may require an additional separate deposit to cover themselves against any potential damage caused by pets at the end of the tenancy. However, with any additional costs for a pet adding to the expense of the usual deposit and rent advances many agents and landlords require before a tenant moves in, with this being hundreds if not thousands of pounds, this might not actually be a viable option for all pet-owning renters. And it's also unclear whether there is a set limit on the additional amount, as under the Renting Homes (Wales) Act, it states that a slightly higher deposit may be requested. But then, what is 'slightly higher'—is it £100, £200 and so forth? Obviously, making pets a legal default in tenancy agreements, as we are calling for, would cover all pet owners, regardless of their financial circumstances. I'll let somebody else speak. [Laughter.]

I think we'd definitely echo a lot of that. I think the biggest fear, the biggest barrier, is an unfounded fear that landlords have that pets cause damage, and I think it's that that needs to be challenged and interrogated, because the data simply doesn't bear that out. A couple of years ago, Cats Protection and Dogs Trust did a joint YouGov poll, and that revealed that 73 per cent of landlords reported no damage at the end of the tenancy, and, again, there's been a very recent piece of research by Battersea Dogs & Cats Home, and that's revealed very similarly that 76 per cent of landlords reported no damage at the end of tenancies. So, I think it's this unfounded fear that is the biggest barrier, and then that's biting at the lower end of the income spectrum. More properties tend to be listed as pet friendly at the higher per-calendar-month spectrum, and the effect that this is having is preventing people at the lower end from having a pet. And we see this with our Lifeline project, which has just recently launched in Wales. Lifeline is a project that Cats Protection run to help those fleeing domestic abuse, by temporarily taking care of their cat while the victim-survivor is able to resettle, and until they're able to be reunited with their cat. And what we're finding is, when that time comes, when they're ready to be resettled, they cannot find pet-friendly accommodation. This means that, unfortunately, the cat is having to stay in the temporary care for much longer than ever anticipated or, sadly, they're unable to be reunited, which then has a huge knock-on effect in terms of the healing process and is obviously devastating for both cat and owner.

So, that's what we're seeing and, really, I think the main barrier is this unfounded fear, and that's evidenced by the fact that, for example, Zoopla are only advertising 8 per cent of properties as being pet friendly.

Thank you. And James?

I would say that, just going back to your original question, I think pets are a barrier to housing in Wales. It's quite clear that with more than half of households in Wales owning a pet in their household, tenants when they need to move—and tenants need to move for lots of reasons—they can always request to have pets in their property or their household. However, there's a stigma. I think, as my colleagues have mentioned, there's a perception that the pet is going to cause damage, so that's a big issue.

My colleague has mentioned the YouGov data that we did a couple of years ago, but as part of that, it found that, when we asked tenants, 'Were your properties advertised as pet friendly?', only 8 per cent were, so you've got more than half of the population that have got pets, and less than 8 per cent are advertised as pet friendly. That's an issue. One of the problems with that is that, then, when someone comes to move, and they are looking for accommodation, and they can't find that accommodation with their pet, their options are limited. So, what they end up doing is having to rehome their dog, or in very bad cases, euthanise the dog.

Now, for us, we see that through our rehoming centres. We have two rehoming centres in Wales, one in Bridgend and one in Cardiff, and we find that 10 per cent of the people who contact us to rehome their dogs are telling us it's because they've had a change of their accommodation or a change of their tenancy agreement. So, we are seeing the true figures coming through: at least 350 people a year contacting us in Wales alone to do that.

There's also a real challenge, I think—again, Cats Protection have already mentioned it—we have an equivalent programme called Freedom that supports people to find freedom from domestic abuse, and we foster their dogs for a period of time. We used to have placements of about six months in length, they're now up to nine-to-12 months long, and that's because, when we look to reunite someone when they leave the refuge, they're unable to find pet-friendly accommodation.

Another area that is of concern to us is people who are experiencing homelessness. We know that if someone is homeless and they're looking for accommodation, they've already got the barriers of potentially being on benefits, needing to find a deposit, and then finding a pet-friendly property on top of that is another challenge. And what we find, unfortunately, is that people will often choose to stay with their pet rather than take up accommodation, and then they become homeless. So, it's a cause of homelessness. Now, if the Welsh Government is committed to ensuring that homelessness is rare, brief and unrepeated, this is a repeatable form of causing homelessness, which is very much of concern to us.

The other point I wanted to make was around the impact—the second part of your question. So, I think the impact that we see is that there is a great anxiety for anyone who is a pet owner when they start to look for accommodation, because they go, 'Am I going to find something?' Part of the challenge of that is that the power does not lie with them, the power lies with the landlord. So, they are disempowered in this equation. A case study, for example, is that we recently had a dog, called Spock, in Cardiff—it was a previous greyhound [correction: an ex-racing greyhound] dog that we rehomed into a very stable household. They had a pet-friendly landlord, everything was great. But then, because of the cost-of-living crisis, they had to find other accommodation, and they couldn't. So, they ended up having to rehome and hand back Spock to us, because they couldn't. Now the impact of that is really bad as well, I think, for the health and well-being of people. We know that there are a lot of benefits to pet ownership. So, if you have to be separated from your dog, that, in itself, is not a great thing. But, on top of that, it can be very traumatic, because pets are considered part of the family.

When I've asked Welsh Government regarding this, they have said that they don't believe it's an issue for landlords and tenants regarding pets, and that many might just ask for a bond or a small amount of money, if people want to have a pet. So, this appears to be very different to what you're hearing—is that correct?

Yes, I'd question what evidence the Welsh Government are using on that, because, again, as my colleagues have said, we know that having to give up a pet to perhaps move to new rented accommodation, be it because of the cost-of-living crisis—with prices up by 7 per cent in Wales for rental properties in 2023—or other reasons, we know that it's one of the more common reasons that pets are relinquished to us, and then they're in our centres for longer because, obviously, there are fewer forever homes for animals, because people who rent perhaps cannot commit to pet ownership. So, I would question Welsh Government's evidence base on that, because we know it's a problem—we hear of it on a regular basis.

Yes, I'd echo that. Our evidence is that one cat every four days is relinquished just in Wales because of issues relating to housing, and by that I mean landlords refusing a pet. And tenants' inability to find pet-friendly accommodation is in the top four reasons for relinquishment. So, it's just that that doesn't bear out our evidence or the evidence of any of my colleagues, I think.

I think the thing I'd add is that, ultimately, at the moment, landlords have a choice and, with that choice, they can ignore pet owners, they can discriminate against them. Unless there's some type of legislative change, I think that will continue. The YouGov survey that I referenced earlier, through that, we found that one in three landlords said that they would not have a pet under any circumstances. So, if they've got the choice, the choice would be 'no'. We also found that one in three landlords said that they didn't proactively decide, so it really was depending on the way the wind was going or what advice they were getting at the time. So, the more we can do to make it a right, or certainly make it more possible, it's going to have a huge impact.

Again, we've mentioned this perception of damage. The YouGov survey that we did was showing, again, that one in five landlords were seeing that there was damage from pets. So, yes, sometimes they can cause damage, however, most of the time, that damage can be covered by the deposit—we're not talking huge amounts of money here. The existing deposits will cover most of that damage, if there is damage. And the National Residential Landlords Association themselves have recently released some research that shows that their levels of damage by tenants is 29 per cent. So, people are causing more damage than pets.

And just to add on that as well, Battersea Dogs & Cats Home, which obviously we work with on policy issues, have also recently released some research that shows that the average cost of pet-related damage was £300 per tenancy, compared with £775 for non-pet-related damage. So, that just goes to show even further what James was just saying there, that actually pet owners, on average, cause less damage than non-pet owners.

Okay. Could I just ask, then, about the Renting Homes (Wales) Act 2016? Has that had an impact? Is it having an impact on these issues?

In terms of the Renting Homes (Wales) Act, obviously, it came into force in December 2022, but there's little reference to pet ownership in either the legislation or the guidance. While pets can be included as an additional term in rental contracts, obviously this does still fall short of having pets as a legal default in tenancy agreements, as we'd like to see, because the guidance states that additional terms are agreed between the landlord and contract holder, but again the ball is still in the landlord's court. They can refuse, should they wish to.

And again, even though it says in the Renting Homes (Wales) Act that a landlord cannot unreasonable withhold a request for a pet, unfortunately there's no further explanation as to what would be deemed reasonable. Obviously, what would be deemed reasonable to a tenant could be different to what would be reasonable for a landlord. And there's no dispute-resolution mechanism in place as it stands, and also how is this being enforced?

You could argue that the Renting Homes (Wales) Act actually didn't change anything, because landlords could give permission for pets before that, and then you had the Consumer Rights Act 2015, which is meant to forbid unfair terms in contracts. So, did it have any practical difference? It's unlikely.

And as far as we can see, there are no teeth to the functionality of the additional terms. It didn't change the position from one which was where the tenant and landlord could freely negotiate in any case.

Okay.

Just something to quickly add from the Dogs Trust point of view, we absolutely welcome anything that makes pet ownership more likely within accommodation, but I think from the evidence we've already given, you can see it's not having the impact that you say you want.

Okay. Thanks for that. Joel James.

Thank you, Chair, and thanks ever so much for coming in this afternoon. You heard in a previous evidence session that I mentioned the Renters (Reform) Bill that's happening in England. And obviously they're looking to prohibit landlords from unreasonably withholding consent when they're asked to allow a pet. And I just wanted to get your views on that and whether or not that's something that could or should—well, I imagine it should—be implemented here at that sort of level. But then also is there anything you see from the English point of view that could be improved, if that makes sense?

Yes. I'll go first, if that's okay. Yes, the Renters (Reform) Bill is broadly welcomed in England, and we're broadly happy with the proposals, because we hope that it will change the narrative from not accepting pets being the norm to seeing pets as something that should be granted.

There are some concerns that we have with the Renters (Reform) Bill, and those are around the superior landlord. So, in cases where there is an overall freehold, the right to request doesn't go up the chain, if you like. So, it stops with the landlord—sorry, with the superior landlord. So, where that situation arises and a tenant makes a request, the landlord passes it up the chain and the superior landlord can just say 'No, no pets.' They don't have to reasonably consider and not unreasonably refuse. So, we would have been much happier if that obligation to consider and not unreasonably refuse carried on up the chain, if you like, but it doesn't. So, especially in cities where there are lots of freehold situations, we see that as a major barrier.

The other concern that we have is around the time frame for considering the request, which as currently drafted is 42 days. We just don't think it needs to be that long. There's not really any clear evidence as to why a landlord should need 42 days to respond to a request to have a pet. We think 28 days would be much more reasonable, and that fits with other cyclical terms that are commonly found in a tenancy, such as periodic payments, et cetera. So, that would make much more sense to us.

I think there are two positive proposals in the Renters (Reform) Bill as well as forbidding landlords from unreasonably refusing a request. So, there's the proposal to create a private renters' ombudsman. And what that would give tenants is somewhere to turn. If they think a landlord is unreasonably refusing a request, then there's a free service that they could turn to, and they would make the decision as an independent as to what could be deemed reasonable versus unreasonable. And that's not something, obviously, that we have with the Renting Homes (Wales) Act.

And also, landlords would be able to perhaps require insurance as well from their tenants in terms of their pets. And obviously, with insurance—I know that the panel before us raised concerns about whether there are enough providers—but with insurance, you're more likely to be able to pay monthly, rather than having to find a lump sum of money, such as with an additional deposit. So, there are positive things in the Renters (Reform) Bill, although how likely it is to make it through Parliament, I'm not sure. Obviously, there are talks of the Bill falling, and it's been progressing quite slowly—nothing's happened on it since November—so we'd very much like to see the Welsh Government prioritise their own action.

From the Dogs Trust's point of view, you know, we absolutely welcome these proposals. I think I'd echo everything my colleagues have said, certainly around the different times and the working with superior landlords, the 28 days; all of those proposals, exactly the same, and insurance as well. I think on insurance, again, going back to my previous point: is insurance really necessary if existing deposits will cover the majority of damage? And the challenge is that if you expect people to pay for insurance, it's another cost, and it's another cost at a time when we have a cost-of-living crisis and those in society that are experiencing the most vulnerable situations are going to be disproportionately affected. So, that would be my concern about that.

The other area, just to say, is just around what counts as unreasonably withholding consent. So, there's a discernment there. One of the things we have done with the UK Government is we have come up with some guidance considering dogs and what is appropriate or not, and we would be very happy to share that with you as well, but I think we certainly need to see some type of guidance around that area specifically.

Yes, please do share that with us, James.

We will do that.

Jayne Bryant.

Diolch, Cadeirydd. And, just finally from me: are there any solutions that you think would help to increase the number of pet-friendly homes in the private rented sector in Wales?

So, for us, it would be making pets the legal default in tenancy agreements unless there's reasonable cause not to, for example, concerns for animal welfare. Obviously, the last thing we'd want to see is, you know, eight dogs in a one-bedroomed flat. That's an extreme example, but, you know, anything that falls in that sort of context would compromise animal welfare. So, yes, it does need to be reasonable, but we still think that it would create a fairer balance where landlords are not just in a position just to say 'no', regardless of what the tenant says.

I think we'd like to see a pet clause moved up into standard terms within the model tenancy agreement. And also, we see a real role for the Welsh Government, for Rent Smart Wales, for example, to do some myth busting with landlords. Because since there is this unfounded fear, I think there's a real role to present the data, to show that, actually, the evidence just isn't there, and, as James has also said, where there is damage, it's very minor. And, actually, the Battersea piece of research that's been referred to a few times has shown that—. It categorised the types of damage in cases where there was damage, and it found that, in the overwhelming majority of cases, it was minor; so, small, cosmetic things that are easily remedied within the security deposit. So, I think, a real myth-busting campaign would help, alongside a presumption in favour of having a pet in the model tenancy agreement.

Yes, I definitely would agree with that. I think, as we've already said, we need legislative change to make it really work. I don't think if we keep leaving it as people's individual decision that we're going to see a change. So, we definitely would welcome that clause moving up and having a bit more teeth to it; that would really support things to change. I agree about this idea that we've got to overcome negative perceptions and actually look at what's the reality, and actually what's the—. I appreciate landlords need to make the best money that they can and make things profitable, but there's a reality of what the typical costs are and the scale of those costs. I think Welsh Government potentially could improve your data collection relating to the number of pet-friendly properties that there are, and that will help you to further develop and deliver the right policy interventions.

Thank you, Chair.

Okay. Thank you very much. Thank you, Jayne. Thank you for coming in to give evidence to committee today. You will be sent a transcript to check for factual accuracy. Diolch yn fawr.

Okay, the next item on the committee's agenda today is papers to note. There are three of them. The first is a letter from the Minister for Climate Change in response to our report on the Welsh Government's draft budget. Paper 14 is additional evidence from Dr Edith England and Dr Josie Henley in relation to our work on the private rented sector following their evidence session. And the final paper is from the Legislation, Justice and Constitution Committee in relation to the legislative consent memorandum on the Renters (Reform) Bill. Are we content as a committee to note those papers? We are.

We will then move on to the next item, which is a motion under Standing Order 17.42 to resolve to exclude the public from the rest of this meeting. Are committee content to do so? Yes. We will move to private session.