Local Government and Housing Committee

Welcome back to committee. We've reached item 4 on our agenda today, which is our eighth evidence session on the Building Safety (Wales) Bill, and I'm very pleased to welcome our witnesses joining us here in the committee room and also online. Would you like to introduce yourselves for the record—perhaps, firstly, Steven?

Thank you, Chair. My name is Steven Bletsoe. I'm with the National Residential Landlords Association, and, just to be clear, if possible, Chair, I am used to doing this in my private life. I think it's public knowledge I'm also a local authority councillor, but anything I say today is in relation to my paid employment and as a representative of the NRLA.

Absolutely. Thank you very much, Steve. And Timothy.

Good afternoon, and thank you for the invitation today. Timothy Douglas. I'm the head of policy and campaigns at Propertymark. Propertymark is a professional membership body for property agents working across the UK in residential sales, lettings, commercial agents, valuers, auctioneers, both chattels and property, and some of our members do land and new homes, and some are in the block management space too.

Okay, thank you. And joining us online, Jaclyn.

Diolch. Prynhawn da. I'm afraid that's where my Welsh starts and finishes. Jaclyn Mangaroo. I'm chief communications officer at the Property Institute. We are the professional body for residential property managers. We have 7,200 individual members and over 350 managing agent firms who we support through accreditation, qualifications, training and guidance.

Thank you very much, Jaclyn. Okay, I will begin with some questions, then, before we turn to other committee members. Firstly, a general question, really: what is your overall view of whether this Bill is needed?

Thank you, Chair. On the whole, most definitely needed. I've watched the evidence sessions that you've had so far, and obviously the first two were from the group called the Cladiators. I think they were very eloquent as to why the Bill overall is needed. There are aspects of it that I'm sure need scrutinising and potentially questioning, but, on the whole, the building safety Bill is very important.

Thank you very much. Timothy.

Yes, likewise, from a Propertymark perspective, we do think it's needed. We want safe buildings, resident safety, we want accountability, and we need regulatory enforcement and oversight, and, ultimately, the Bill is looking at the occupation and management. It builds on the findings of the Hackitt report, and, ultimately, we don't want the tragedy of the Grenfell Tower to happen again. I think, ultimately, it's, like the Building Safety Act in England, attempting to provide a stronger voice for residents, and that's vitally important.

Okay, thank you. Jaclyn.

Absolutely, TPI welcomes the new regime. I think the commitment to enhanced safety standards, greater accountability, greater transparency is needed. I think a consequence of what's happened in the market is that we don't just have a cladding crisis, we have a construction quality crisis, and I think the regime seems to go far enough to identify fire and structural safety risks in buildings. So, I very much welcome the moves of the Bill and also note that it has learned a lot of lessons from Part 4 of the BSA and sought to address those to avoid a lot of the unintended consequences that we've seen from the Building Safety Act in England.

Okay, thanks very much for that, Jaclyn. Okay, one further question from me. Welsh Government, then, has decided to include buildings below 18m in height, which is different to England—at the current time, at least. Do you believe that the Bill's provisions with regard to those particular buildings is proportionate?

I think it was essential that Wales went down a different route, purely because of the types of buildings and the height of buildings that we have in Wales. I think, if it was copied over identically, it would be covering very few buildings that we have. I think the ones we have are only in two areas—Cardiff and Swansea—anyway, and I think it was absolutely imperative that Wales had its own Bill, based on the type of buildings we have here. I spoke to our policy team yesterday, and they certainly think there's a case that there are vast elements of this Bill that are actually better than those that are in England and that we've found the right balance in Wales.

Okay, thank you for that, Steve. Timothy.

Yes, certainly. Ultimately, housing is devolved. The Building Safety Act 2022 allows for national Governments to set up their own building safety measures, and I think, as Steven's alluded to, the nature of buildings in Wales is different, there isn't a large concentration of high-rise buildings—we well know the handful in Cardiff and Swansea—but, ultimately, there are still people living in these buildings with unresolved issues, so these need to be addressed.

I think one area that, certainly, we've looked at with our members is—. I think we acknowledge, certainly on the regulation regime, ultimately, in England, they've introduced a building safety regulator, and we'd probably define Wales's as a broader approach. I think we acknowledge that it is trying to attempt to utilise that expertise, the knowledge, the experience of local authorities and fire services who, ultimately, know their buildings best in their geographical areas. But I think it's ensuring that the Welsh Government can monitor, train, they have oversight of that, so we get a consistent enforcement regime across the country. Ultimately, some local authorities will be disproportionately more impacted than others, based on the nature of the buildings in their area, so are the resources being evenly distributed?

But, ultimately, we know, certainly from our estate agent members, that—more on the cladding remediation—without regulatory oversight, sales stall. There's no legislative certainty for consumers, home buyers and sellers, so I think a post-occupation system, steps to be taken, are a step in the right direction.

Okay, thank you very much. Jaclyn.

I think it's clear that fire risks are not limited to tall buildings; cladding issues and other safety defects are not limited to tall buildings. I appreciate that the higher the building, sometimes the higher the risk. So, I would just urge that the regimes that you've created are proportionate, so that they don't disadvantage people in smaller blocks, because, the costs that you incur, if they are to be passed to residents through the service charge, you've got a smaller number of people contributing to those costs, therefore they may be disproportionately affected compared to somebody in a taller building who will be paying a smaller share of those costs.

I do note that, in the Bill, there is a significant attempt to define a regulated building, separate parts and structures. I think maybe this will not be as prevalent in Wales, but you may have a development that has multiple blocks, and you may end up with a block that is 18m plus, a block that is 11m plus and a block that is under 11m, so you might well find yourself with an estate where multiple regimes are happening at the same time. I think that could create confusion, so I would just urge that the guidance around measuring a building and what to do in those cases where there are separate blocks but they may be linked, for example, by an underground car park or a ground-floor lobby, is very clear about how many regimes, how many registrations that that estate needs to make.

Okay, Jaclyn, thank you very much for that. Lee Waters.

Hi, thanks. I'm interested, first of all, in your views on how this Bill dovetails with existing legislation and regulation.

Ultimately, I've got a long list here. Our main concern, and I know this has been a theme throughout all of your sessions, is the category 3 inclusion in this. Our view is that there is already existing legislation in place, but it needs to be properly enforced, and the funding needs to be made available for the relevant authorities to enforce it.

So, just as an example—and I haven't remembered these off the top of my head; I'm not going to pretend—the Housing Act 2004, the fire safety Order 2005, the Housing (Wales) Act 2014, the Renting Homes (Wales) Act, the fit-for-human habitation regulations, houses in multiple occupation management regulations for Wales, the national minimum amenity standards, and building safety regulations all have provisions for fire safety in them that cover HMOs. They're not properly enforced at the moment. Our view is that this proposal complicates that and there should be a streamlining of the existing legislation, and they should be enforceable, because all of those do protect people who live in three-storey HMO room-only properties. It doesn't need this addition—it complicates with the proposal.

So, you want greater enforcement of existing rules and regulations.

Fully. And to be honest, that's why I made the declaration at the outset on my other role as a local authority member; the NRLA's view is that local authorities should be better funded to enforce those existing regulations and to provide the safety that everybody deserves.

In terms of, particularly, compatibility with the Renting Homes (Wales) Act 2016, do you think that needs to be amended?

Yes. We believe that there should be a fundamental term inserted that requires a tenant to grant access to a landlord so that they can ensure that the tenant is abiding by the fire safety regulations. We believe that every landlord needs to provide a property that is free from fire risk, but tenants, internally, to make sure that they're living within the rules that would retain the safety of other people. We're talking about buildings where other people's safety is reliant on how tenants live safely. If tenants are not doing that, it completely negates all of the conditions that the landlords are required to put in place, and we believe that a fundamental term does need adding to the contract in the Renting Homes (Wales) Act, to make sure that tenants also adhere to the regulations.

It's implied in your evidence—your written evidence—that, were they not to do that, landlords could take action against them. Is that your position?

It is, yes. But what we want is the ability to—. Again, this is about enforcement; this is to make sure that landlords can gain access to the property to make sure that tenants are living lawfully and not putting other people at risk, and there are repercussions for not doing so. So, the repercussion would be there that an eviction or a 173 notice could be issued for failure to comply with legislation.

You also say in your written evidence, in terms of houses in multiple occupation, that you feel that existing legislation covers them sufficiently and that could create unintended consequences. I wonder if you could elaborate on your concerns.

Yes. Unintended consequences always have to try and be challenged, because we have to make sure that good intention doesn't lead to bad. Our concern would be around the possibility that vulnerable people could be added as a condition on the conditions. I know that this was discussed in the last session before. There are currently too many people applying for houses and what we don't want is unintended discrimination against people. So, if you have a house that's compliant and you have a potential tenant who is vulnerable, then taking them on would add additional needs for the landlords to put more things in place. We don't want that to happen. We believe that everybody should be able to apply for a house and their status as vulnerable shouldn't count against them.

Okay, I wonder if the other two witnesses have anything they want to add.

Yes, thank you. We'd agree, certainly, Propertymark, with a lot of what Steven has said. I think, on the inclusion of HMOs, when we saw the White Paper, it was broader in scope and I think there was more concern—or we certainly highlighted in our response to the Welsh Government that it needs to interact with the long list of legislation that Steven's outlined. So, I think it's welcome that there's not going to be, if HMOs are included, a duplication of the registration process. So, I think that part of it—. Because, ultimately, there's an acknowledgement that there's Rent Smart Wales in place and local authority licensing. But I think, beyond that, we've tried to delve into the detail of why HMOs have been included, and we all want building safety, but I think we're struggling to see how does that add to what's already out there in terms of co-ordinating that legislation.

So, it doesn't appear—. I think the Welsh Government have got to decide are they going to co-ordinate that regime better, perhaps remove the three-storey rule for HMOs, which is the case in England, so the licensing is broader, or put a pause on HMOs for this Bill, review HMOs separately and should additional regs come in later, which then allows for local authorities and the fire authorities to concentrate on the category 1 and category 2, which are the ultimate, the higher risk, or the emphasis of the legislation. So, I think we are at a bit of a crossroads in terms of trying to understand where we're going and the added value of bringing in HMOs. So, I think we would welcome some more feedback from the Welsh Government on that.

I think, secondly, we would agree with ensuring tenant responsibilities for a fundamental term. Clause 76 talks about not tampering with fire safety measures in the property. Landlords and agents need some teeth when they're applying an access order, for example. That's really important. Just on that, looking at the Bill clause 77, the entry duty, 48 hours' notice, all that sort of thing is pretty much common practice within the sector, to give that written notice and the right to quiet enjoyment for tenants. I think just two areas there are, if the occupant denies entry after receiving a notice, the duty holder can apply to the residential property tribunal, but also write a notice to the fire authority demonstrating their intention to apply for such an order, but there are no timescales on that. There's an emphasis on safety and emergency, but how long is it going to take for a landlord to receive that information back? In extreme cases, do we need a fast-track process to support landlords?

Finally, the only other point I would make is about when this legislation interacts. From a sales and letting agent point of view, sales and letting agents across the UK are obviously marketing property and dealing with tenants, home buyers, sellers and leaseholders under the Consumer Protection from Unfair Trading Regulations 2008, which have now been superseded by the Digital Markets, Competition and Consumers Act 2024. Ultimately, they need to provide information when marketing property to ensure that would-be tenants or occupiers understand information about a building. I think, in the majority of cases, they work with block managers. But where that block manager, perhaps, isn't the accountable person or the accountable person can't be found, that can be tricky. I think if we can ensure that letting agents and sales agents are included in the guidance as relevant persons, that would shine a spotlight on that, and the principal accountable person and the accountable person will be aware to expect requests for information from sales and letting agents in order to inform and help consumers, ultimately, make a choice about whether to buy, sell or live in that property.

Jaclyn, is there anything you wanted to add?

Thank you. HMOs are not our bag, but I will say, with regard to how it dovetails, I do welcome the residentialisation—if that's even a word—of the fire safety Order. I think that's a really welcome change. In terms of moving a category 3 into a category 2 type building, where you have vulnerable residents, again, I would just add that that may lead to disproportionately higher costs for people in those buildings. If you've got a very small building moved into a category 2 regime, there will be increased costs. So, I think we need to consider how that might work financially. I agree with the other views that enforcement of the existing legislation is probably enough, rather than creating multiple different regimes.

Thank you. Steven, you mentioned the evidence we received from the Cladiators, and one of their points is that the Bill doesn't include any new powers to accelerate remediation of existing safety risks. Do you have a view on that?

Again, I know them very well. I was actually working in this building when that all started. I was working for a now departed MS. I know the Cladiators very well, and I know their passion. I think it should remain the priority of the Bill itself, those existing buildings. Because I've seen first-hand the fear that they live in. I haven't looked at that side of it as much as the HMO side of things, if I'm honest, but I would certainly hope that that would be centre of the—. For me, and it's the view of the NRLA—again, I spoke to the policy team yesterday—that that should be the centre and the priority. I don't have a view at the moment as to whether it goes far enough.

Does anybody else have a view on that?

I think it could be a lost opportunity, a missed opportunity, certainly. It needs to be more of a priority for the Welsh Government to resolve these issues for current leaseholders—stricter deadlines, fines, legal sanctions. I think the UK Government is looking at a specific piece of legislation; I know it's more focused on the remediation, but it's all part of the same consumer journey and building safety, so—

'Should it be part of this Bill?' is the question.

Yes.

It should. Okay, thank you. Jaclyn was trying to come in, I think.

But perhaps—

Sorry.

Sorry, Jaclyn. Before I just say that, Steve—Lee, sorry. I think, yes, it should be part of that Bill, but what does that look like? Well, we need an action plan, and the Welsh Government need some teeth, and perhaps now they could do some—. Is there a need for some better joint working with the UK Government? I think ultimately there are different levies, funding streams in play, and these developers are working across the UK, but it seems like they're being held to account by one Government and not by the other, and I think for the short period, perhaps, with the shade of Government we've got in both countries, I'm surprised they haven't got together and maybe shared some of the action, the teeth, the money that's been raised in order to resolve this issue.

Okay. Jaclyn.

Yes, fundamentally I think the Bill should include duties for remediation. I think the Welsh Government have to be applauded for the comprehensive programme that they have around remediation. One of the fundamental differences is that it's not just limited to cladding, which is what we've seen in England. I think there are too many leaseholders trapped in a flat that they can't sell, and they're continuing to pay potentially higher insurance premiums, and also living in fear.

I think we need a backstop. Where we've seen the biggest delays in remediation progress is that pledge developer piece, as Timothy mentioned. The situation has been so disjointed that the building safety Minister and the Ministry of Housing, Communities and Local Government have now had to introduce a piece of legislation to bring legal powers. I think we need to be careful about who we place that legal duty on. If we place it on the landlords, sometimes they are not the ones who are the polluter, and I know very much the Welsh Government's position is the polluter-pays principle. Where you have a pledge developer, there should be some kind of teeth to make sure that they complete that in a certain time period, and if not, then they fund the work, they put the work into the funds.

There are 12 different measures in the remediation Bill that's forthcoming, including things like a registration, looking at remediation contribution orders, et cetera, but I do think it would be a missed opportunity if remediation progress is not included in this Bill. It needs to be a joined-up, holistic approach to safety.

Okay, thank you. That's clear. Then the last question I want to ask is around any potential skills gap. We've heard various witnesses saying that they don't think the workforce is there to deliver the things that this Bill requires. I wonder what your experience in your sector has to say about that.

I totally agree with that. I don't think there's much that I could add to it. There literally just aren't enough people to deliver the scope of the Bill and its wishes and its desires. I know, again, previous sittings have heard about prioritising, but there literally aren't enough people to deliver what is proposed.

Community Housing Cymru suggested a workforce plan. You could identify the skills gaps and put something in place to fill them. Is that something you'd support?

Well, there are a lot of new responsibilities put into this, and that has to come from somewhere, so a plan would absolutely have to be necessary.

Okay. Anything to add from anybody?

Jaclyn.

Yes, I think there are two parts to this. I think when we look at the building safety regulator regime in England, it's been much publicised about the under-resourcing and the delays that they're facing. I think that's to be expected with any new regime, but this is going to require very specific competence and very specific safety expertise to deliver and to enforce, and I think we need to consider a separate scheme for approving things like emergency works. That's where we've seen the gateway 2 delays.

Secondly, I would add when it comes to large remediation projects, including things like cladding, that is a very specific and niche skill set, and I think if we're putting more pressure on people, or developers, landlords, et cetera, to remediate that cladding, I think we're going to find a real pinch on supply there. The final pieces around fire risk assessors, I mean, the fire risk assessor at Grenfell made up some post-nominal designations. He just made them up. He wasn't a competent person, and I think we need to address that if you are going to be carrying the badge of a fire risk assessor, there needs to be a recognised qualification accreditation process and a register to check that those people are actually competent to carry out a fire risk assessment, or a fire risk assessment of external walls, and we need those people to be audited.

Can I just add to that? Jaclyn's just prompted me on something. It didn't happen a million miles away from here: there was an EWS1 form issued on Century Wharf by somebody from Birmingham who hadn't been to Wales. That regime needs totally tightening up. If we're going to have faith in the system, we have to have faith in the people who are going to check these things.

We've heard that as well. Using onsite CCTV cameras, an assessor turns up, is on site for eight minutes, and leaves. That is not enough time to carry out a competent fire risk assessment.

I certainly agree with the comments. A workforce plan, I think, would be welcome. Task against resource and human hours isn't really referenced in any of the impact assessments, and I think it should be. Ultimately, the extension—. We've just talked about HMOs. If more assessments are being done, then, obviously, you need more competent persons to do them. I'm pretty sure that, when the electrical safety regulations came into the private sector, and these sorts of things, there's ultimately an impact and a backlog.

The only thing we were discussing with our members is that clause 72 says that, for a HMO, a fire risk assessment must be done from six months, either from when it becomes a HMO or when this section comes into force. It's difficult to say whether six months is enough if we don't have an impact assessment on how many assessors are out there. So, we do need that impact assessment, and, perhaps, if the assessment is done and there aren't enough competent persons, then that six months might need to go to 12 months for landlords to comply. So, it is interesting that six months is in there without an assessment of how many assessors are in the market.

Okay. Interesting point. Thank you.

Jaclyn just wanted to come back in for a minute, Lee. Jaclyn.

Thank you. It's just a point that Timothy made there around working hours. This is a separate piece to the fire risk assessment. Under a freedom of information request, the building safety regulator reported that, on average, it was taking them 123 man-hours to approve a certificate, or to assess an application, look at safety cases, look at resident engagement strategy, at a cost of £151 an hour. That is a substantial cost. What we need to be clear on is how much of that was their learning curve and how much of that is actually being passed on to the principal accountable person, and, ultimately, being passed on to the leaseholders through the service charges. If there is going to be a learning curve, we would ask that that is separate to what is actually billed, but it's 123 hours. I appreciate that tranche 1 of those back applications were the highest risk buildings, so they are naturally going to probably take a lot longer, but, just in that human hours piece, that's the kind of scale that you're looking at: 123 hours for one assessment of one high-rise building.

Okay. Thank you, Jaclyn. Thank you, Lee. Peter.

I'd just like to ask a couple of questions on enforcement, if I can. I just wondered what your views were about the Bill's provision to give landlords power of entry.

Again, back to my previous answer, that that should be a fundamental term, because we are asking landlords to provide the houses. Their duty of responsibility is that the tenant living there is complying with the legislation. They can only do that by gaining access to the property. They can already gain access to the property through the Renting Homes (Wales) Act 2016, under 'quiet enjoyment', with the relevant notice. This should enforce that; it shouldn't make it more complicated or more difficult to do.

Thanks for that. Timothy, anything?

I previously alluded to this, I think. Clause 77 outlines the entry by a duty holder. I think that mirrors best working practice in the sector. As I reiterate, where landlords and agents are trying to do the right thing, they need to also be backed up, so that they can act on a notice. As I say, if they apply to the tribunal, or engage the fire safety authority, they need to be given some security and timescales around when that's going to come back and they can act to make the property safe.

Thanks. Jaclyn, do you agree with that?

I think in leasehold it's a slightly different issue, because, obviously, the flat is demised to the leaseholder. So, the landlord of the building and the building manager, who is appointed by the landlord, have no right of access. I know that there is an intention to imply terms into leases to allow that access, and I think that's fine, but it's really about communicating and engaging with residents to make sure that they understand. I think we've seen issues with the flat front door survey inspection and checking regime. Even when the flat front door is demised to the leaseholder, enforcing that has been really, really difficult in terms of allowing people access to survey the flat front door and things like that. So, I think that needs careful consideration when you're looking at it through a leasehold lens and you're dealing with lots of different leases.

Thank you, Jaclyn. Steven, you've got some quite strong views on enforcement. In your written evidence, you suggested that enforcement measures around non-compliant residents is weak. In fact, the penalties for residents could potentially include fines and imprisonment. I just wonder if you wanted to expand a little bit more on your thoughts around that.

Enforcement is the backbone of any piece of legislation, isn't it? We can all have views on the laws that we live under, but if we don't abide by them then they don't have any teeth. We are talking about something so fundamentally important here. If a contract holder, if a tenant, is living in a property where their lifestyle is causing danger and risk to life for others, enforcement is so important, and if we're not going to follow up the enforcement here then what's the point of having the legislation? The landlord and the relevant authorities must be given the powers to enforce this Bill, and reinforcing all of the others that we've already made reference to, to make sure that people can live free from fear in their properties. Because I don't think there's a single person anywhere that would want to see a replication of Grenfell, and we must do everything that we can to stop that. The only way we can do that is to make sure that landlords, builders, create safe buildings and that people live in them properly and legally. Without enforcement we can't do that.

No, no. So, you believe that the Bill needs strengthening around that?

The enforcement of the entire piece needs strengthening. Every other piece of legislation I've referred to needs the teeth of enforcement.

Yes. Okay. Yes. So, a last question for everyone, really, is just: do you have any other views on enforcement provisions in the Bill? It's useful if you want to share any other areas where you think there's perhaps weakness or—. Tim.

Thank you, Peter. I've talked about the entry requirements; I've talked about the broader regime for local councils and whether—. I think there does need to be some national co-ordination and oversight of that, and that could potentially remove the strain for individual local authorities, to have lots of different IT systems, for example, which I know has been discussed.

The only other issue that we dissected was—. Ultimately, I think the powers in the Bill allow for unlimited fines and criminal prosecutions for imprisonment. However, I think the starting fine for registration and beyond was only a level 1, £200. That did seem quite low, so I think a recommendation of moving that up. It'll be interesting what Jaclyn and Steven say, but, yes, even moving to level 2, at £500, would seem a greater deterrent than £200. It did seem quite low. But I know there are other powers in the Bill.

Thanks for that. Jaclyn.

Yes, I would agree with what's been said. I think, really, enforcement should be seen as a last resort. Nobody wants to have that hanging over their head. People buy buildings or they rent buildings or homes thinking and assuming that they are safe. And I agree that there are resident behaviours that might lead to fire safety risks: the plugging in of electric scooters for example. I've heard people talking about plugging in solar panels that they put on their balcony, which is a huge fire risk, so I think that piece—. I would say, rather than enforcement, it needs to be about education, and that's educating all of the residents, whether they be leaseholders or rental tenants. It's about that education piece and then, hopefully, you shouldn't need enforcement.

Thank you for that. Thank you, Chair.

Okay, Peter. Siân Gwenllian. Siân.

Good afternoon. Turning to the costs of implementing this Bill, what are your views on the Government's assessment of the costs of implementation?

I'm sorry, I didn't get the translation. I just got the original audio on that.

What are your views—? Shall I ask the question again, Chair?

Yes, please, Siân.

I'm asking about the Welsh Government's assessment of the costs of implementation of the Bill. Do you agree with that assessment? Do you think it's an insufficient assessment? What are your views on the assessment?

No, we don't agree—far from it. We were quite surprised at the figure that came forward, to the point that we actually had a member of our staff phone around the sector and get their own pricing. So, it can only ever be deemed as anecdotal, obviously, but we found that the typical cost of a full fire risk assessment would be £394.50, with an annual review of £100 a year. So, we are far, far away from what the Welsh Government have proposed could be an average cost of £62. We cannot understand where that figure's come from in any way. As I say, that is literally just a member of our staff phoning service providers all around Wales, trying to get a very wide remit of them, but—. No. Even the annual reviews were more expensive than what the Welsh Government proposed could be the overall annualised cost.

I think we would certainly concur with those figures, yes. Speaking to members across Wales, in terms of—. Obviously, the cost of a fire risk assessment will vary on the size of the property, but certainly anything from £100 to £500. And I think—. You know, ultimately, we've already talked about the impact, or the lack of impact, on working hours. So, I think, unfortunately, the Government assessment is an underestimation. And, of course, there are ongoing costs to training—whether that's the authorities, the fire authorities, or landlords and agents as well. So, I think we would say certainly an underestimation at this stage.

I see Jaclyn agrees.

Yes, I think it has been underestimated. If we typically look at a service charge at the moment in England, we've seen costs for a block of, say, 180 flats in the north-east cost £60,000 this year, a block of 83 flats in London costing over £95,000 in compliance costs. I'm not talking about remediation costs or general health and safety costs; those are just costs to comply with the regulatory regime in England. There is a huge amount of variation. We did see this in the Building Safety Act 2022 as well, that the impact assessment massively underestimated the amount of upfront costs that need to go into training, into education, into skills development. Even the process of registering a building, measuring a building's height, has costs.

And also, it might be a separate piece, but the managing agents that are supporting the principal accountable persons will have additional duties, and we may see that the management fees for buildings will go up as well. Now, management fees are typically around 10 per cent to 11 per cent of a service charge budget, but we may see that increase with the new regime coming into Wales. And I know that service charges are a massive issue at the moment. We've seen costs across all of the categories for maintaining and repairing a building go up for various reasons.

The other thing that I would say is that there is a potential loophole where—. The polluter-pays principle, under the remediation, is there a loophole there, where, if there's an issue that needs to be fixed that's not a defect covered under the remediation, who then pays for that work to be done to bring it up to standard? Who's going to pay for that? Is it the landlord? Bear in mind that 40 per cent of the buildings that our managers are looking after are resident controlled or owned under a residents management company or a right-to-manage company. These are not competent people and they don't have a budget. They're a dormant company. They don't have any money in the bank to pay for this work.

So, the Government's assessment is far from being adequate and accurate, there is some work to be done in that regard, and you say, clearly, that it's the residents who will ultimately be paying for the implementation of this Bill's content. Is that right?

From a private rented landlord's point of view, they would, I think—I don't speak for all of them, but they would—be looking to pass those costs on to their tenants. People are not making large amounts of money from rental income at the moment. We've got the highest compliance costs ever of being a private rented landlord. These are additional costs being placed on the provision of private housing to tenants, and it's our experience that these costs would be passed on directly to the tenants.

Jaclyn.

Absolutely, the same with leasehold. The Bill outlines all of the costs that are service-charge recoverable, which mirror what is in the Building Safety Act, so, professional fees, legal fees and things like that, even the cost of just registering the building, which was £251, but providing that key building information, doing the additional surveys—you know, a structural survey on a building can run into thousands and thousands of pounds.

The one thing that Part 4 in the BSA did have, although it was a very complex regime, was leaseholder protections, where, at least, there was identification of a relevant building at the relevant time with a relevant defect. If you have a landlord that can pay, they pay. If you are the leaseholder and you've already paid up to a certain cap, then you don't have to pay any more, and then the rest, who knows where that funding will come from? We need to look at this piece in the round to see what the remediation fund can maybe do to extend to meeting these new safety requirements. And, ultimately, contractor availability may also put pressure on costs.

Is there any good news for residents? Sorry.

Sorry, I was just going to add that I would agree with what's been said. We've even raised cases with the housing Ministers at Westminster where, even on the remediation side, work's been done, even to a higher standard than what was required, and insurance premiums have still not gone down. So, ultimately, the managing agent and the leaseholders are in a difficult position there. But the costs are passed on, unfortunately.

Jaclyn.

Yes, on the insurance premiums, I know that's been floated before. I think it's important to note that, yes, we have seen an increase in insurance premiums, and it happened to coincide with a tightening of the insurance market. I think it's important to note that fires, when they happen, are hugely expensive and costly, but, actually, one of the main reasons that insurance premiums have gone high comes back to my issue of construction quality: it's escape of water. One insurer who does block management insurance or block insurance is paying out £2 million in premiums for escape-of-water issues, so I think we need to be very careful around that myth that, if you fix the buildings and make them safe, the insurance premiums are going to come down. We have assurances that we're unlikely to see insurance premiums ever return to pre-Grenfell levels. I think the reinsurance scheme that was introduced by McGill last year has helped a lot, and we have seen premiums come down, but I think the EWS1 rating is now being used on buildings by insurers to have a look at that, and I think it's very difficult.

But, in terms of good news, I think what this regime will do is vastly improve the safety, the risk management, the way a building is managed and looked after, and, whilst there will be upfront costs when this regime starts to hit, I think, generally, a well-managed, maintained building should see some costs come down a little bit. But, yes, I think I come back to the point earlier as well about the learning-curve costs being passed on to residents. We need to make sure that that regime is not being funded by leaseholders in terms of the initial learning that they're going on.

Okay, Siân?

Yes, thank you.

Diolch yn fawr. Joel James.

Thank you, Chair, and thanks ever so much for coming in this afternoon. I just want to ask you a couple of questions. It was briefly brought up in the last questions about the accountable person, or the principal accountable person. I just wanted to get your overall thoughts on that, in the sense of whether you think it's proportionate, whether you think it's fair to bring that in. How do you see it actually working in principle, really, I suppose? Yes, Jaclyn.

Yes, I think it absolutely makes sense to follow the accountable person, principal accountable person. I note that there is a very clear description on the definitions around that. I think we need to be sure that we have a good regime to identify who the PAP is. When you have complex lease structures, when you have intermediate and superior landlords, sometimes it's not always clear who will be the accountable person when there are multiple accountable persons. That can cause massive delays and additional costs by going through the tribunal process to sort that out. So, I think as much clarity on that, as upfront as possible, to remove that ambiguity, would be quite good.

I note that there has been a suggestion that managing agents should be an accountable person or a PAP. I absolutely strongly recommend that this is not considered. Managing agents are short-term contractors, they are not typically party to any lease or definitions within any relevant legislation. In the case that they are a named manager, or a tripartite lease, absolutely they will find themselves an accountable person. They will have a strong supportive role with the client, who is ultimately going to be the AP or the PAP. They will absolutely have a role to support that, but they cannot take on those duties.

In terms of having a company or an individual, I think in England we've seen that having a company as an accountable person, or a principal accountable person, works fine, as long as whoever is the building safety authority has a key contact. And as far as putting the name and address and contact details within the building, I think that's absolutely fine; that should be part of the resident engagement strategy that identifies who the accountable persons are, who the principal accountable person is, and how they can contact those people. And the use of things like premises information boxes, or secure information boxes—that's where those types of details would be for the relevant fire and rescue authorities as well. But I think there are ways that it's been done in the Building Safety Act that pierce that corporate veil, so that it shouldn't preclude a company, be that an RMC, a resident management company, or a third-party private landlord company, from being the accountable person or principal accountable person.

Timothy, sorry to put you on the spot here, but I know in your written evidence you said that management agents should be allowed to be—.

I think it's about the clarity, and the clarity in guidance. And I think it's where the reality of the black and white of the Bill meets the buying and selling and renting of homes. And I think our suggestion of that is probably borne out from our experiences of agents interacting with the properties and trying to find the right person who is the accountable person or the principal accountable person. So, I think I completely understand what Jaclyn said there.

So, I think it's something that needs to be potentially clearer in the guidance. It was fairly ambiguous, certainly to our members, through the Building Safety Act in England. Could there be more detailed separate guidance for principal accountable persons and the accountable person, and the potential scenarios in properties, whether there's a right-to-manage company in place, or a managing agent? Because I think, if you read the Bill, it does imply that you've got a freeholder, as the kind of external face and responsibility, and then, perhaps, a managing agent or right to manage as the internal. And I think, if that's not the case, then it needs to be made clearer, or stronger statutory duties on those responsible, in the scope of the Bill, to identify themselves, because ultimately, as I said, from a sales and lettings agent point of view, under the consumer protection regs and the digital markets Act that's come in, they need to provide material information for consumers. So, they need to know who to go to in order to find that. But I think it can be something, probably, that could be solved through better and more detailed guidance.

If I remember rightly, now, from the previous evidence session, I think that they questioned whether or not a category 3 property would need to have this accountable person. What are your views on that? Do you think it should be across the board in the three categories or should it just be categories 1 and 2, maybe?

Well, I think if I have understood it correctly, there’s a slight difference in categories. For category 1 and category 2, there's a need to register and for category 3 there isn't. So, I think if the premise of the Bill is to target the high-rises, the greater risk properties, then probably for category 1, category 2, a focus on registration is appropriate. And then it's a case of clarity through guidance, being able to enforce category 3 and everyone understands their roles. But of course, I think there are more category 3 buildings across the country, and I think that's got to be taken into consideration as well.

Obviously, at the start of the evidence session, Steven, you mentioned how, especially in terms of category 3 properties, the legislation is there, it just needs to be streamlined, it just needs to be enforced. There is an argument that the Welsh Government are putting forward that this new regime will streamline, especially in fire safety and that. I just wanted to get your views on that. You don't necessarily seem to think that.

No, we don't feel it streamlines, we think it complicates it further. There needs to be a streamlining of existing legislation, but adding more legislation on top that—. I don't think anybody was calling for this. I don't know why category 3 was added so late. The priority here, and this is a nuanced statement, so I don't want to be misunderstood, is about the high-rise category 1 and category 2. Category 3 is already looked after in relation to all of the other legislation and any local licensing that is in place in these areas as well. We're not sure why category 3 was added on. Fire safety in those buildings is a priority but not of this Bill, and adding more Bills into that long list I gave earlier, I don't think, we don't feel, streamlines it, it just complicates it even more.

So, in terms of small-scale landlords, I imagine you could see this having a detrimental impact on them, then, with them maybe leaving the market then, do you think?

Potentially. Look, we are very clear, a private rental landlord of a HMO should be carrying out annual fire checks on the property anyway. That's our advice to our landlords. It's the additional compliance that it's going to add on top of these. The vast majority of landlords in Wales have one or two properties. This is more paperwork, more compliance, with more things that they're going to have to do under even more legislation. At this moment in time, we don't need to be convincing small, good businesses, private landlords, to leave the sector, because, as has been made reference to, we have a housing crisis in Wales. There is a need for private rented sector housing. It's filling a gap in the social housing sector. It's offering temporary accommodation to those who need it for a six to 12 month, two-year period of time, who are not in a position or who don't want to buy. We cannot force more people out of the sector. We're seeing the bedding in of the Renting Homes (Wales) Act, we're seeing minimum energy efficiency standards coming down the line. I don't know why we would be trying to complicate the lives of small businesses, small landlords further than they already have.

And I think, just on that point, if I get the categories and the heights correct, the Building Safety Act passed by the UK Government amended the Fire Safety Act 2021, and that applies to both England and Wales. So, that's already extended to buildings containing two or more sets of domestic premises. It's amended the fire safety Order, which was originally for non-domestic, commercial property, and it's extended the requirements for the fire risk assessment in those buildings to include the structure, the external walls, the doors, the windows, the fixtures, the common parts. So, there is already legislation in place covering that, which attends to the fire risk assessment.

I certainly was confused when I was trying to work through the Welsh Government's proposals in this Bill for HMOs. I was looking again to the fire safety regulations of 2022, which are England-only and are amended via the Building Safety Act. And that extends, in buildings split into two premises or more where communal parts that residents must pass through to exit the building, to 'evaluation strategies', 'must report a fire', 'keep fire doors shut', 'not tamper with devices'. So, it seems to me that the measures—we need some more clarity from the Welsh Government—in this Bill are trying to potentially pull bits of those two Acts and regulations together without building on the existing structures. And I think, ultimately, that's where we're left thinking, they've either got to pull all the HMOs and those two or more buildings—category 3—together or remove HMOs altogether, review it, and then come back with something that pulls everything together and supports enforcement.

Okay, I think we'll have to move on at this stage. Peter.

Yes, just a few questions, which I've asked in previous inquiries, and those are from the residents' perspective, really. Just a quick one, really: is the balance right in the Bill between residents' rights and their responsibilities?

Categories 1 and 2, yes. Category 3 I think is still open for a lot more debate.

Thank you for that. Timothy, anything?

I think we haven't had, when we've dissected it, too many concerns in this area. The Bill does have clear expectations on residents throughout to not tamper or damage, and, ultimately, it's trying to create a regime where residents understand who owns the building, who's managing it, where they can go if there's a problem, and I think it's a step in the right direction, but as long as landlords can enforce notices when they need to access a property and do the works, as has been said.

Okay, thanks. Jaclyn, anything to add?

I'd probably just echo those views. I think there is obviously a need for tenants to have responsibilities and also rights to raise safety issues and complaints et cetera. But I come back to my point on resident engagement and education. This is a key focus that we need. We need simple, clear guidance for residents so that they understand exactly what's required. If you think about when you get on an aeroplane, you have an A4 sheet, which is two sides, and you know exactly what to do when something happens—we need something akin to that that is easy for people to understand the fire safety risks and why they should be encouraged to report them, but also avoid certain behaviours and damage to the building. But it's about education and engagement for me.

Thank you. The Bill has provision to allow tenants to withhold the rent if they don't get certain safety information. Do you foresee some unintended consequences of that?

Definitely. That was obviously made part of the Renting Homes (Wales) Act. There haven't been too many cases that have tested that yet. But the ability to withhold rent, if you're found to not be right, means you've made yourself intentionally homeless if you lose the debate in a court of law. That should only ever be used in the most severe situations. And as with many things in life, communication over that is key. If a tenant doesn't believe they've been issued with the right notices, they should be talking to their landlord, not withholding rent. Because if they're found to be wrong, they won't get any assistance from their local authority to find a home.

That's an interesting point. How should that be articulated within the Bill, perhaps? I don't know.

It's just that the fallout for withholding your rent, if you're not right, is very serious.

Yes, that's a good point. Anything to add to this, Timothy?

I think I'd agree with Steven. I think allowing tenants to withhold rent is a slippery slope. I mean, certainly, from a—. We're talking about landlords in the private rented sector, certainly from a letting agent point of view. A decent agent worth their salt would do an inventory at the start of the tenancy, a check-in, check-out report, and they'd be doing checks on the property in month 3 and month 9 through an annual cycle. So, I think, as Jaclyn's alluded to, it's education, people knowing their rights at the start of the tenancy, making sure that's clear, the ability to communicate when things aren't quite right, and enforcement, both championing good landlords and tenants and outlawing bad landlords and tenants.

Yes. Jaclyn, anything further to add on that?

From a leaseholder perspective, I think it would be quite a drastic action to withhold service charges. I mean, in effect, that's a breach of lease, so that would be quite a strong thing for a leaseholder to do. But I think there should be some ability for them to challenge that through the building safety authority or through the tribunal or with the principal accountable person where they feel like they haven't got adequate information, or they feel like something that they have reported has not been resolved adequately, or they fear about, you know, a risk in their building. But I think withholding service charges wouldn't really be an option in that case for a leaseholder. So, you would need some other mechanism for them to be able to challenge any issues around building safety in a leasehold block.

We've heard views that the Bill should address the needs of residents who need support to evacuate. Recognising that could be challenging, what are your views on that?

I think everything needs to be put in place to make sure that somebody who has additional needs can get out of a property. I come back to my point I made at the outset that the definition of enhanced responsibilities for somebody who is deemed as vulnerable would have unintended consequences on a landlord's wish to offer them a tenancy in the first instance. But nothing should ever be done that should make anybody's ability to leave a property more difficult. That balance has to be found for all parties, because with the best of intentions, you could create some very bad unintended consequences there.

So, should it be incumbent on landlords to do those assessments, then?

Sure, but it should be linked to the building, not to the person, and the requirement should be on the building, and then if you can make a building more suitable for those who have those additional needs, then you have a better property for somebody. But it should be linked to the bricks and mortar, not the person.

Thank you for that. Anything else? Yes, Jaclyn?

I would say vulnerable people don't just live in small buildings. I think something like this could be—. The information could be gathered through the resident engagement, but also maybe through the use of the residential PEEPs, which is the personal emergency evacuation plan. We're starting to see some guidance come through on that now, and I think using a tool like that to identify residents that might need additional help and encouraging fire authorities to engage in that process as well would be important. But I would see that as a huge part of resident engagement on the category 3 buildings, and using a tool like a personal evacuation plan would be suitable.

Thank you, Chair.

Okay, thank you, Peter. Well, let me just thank the three of you, Jaclyn, Timothy and Steven, for coming along to give evidence to committee this afternoon. You will be sent a transcript to check for factual accuracy. Diolch yn fawr.

Thank you, Chair.

Thank you.

Thank you.

The next item on our agenda today, item 5, is papers to note. There is only one, a letter from the First Minister to the Chairs' forum in relation to reviewing committee effectiveness in the sixth Senedd. Are Members content to note that paper? I see that you are.

Item 6 is a motion under Standing Order 17.42 to resolve to exclude the public from the remainder of this meeting. Is committee content to do so? You are. We will move into private session.