Official Report: Minutes of Evidence

The Chairperson (Ms P Bradley): I welcome the departmental officials David Polley, Eilish O'Neill and Karen Barr to the meeting. Go ahead and brief the Committee.

Mr David Polley (Department for Communities): We will start with the responses on clauses 1 to 5. Eilish will go through our reply, which we sent yesterday.

Ms Eilish O'Neill (Department for Communities): Does this have to be read out, clause by clause, with your questions and the departmental response?

The Chairperson (Ms P Bradley): No, just go ahead with the key issues.

Ms O'Neill: The Committee requested confirmation from us on the update that we gave on clause 1. We confirm that we will produce comprehensive guidance to assist landlords and tenants with the new legislative requirements. We also confirm that an online template will be provided for landlords to download and use, and that we will have a communication strategy with publicity on the new legislation.

Clause 2 is "Tenant to be given notice regarding certain past matters". You asked for confirmation of the response that we gave at the meeting on Tuesday. We confirm that there will be no retrospective action by virtue of clause 2. It simply protects those tenants who had not been given notice of their tenancy terms because of the repeal that had happened in error.

Theme 2 was about rental payments and deposits. Among the main issues that arose from that was whether we would consider the term "receipt" and if we needed to define that more fully in the Bill. The advice that we received is that what is contained in the Bill adequately covers digital receipts and those issued by email or any other electronic method. We intend to set out more fully what constitutes a receipt in the guidance that will be produced, but we were advised that we do not need to change the Bill.

The Committee asked whether we would consider what else could be included when a landlord has to produce a receipt for a tenant. We missed that question when we sent the response to you, so apologies for that. We said that, where rent is paid, a receipt must be issued. The Committee asked us to consider whether a receipt could be given for any cash payments made for a tenancy. We are happy to look at and consider that further, and we will take it to the Minister.

The next thing was on clause 4, "Limit on tenancy deposit amount". The Committee asked that the Bill —

Mr Polley: Eilish, can we go back to clause 3 and the time that landlords have to give receipts? The Committee suggested that that should be 28 days.

Ms O'Neill: Apologies. The Bill states that a receipt must be produced within a reasonable period. There was some discussion at Committee about what that means. Our response is that, at clause 3, the proposed new article 5(3) of the 2006 Order, states that a receipt is to be given for a cash payment:

The policy intent of that is to accommodate landlords and tenant relationships in which the tenant gives the rental payment to the landlord in a more informal setting, where the landlord may not have the means to acknowledge the payment, for example, by using a receipt book. Should a receipt not be produced, the landlord would be subject to a penalty. Should a receipt be produced but the tenant feels that the period that they had to wait was too long, they can complain to the council. The council could then discuss that with the landlord to get an explanation of why the receipt was not produced within a reasonable time and impose a penalty if required. We feel that that gives some discretion to councils in discussing with a landlord why a receipt was not produced at the time. Again, we intend to stress to tenants in the guidance that they should only really make payments at a point in time that they can receive a receipt. This provision allows for circumstances where that may not be possible.

The Committee also asked us to consider inserting a time period, and 28 days was mentioned because that period is included for other aspects of the Bill. We feel that, if we put a time limit of 28 days in the Bill, that would not allow for some of the scenarios that we have highlighted. If it had to be within 28 days, rather than a council having the discretion to assess why a landlord had not been able to produce a receipt within that period, it would immediately become an offence. That would remove any element of discretion for councils.

Thanks, David. I had skipped over that.

Going back to clause 4, the Department confirms to the Committee that the Bill only limits the amount of deposit that a landlord can charge. It does not refer to rent in advance. Rent in advance and any other tenant fees will be looked at in phase 2 of the reform of the private rented sector.

The Committee asked us about deposits that are paid to letting agents. We confirm that article 5B of the 2006 Order contains a requirement for a landlord, or a person acting on behalf of the landlord, to pay the deposit, and states that the offence is committed by both where the deposit is not paid.

In the 2017 Proposals for Change, the Department said that it would amend the legislation to allow additional time to protect the deposit and give the required information to the tenant. All 13 respondents who answered the question that we asked on that in our consultation were in favour of the increase to 28 days from the 14 days that is in the current legislation.

On clause 5, there was a query about having in legislation an extra week to allow for a tenant to be notified. When we were working through the drafting with our colleagues in the Office of the Legislative Counsel (OLC), it was decided that, in a scenario where a landlord did not protect the deposit until day 27, which would be within their legal rights under the new legislation, he or she could require additional time to get the information to the tenant. An extra week would be legislated for to allow for that type of scenario.

The Chairperson (Ms P Bradley): OK. Thank you, Eilish. Do members have any questions about the departmental responses? Are members happy enough with what we have heard? We will be discussing those with the Bill Clerk in closed session anyway.

Mr Frew: I am not really happy with what I have heard. That is no fault of the presenters, of course; it is just the content. I have not had a real chance to read the responses yet. I was speed-reading it as you were speaking, so forgive me. I am still concerned about the proposed new article 5(3)(b) of the 2006 Order at clause 3. I also acknowledge that you will look at a new subclause or clause to amend the 2006 Order to include all other payments apart from rent; is that right?

Ms O'Neill: Yes.

Mr Frew: Have we explored affording the tenant payment options so that it is not cash only? Have we interrogated that issue? I am not sure if that was one of the responses requested formally last time and whether it is contained among these responses. I am concerned that the tenant will only be afforded cash as a payment option; that is wrong. There should be an option to pay in various ways. Have we explored that?

Ms O'Neill: Sorry; is that for paying rent?

Mr Frew: Yes. There should be a payment option for rent and deposits.

Ms O'Neill: Cash payments are referred to in the legislation, but our understanding is that those cases are small in number and that the majority of rent payments are made by direct debit or transfer. This provision is to allow for the cases where a tenant makes their payment by cash or, as a one-off, has to make their rent payment in cash. By and large, people pay their rent by direct debit, electronic transfer or lodging it to a landlord's bank account. We are doing away with the rent book. Under the current legislation, in the old days, a tenant would hand over cash and have their rent book marked by their landlord to acknowledge receipt of the rent. The rent book will not be used any longer. This provision is to show that, as you will not have a rent book, you must get a receipt for any payment that is made. However, by and large, tenants make their payments electronically.

Mr Frew: Yes. When you read the 2006 Order, you see that article 5 pincers the rent book issue throughout. Will anything in this Bill ban a landlord from making the tenant pay only in cash? I get that it is very rare and that most people pay by direct debit. However, there may be some circumstances in which landlords insist on cash payments only. Does anything in the Bill ban that restriction?

Ms O'Neill: No.

Mr Frew: Could the Department consider looking at that?

Ms O'Neill: We did not consider that during our consultation, and we have not consulted on it. Landlords may feel that that limits them in circumstances where it suits them to have a cash payment. The short answer is no; we have not considered it.

Mr Polley: We have not considered it. We have not done any work on it. It was not part of our considerations when we were drafting the Bill.

Mr Frew: I am not saying that a cash payment is wrong. I am saying that making cash payment the only option, and not affording a tenant the use of direct debit or any other function, could be considered to be a wee bit suspect or dodgy. I do not know how often it happens, but I cannot think of any good reason why a landlord would insist on a cash payment only.

Ms O'Neill: Our focus was on making sure that, where a tenant does make a cash payment, they are given a receipt, so that they have proof that the payment has been made and there cannot be any dispute with the landlord about a payment not having been made. It is to give the tenant some protection. We were not looking at the wider aspect of why a landlord would be looking for a cash payment. That did not really feature in our discussions or focus.

Mr Frew: Honestly, I think that the benefit of cash payment is always on the tenant's side because of ease, having money on you and all of that. However, it is an unwise transaction if you do not get a receipt. That moves me on to my next point, which is on the issue of receipts. I am still not content that proposed new article 5(3)(b) needs to be there. I understand that that is to ensure that landlords are not criminalised, but I do not see any scenario in which you should hand over money for a deposit or rent to anyone and not be afforded a receipt.

Mr Polley: We agree that it is extremely unwise for tenants to hand over money without getting a receipt. If you were to remove this, the landlord would be in a position of not being able to accept payment. Let us think through the ramifications of the different suggestions. Option 1 is to take out proposed new article 5(3)(b), which would mean that the receipt would have to be provided at the time that the cash is handed over. If you were to do that, the landlord would, in some instances, have to say, "Thank you, but not now". We know that that happens. That could have implications.

The second way that the Committee suggested is that we define "reasonable" as being within 28 days. We think that there are two dangers with that. One danger is that there could be a reasonable reason why it is more than 28 days; that is certainly conceivable. The second danger is that that would mean that the default would become that the receipt has to be given within 28 days. That was our thinking.

Mr Frew: Whilst questions came from this Committee on that, I am not on that page. I understand the arguments that you make about reasonableness and putting an actual date and time on it, because there will be different scenarios. I am much more of a purist on this in that my position is that you should not give cash unless you can obtain a receipt and you should not accept cash unless you can afford the person a receipt. Basically, that is where I am at on it. If that scenario were not even contemplated in the Bill, it would safeguard tenants and also landlords.

Mr Polley: You have made your points and we have made our points, so we are maybe at the point of considering what we do. That could have consequences. You could put a tenant into default on their rent account. In some ways, you are threatening a punishment to a landlord in order to incentivise a tenant to behave in a sensible way. I accept the point entirely that it is a bad thing for a tenant to hand over their rent payment in cash. However, you would be saying to the landlord, "We will criminalise you if you accept cash and cannot give a receipt on the spot". That is incentivising one person's behaviour by threatening a punishment to someone else, which does not align exactly.

We may be at the point where we know what you think and you know what we think: is that fair to say?

Mr Frew: It is perfectly fair to say. I am still working through it and the ramifications of removing this. It is all about unintended consequences and the safeguarding around that, why we have it in the Bill and what it would mean to take it out. I am not settled, but I am still considering it.

The Chairperson (Ms P Bradley): Thank you. Kellie, do you want to come in?

Ms Armstrong: David, I will throw in something that is missing from the practice of private landlords and private landlords of businesses. Is a statement of payments a way round the requirement for a receipt?

I rent my office at the moment, and my landlord's agent regularly provides me with an updated statement of payments that includes all the payments that have been made and when they were made. One thing that we do not have for private landlords is any provision for the date that payments were made and received. It could protect them or the tenant. Is that an option?

If you have a landlord who accepts a hybrid of cash and direct debit or bank transfers, is there something that should be produced to protect them? It could be in the template that is provided for landlords: a statement of payments that is produced once a quarter, every six months or something like that. The commercial world has it, and private landlords of business premises do it on a regular basis. A number of agents do it as well. Is there something that we can do that would satisfy the requirement? If the 28 days does not happen, the landlord is due for prosecution. There is a fine. Should a receipt not be produced, the landlord is subject to a penalty. However, can we help the system by requiring a statement of payments between the two parties? Is that too much?

Ms O'Neill: Do you mean in the template for a landlord or in the guidance for tenants? It could be a template that a tenant produces digitally, and, when they pay the landlord, they get them to sign to say that they have received it? Is that what you mean?

Ms Armstrong: No. I am thinking about the landlord taking on responsibility for the receipt. The landlord bumps into Mrs Jones in the street or somewhere. Mrs Jones says, "I have the rent for you in my pocket". The landlord may have required her to pay cash, or Mrs Jones may prefer to pay cash. Either way, we have a payment there, and, if the receipt cannot be produced because of a unique situation — maybe somebody has had a bereavement in their family, they are out of the country or whatever it may be — there is a statement of payments. If the landlord or the tenant needs to go to court, the burden of proof is satisfied, because there is a statement of payments. It would read, "In January, you paid £100 on the first of the month; in February, you paid £100 on the tenth; in March, you did not pay; in April, you paid £200 on the first". There is a statement that provides proof of payment that would belt and braces a receipt system.

Mr Frew: It sounds like a rent book.

Ms Armstrong: It does, does it not?

Ms O'Neill: It does.

Ms Armstrong: Yes, but it is a statement after the fact. It is not a signed statement in advance. It is a statement after the fact of the payment being received.

Mr Polley: In the same way, some of us receive mortgage statements. It is only every 12 months, but, in the meantime, we have evidence from our banks and so on that it has been paid every month. We get a summary of what has been paid over that 12-month period. We could put that in the guidance, as best practice.

Ms Armstrong: That is what I am thinking. It would be a help. Both landlords and tenants would benefit from it. If there is a fall down on either side, they have that proof, and it could be in the guidance that this has to be provided. As you said, mortgage statements come in every 12 months. It means that there is other evidence, on top of whatever the receipt is. It could be a piece of paper, an email or whatever.

Mr Frew: May I add —?

Ms O'Neill: It is to be included in the guidance, as opposed to the legislation. [Inaudible.]

Mr Polley: The legislation is quite specific. I am sure that the member understands that there is a broader issue about making sure that records are kept correctly, which would help in the event of any dispute and, basically, avoid disputes about whether rent has been paid. However, this is a specific issue. A receipt for rent paid in cash is a very particular thing. It is an area where it is quite likely that there could be a dispute as to whether rent was paid in cash.

Ms Armstrong: You could take a belt-and-braces approach with an annual statement and guidance.

Mr Polley: If there was that belt-and-braces approach in the guidance, that would probably be helpful for the overall policy intent.

Ms O'Neill: We would be happy with that.

Ms Armstrong: I still do not know whether that keeps Paul right, but it is another aspect of a belt-and-braces approach.

Mr Frew: I will add to that, if I may, Chair. In the 2006 Order, article 5, which you are replacing, stipulated that the landlord:

There was a requirement on the landlord to produce a rent book, which, in my eyes, is a receipt or a record. We are doing away with that, but what we are replacing it with does not seem to give adequate protection. It may give adequate protection, but I believe that it does not go far enough, for the reasons that I outlined with regard to payments of cash for not only rent or deposits but any aspect and not having a choice about cash-only transactions. A landlord could also hold off from providing that record or receipt until such a time as is "reasonably possible", whereas the old article 5 stipulates that a reasonable time in which to produce a rent book is 28 days.

Ms Armstrong: Have we lost our connection with the officials?

The Chairperson (Ms P Bradley): OK, bear with us for a wee minute. We have gone off StarLeaf. It is on my screen, but we cannot hear anything, and, obviously, they cannot hear us either.

Mr Frew: I hope that it was not on my account. [Laughter.]

The Chairperson (Ms P Bradley): We have lost everything here.

Mr Frew: Hit the button.

The Committee Clerk: I am emailing the broadcasting team as we speak.

Mr Frew: Yes.

The Chairperson (Ms P Bradley): We will take a short break until we sort that out.

The Chairperson (Ms P Bradley): OK, you will be glad to hear that we are all back on again. I am sorry about that; I do not know what happened. We are blaming it on Paul Frew anyway, because he was last to speak.

David, we did not catch anything that you said when we went off. Do you want to go back and comment on anything that Paul or Kellie said?

Mr Polley: Where did we stop?

The Chairperson (Ms P Bradley): We stopped when Paul stopped speaking.

Mr Frew: I was talking about article 5(1) of the 2006 Order, which states that a landlord:

That protection and that requirement of a landlord is provided under the 2006 Order. Yet, the new article 5, whilst it affords protection around cash payments, is probably not as tight as article 5(1) of the 2006 Order.

Mr Polley: We wanted to try to improve on it. The model of the rent book goes back to the days when somebody came to your house and knocked on your door. You gave them cash in their hand, and they wrote in your rent book, which you kept, that the rent had been paid. They walked along the street and did that with all the tenants of the houses. Nowadays, this would mean that you would pay by bank transfer to the landlord, who would then have to come to your house and write in your book that you had done it. In most cases, rents are paid electronically, and both parties have a record of that from their bank account; nothing more is needed.

We wanted to make sure that we still covered off the cash bit. I am going back here to the point of replacing article 5 and that a receipt is given if rent is paid in cash. That is where tenants and landlords need to be protected. Where people pay rent electronically, that takes care of itself.

Mr Frew: That is entirely the point that I make. I can remember that well. I was a wee boy at the time, and I remember looking at my mum and dad's rent book. There was a picture of Ballymena town hall on it. I remember it vividly. I remember this guy coming to the door and mum paying. It was always recorded, and the rent book was always signatured. We are losing that. While cash payment is very rare now, if a receipt or signature cannot be produced at the time of the transaction, we lose that aspect of protection for the landlord and the renter. That is entirely the point.

Mr Polley: We agree. We wanted it to be provided straightaway. The point of new article 5(3)(b) is that we accept that there may be circumstances in which that is not possible. Given the way things are now and the way things are normally paid, if somebody chose to pay in cash, they would not be set up to do that.

Mr Frew: In the seventies or the early eighties, if the landlord or their representative went to collect the money and received the rent, but the rent book was not signed — even if it happened by mistake — would that have been an offence?

Ms O'Neill: We would have to go back and check that. It is not something that I am aware of.

Mr Polley: That is before the Private Tenancies (Northern Ireland) Order 2006. We would have to go and check what the legislation says before the 2006 Order.

Mr Frew: I am not asking you to do that if it is too cumbersome, but surely you see the point that I am making.

Mr Polley: Yes. I understand the point that you are making. There are consequences of removing any test of reasonableness for not providing it on time and where that might end up. That is why we have that.

Ms O'Neill: Karen, I think that you are on mute.

Mr Polley: The member made an interesting point, which we are bearing in mind in our considerations. The old article 5 includes the written recording of all payments —

Ms Karen Barr (Department for Communities): Other payments.

Mr Polley: — whether or not those are rent.

Ms Barr: Through the tenancy.

Mr Polley: Yes.

Ms Barr: Paul, when we consulted, we were told by councils that nobody has rent books any more, that that was antiquated and that we need to move with the times. As David quite clearly explained, most people pay their rent by standing order or direct debit or something similar, so they already have a record. We put in the bit about the receipt for cash simply to cover instances when people pay in cash, which, we believe, will be few.

Mr Frew: I get that, and I agree that the rent book is now antiquated. We have only sentimental memories now. I get that, but, while the new article 5 provides protection, I do not think that it provides enough protection. First, I question why it has to be cash in this day and age. That might be more to help the tenant than the landlord. If that is the case, I believe that you still have to tighten up the new article 5 for those very rare occasions when someone —.

Ms Barr: The Bill does not say that you have to pay by cash. There is a choice. That will be agreed by the landlord and the tenant. The landlord will ask for payment in a certain way. We are just saying that there is cover for someone who pays in cash. As I said, there is cover for other people through audit trails of bank statements or whatever. It does not take away choice; we are just trying to provide cover for people who pay in cash.

Mr Frew: Yes. I get that it does not state that in the Bill and that there is cash, but I am making the point that there may be scenarios where landlords insist on cash payment only. That is wrong.

Mr Frew: I did not raise that last week, but I should have. That is wrong. The choice should always be offered. Direct debit is the handiest way, so why would any landlord insist on cash? I am not saying that it happens, but, if it does, it is wrong.

Ms O'Neill: Landlords insisting on cash payment is not something that has ever been raised with us, but that is not to say that it has not happened or does not happen. Who knows the reasons why a landlord wants to receive cash? I am loath to cast any aspersions on any landlord who asks for cash payment. I do not have information that I am able to quote as to why that would be the case.

Mr Frew: OK. Thank you.

The Chairperson (Ms P Bradley): We move on to the proposals for schedule 2. Will you give us an overview of that, or tell us what is going on?

Mr Polley: The Department is proposing amendments to schedule 2, which, as you know, relates to clause 9. A draft amendment is being finalised with the Office of the Legislative Counsel (OLC), and we will pass that to the Assembly Bill office as soon as we can. We plan to do that next week. I talked to the Assembly Clerk about that yesterday. In the meantime, I will set out the changes for the Committee today.

Schedule 2 relates to energy efficiency regulations. When the Department reviewed the evidence that was given to the Committee, it did some work to consider how the regulations would operate. On review, we came to the conclusion that schedule 2, as drafted, did not fully enable the regulations that we might wish to make and definitively deliver the policy intent.

I apologise to the Committee for the late notice of the proposed change. I had hoped to tell you about that at the first opportunity during deliberations, which should have been on Tuesday. I realise that that was only two days ago and that I notified you yesterday, but it is an error on our part. I am very sorry about that. You referred to the rapid progress that we had made. I was trying to get it sorted out in time to tell you on Tuesday. I am glad that I can tell you only two days afterwards.

There are no proposed changes to clause 9, which introduces schedule 2. As I related on Tuesday, schedule 2 sets out the powers for the Department to make regulations to detail the requirements for the energy efficiency of dwelling houses let under private tenancy and what the minimum level of any energy performance certificate (EPC) should be. Articles 11G(1) and 11G(2) will still prohibit letting or continuing to let a dwelling house under private tenancy of inadequate energy efficiency. Given the impact of those regulations, the Department considers that we should now make them draft affirmative.

Article 11G(3) provides that the Department may provide exemptions to that prohibition. We are going to augment that so that exemptions other than those relating to the fabric of the building can be made. In particular, the regulations could provide an improvement exemption. The amendment will also detail other areas that the regulations may cover, including designating an authority to oversee the exemption process and public access to lists of exemptions; more detail on exemptions, including the length of time that they would last for; and appeals, inspections, applications and other issues related to the processes around getting exemptions for houses that people are proposing to let. The proposed amendment links the required improvement to article 12 of the 2006 Order, which is intended to assist landlords to carry out works to tenanted properties.

Article 11H provides that the Department may specify in regulations offences committed by virtue of non-compliance. The proposed amendment introduces an additional offence that relates to continuing to let a house with an inadequate EPC, and more specific detail around improvement exemptions.

Finally, an amendment to article 72 states that, when making the regulations, the Department must consult with tenants. The Department also proposes to make that minor change to schedule 3.

Chair, I will stop there for any questions. I will go on to explain why the Department is doing that, but perhaps there are questions at this point.

Ms Armstrong: David, if a landlord needs to go into a house to do significant improvements, will there be any consideration of the notice period for the tenant? We could find that tenants do not have somewhere to live while a private landlord carries out whatever works it may be. If it is substantial works, are you thinking about anything along the lines of the notice to quit or some notice period for works?

Mr Polley: There are different bits to that, but, as the Bill is drafted, a tenant could refuse the works, which would leave the landlord in the position of having to either break the prohibition or evict the tenant. We did not think that that was sensible. All the work that has been done around energy improvement implies that the optimum time to do it is when the house is empty, so when there is a change in tenancy in the private rented sector or the social sector, or when you have just moved into your new house in the owner-occupied sector. We did not think that that was, necessarily, sensible. We wanted an exemption for that. It was one of the things that got us thinking about this area in the first place.

Secondly, we are proposing a duty. The 2006 Order requires that, where the landlord has a duty to do something, the tenant has to let them in. The landlord can go to court to enforce that. The judge could decide that there are mitigating circumstances for the tenant. At the minute, that would apply to things such as gas inspections. We propose that, where the landlord is obliged to carry out energy efficiency improvements, they fall within the definition of a duty, which would help landlords to carry out work. Does that answer your question? Our intention, and one reason why we propose the change, is to avoid the need for tenants to be evicted so that works can be carried out to avoid the prohibition.

Ms Armstrong: Will there be a deadline for private landlords to complete the work? I say that because we do not know what the standards are and how much work a private landlord may have to do to a house to bring it up to those standards. A building may not be fit for a long-term tenant to remain in while the work is being done. That may not be a break in tenancy. If someone has lived there for what could be, as we know, over 10 years, and, in particular, if they are an older person who has no intention of moving out, wants to stay with their landlord and loves their home, but the work has to be done, and the landlord has to do it by a certain date, it is about the protections that we can give to tenants to give them enough notice to find another place. Is there any compulsion for a landlord to provide another domicile for that person in the period during which they have to be out of the property? It is about clarification, because we do not know what the standards are or what the implications could be.

Mr Polley: As I said, we wanted to allow the possibility of work being done more gradually so that a landlord was not obliged to come to the point of suddenly having to do an awful lot of intrusive work and also to introduce an exemption for tenants to refuse work. That would be fine for the landlord. That should stop those things happening.

On the question of different notices to quit, if it came to that, the point of this system is to prevent that happening, where possible, and the revisions that we are proposing will be a lot more successful at avoiding that scenario than the Bill, as drafted, would allow us to do.

Ms Armstrong: I suppose that this is not notice to quit. It is notice of maintenance and that you need to move out for a period.

Mr Polley: Yes.

The Chairperson (Ms P Bradley): I am conscious that we have not had the chance to look at this in any great detail.

Mr Polley: Chair, do you want me to explain why the Department proposes to do it? The point is that we need to get the amendment sent over as quickly as possible.

The Chairperson (Ms P Bradley): Yes, it is.

Mr Polley: My proposal is to do that by the middle of next week.

The Chairperson (Ms P Bradley): That gives us a chance to look at it, without going into too much detail. Go ahead, David.

Mr Polley: Why is the Department proposing the amendment? We have concerns that the powers in schedule 2, as drafted, would be too limiting in the regulations that they would allow us to put in place. The original powers were conceived when we were mainly concerned with fuel poverty. The powers will now be a tool to drive the decarbonisation of a significant portion of the housing stock to deliver our climate change obligations. We will need to ensure that we can enforce a higher level of energy efficiency using the regulations, of EPC rating C at least or possibly B, depending on where we go. That will be more intrusive and expensive, possibly costing tens of thousands of pounds in older houses. We cannot have a significant number of exempt dwellings, and we need comprehensive powers to enforce, as the stakes and benefits of the prohibition will be that much higher.

For example, with the Bill as drafted, we could not have an exemption for a tenant's refusal of works, which would mean that the landlord would be in the heartbreaking position of having to evict them to do the works, or break the prohibition. We could only have exemptions for entire types of buildings for which it was not realistic to reach the required level of energy efficiency. There would be no requirement to carry out any works to exempt buildings. We could not have put much process around the exemptions, and that would have greatly limited enforcement.

Fundamentally, the Department would inevitably have been forced at some point to choose between risking supply of private rented housing and delivering energy efficiency improvements.

The Department feels that that process is needed to drive this improvement across all private rented houses and limit the impact on landlords to what is manageable and that it does not risk supply shocks. The revised schedule will allow the regulations to have other features that allow us to set up a system that can deliver the policy objectives of much higher energy efficiency in the private rented sector over the period to 2050, a reduction in fuel poverty and meeting our carbon reduction goals. It will allow us to do that in a way that is deliverable and avoids shocks to supply in the private rented sector that would increase housing stress.

The Chairperson (Ms P Bradley): Thank you for that, David. We absolutely get that those are positives, albeit we are not overly happy with how it has all worked out. However, they are positives, and that is good. The Committee needs time to talk about that. We are going into closed session shortly with Claire from the Bill Office to discuss how we proceed. I might stop the conversation on it. Kellie, do you want to say something briefly?

Ms Armstrong: It is about the consultation that is out at the moment. I know that it is in the public domain, but has the Department reached out to all those who have given evidence to the Committee during the process to ensure that they are specifically aware of the consultation — I am thinking about Renters' Voice and people like that — and can feed in to it? They provided fantastic evidence to us. It would be good to have their input in your consultation.

Ms Barr: Yes, we have indeed, Kellie.

Ms Armstrong: Brilliant.

Mr Polley: We have had meetings with Renters' Voice, which have been brilliant as we have been preparing up to this point. Chair, it was suggested that we might want to outline briefly what is in the consultation on notice to quit.

The Chairperson (Ms P Bradley): Yes, go ahead — briefly, if you can.

Ms Barr: I will take this one, because I was working on it. On Tuesday, we notified you that the consultation would launch. We managed to launch it yesterday. The Minister wrote to inform you of that. The purpose of the consultation is to inform policy around the notice to quit, the Bill's passage in the Assembly and then the possible further use of clause 11(5), which gives us an option to increase it in the future. As you know, the Bill states that a landlord is required to give a tenant eight weeks' notice for tenancies that are longer than 12 months and up to 10 years. However, the Minister was concerned that that was still not enough, given, as you have said, the time that it sometimes takes a tenant to find suitable and affordable alternative accommodation. She asked us to do further work on that, also bearing in mind that the context has changed since the pandemic and that the notice has increased to 12 weeks for all tenants and landlords during that period.

As you know, the notice to quit is a crucial part of private tenancy law. It provides protection for landlords and tenants. It is important that the changes, as necessary, are properly considered and based on sound policy rationale. The Chartered Institute of Housing (CIH) was commissioned to carry out research. That research is summarised in our consultation document so that it provides the most up-to-date information and research in order to help those who will respond and to inform them. The research includes consideration of the views of tenants and landlords, practice elsewhere and the human rights implications. The consultation asks a number of questions, such as on the purpose of the notice to quit and whether it is reasonable that notices should vary depending on the length of tenancy. It looks at the notice to quit for tenancies that are under 12 months. It looks at notices for over 12 months and up to 10 years, and it gives options for eight, 12 or 26 weeks, with possible exemptions if it were to be increased. It also looks at the notice to quit for houses in multiple occupation. It addresses many of the issues around the notice to quit that were raised by groups during the evidence sessions.

The consultation closes on 25 January. We will then analyse the responses, publish a report in due course and keep the Committee informed at every stage. We know that it is not ideal that it is coming in the middle of the Bill's passage. However, tenants are really looking forward to seeing an increase in the notice to quit period, so it would be a terrible shame if, at this point, it ends up having to be pulled from the Bill or anything like that. We want to give them as much protection as possible.

The Chairperson (Ms P Bradley): As a Committee, we absolutely agree with that — 100%. We want them to have as much protection as possible. Have members any questions on the consultation at this stage, or will we wait to see how that progresses? Yes. All right.

Thank you very much, David, Eilish and Karen, for your time this morning. There is no doubt that we will speak to you again next week.

Mr Polley: Thank you very much. See you next week. Bye.