Procedimientos del área de almacén

247. The costs for private landlords are based on allowing one day to become familiar to the level required. This is considered reasonable to enable landlords to issue contracts and to understand the content to

248. The Bill consolidates and simplifies existing law, which is relevant to the time needed for familiarisation. Many of the core processes for renting a home are similar to current arrangements and this helps to minimise additional costs.

249. The nature and level of contact between landlords and their tenants varies, particularly between the social and private rented sectors. Community landlords may not engage on a face to face basis with tenants as regularly as private landlords (or letting agents) but also use other forms of communication, such as tenant newsletters, to maintain contact. This is relevant to the approach taken to communications, particularly around the conversion of existing agreements to the appropriate occupation contract that will apply under the Bill.

250. Landlords will be required, within six months of this legislation coming into force, to issue converted contracts to all contract-holders; that is, their existing tenants. The six months allowed for this means some contracts would end naturally during the period. Where a tenant leaves during this period, the landlord would have no need to issue a converted contract and would simply issue an occupation contract to the new contract-holder.

251. The Private Sector Landlord survey32 revealed that around 15 per cent of current private tenants had been resident for less than 6 months. This proportion of contract-holders would not require a converted contract in the six-month period, having moved on and been replaced by new tenants.

252. The costs for landlords in converting existing contracts are based on the cost of printing a copy of a contract (£0.60), administration and processing each contract (£2.00), and postage (£1.17). The administration and process cost is based on 15 minutes per contract and average UK earnings. The postage cost is calculated on the basis of Royal Mail non-business postage rates for a large letter.

253. The total cost of issuing contracts is based on an estimate of 190,000 private rented properties33 (less 15 per cent to take account of tenants not requiring a converted contract). On this basis, the total cost to private landlords of issuing the converted contracts is estimated to be approximately £608,855 (£96,900 for printing, £323,000 for administration and £188,955 for postage). This transitional cost would be incurred in 2016-17.

254. Following implementation of this legislation there will be a requirement to issue written contracts to all contract-holders. The Welsh Government landlord survey has shown that 98 per cent of landlords already issue written contracts. Based upon the same research, the average contract length in the private sector can be calculated to be 2.5 years. This means around 1,600 landlords will be required to issue

contracts where previously they had not done so. Assuming an average of 1.6 contracts per landlord, then based on the costs used for contract conversion this equates to £8960 per year. If it is assumed the survey results over-estimate the number of contracts currently being issued by landlords, for each additional contract needing to be issued the cost would be £8.75.

255. The introduction of model contracts will reduce, and in many cases remove, the need for landlords to seek legal advice around contracts. Landlords can be assured that when a model contract is used, it is correct in the legal sense. This would be a saving from the new legislation. It is not possible to quantify with any degree of accuracy the saving at this point in time but it would be assessed as part of post- implementation evaluation study.

256. Given private landlords would probably wish to keep costs to a minimum, many can be expected to seek information from websites and other sources of information. However, there is a possibility that some private landlords will wish to seek legal advice when converting a contract. It is reasonable to expect no more than an hour of legal advice would be needed in these instances. For the purposes of this assessment, it is assumed that around one in five landlords (16,000) would pursue such advice.

257. Investigations into solicitor fees reveal that many offer free initial consultation but that where charged, fees for an hour are in the region of £150. This equates to a cost of £2,400,000. Again, this transitional cost would be incurred in 2016-17.

Table 9: Estimated costs of Option 3 to Private landlords 2015-16 £ 2016-17 £ 2017-18 £ 2018-19 £ 2019-20 £ Familiarisation 0 7,680,000 0 0 0 Legal advice 0 2,400,000 0 0 0 Conversion to Model Contract 0 608,855 8960 8960 8960 Total cost 0 10,688,855 8960 8960 8960

Community Landlords

259. This reflects the level of support, advice and possession-related action they will be required to perform. The time and cost of an average of five housing officers per community landlord have been factored into the calculations. These are based on equivalent Welsh Government grade). The cost for this familiarisation for each community landlord is calculated as £1,230 x 46 (housing associations and stock retaining local authorities) It is assumed the learning would then be shared with colleagues.

260. Housing associations that are classed as “de minimus” will require the scheme or centre managers to undertake one day’s familiarisation. This has been calculated at an equivalent Welsh Government management grade. The total cost for the 41 “de minimus” housing associations is estimated to be £12,300. The total for familiarisation cost for all community landlords therefore is £69,000.

261. Some community landlords may wish to obtain legal advice with regard to the initial formation, or conversion, of contracts. Local authorities will have this facility in-house. Lawyers within local authorities would require time for familiarisation. The cost of £18,000 n year one has been calculated on the basis of one lawyer for each of the eleven authorities that still own their own housing stock. The estimate, which is based on the equivalent Welsh Government grade, works out at £1,636 per lawyer.

262. Although they will receive information and briefing on the new legislation from the Welsh Government and from Community Housing Cymru, their representative body, it is possible some housing associations may choose to seek independent legal advice on the formulation of their contracts. For the sake of completeness, the estimate of £35,000 in the first year is based on the cost if all associations, including the “de minimus” organisations, were to obtain advice.

263. It is difficult to be precise in calculating the cost. The cost of legal advice may vary by provider and according to the size of the housing association and the breadth and depth of advice required. Following discussions with legal representatives and stakeholders, it is expected that up to £500 for small housing associations and up to £1,000 for the larger associations is a reasonable figure. On the basis that good quality information and briefing is provided by the Welsh Government and Community Housing Cymru, the actual cost would be expected to be considerably less.

264. Calculating the contract conversion costs for community landlords is slightly different than those for private landlords as the engagement processes are different. During the six months allowed for issuing converted contracts, it is highly likely they would issue at least one of their regular communications to tenants. During stakeholder

engagement, representatives of housing associations confirmed that in a twelve-month period the following was typical:

Each tenant will receive three newsletters;

The tenant will receive quarterly rent statements; Tenant Liaison Forums are held three times a year; and A tenant conference will be held once a year.

265. It is reasonable to conclude that housing associations’ responsible management of expenditure would prompt them to use regular communications as a means to issue converted contracts. This would present a timely and cost-effective means of issuing converted contracts in the course of their normal business rather than as a special, one-off, exercise. It is recognised issuing converted contracts with other communications activity would incur additional cost such as print, administration and additional postage costs so these have been factored into calculations.

266. As part of preparing for implementation, the Welsh Government would undertake an extensive programme of awareness-raising events throughout Wales, in conjunction with representative bodies and other relevant stakeholders. This would be supplemented by information, detailed guidance and publicity materials for both landlords and contract-holders. This information could be used in tenant liaison forums and other meetings with tenants or their representatives.

267. The estimated total cost for community landlords (£538,356) in converting existing contracts is calculated on the basis of them being distributed with mail already being sent to contract-holders. The cost of printing a copy of the converted contract is estimated to be £0.60. Administration and processing each contract is estimated to be £1.53, based upon equivalent Welsh Government grade. The additional cost of postage is calculated on the Royal Mail business postage rates for a large letter that accommodates the additional weight of the converted contract (£0.25).

268. The total costs for converting existing contracts were calculated based on an estimate of 226,200 social rented properties34. This equates to £2.38 per household.

Table 10: Estimated costs of Option 3 to community landlords 2015-16 £ 2016-17 £ 2017-18 £ 2018-19 £ 2019-20 £ Familiarisation: local authority lawyer. 0 18,000 0 0 0 Familiarisation: Community Landlords 0 69,000 0 0 0

Legal advice – all housing associations.

35,000 Contract conversion for

community landlord

0 538,356 0 0 0

Total cost 0 660,356 0 0 0

Third sector organisations

269. Advice and information on renting a property is delivered in numerous ways. It is dominated by online provision of which there is a considerable volume although the quality varies. Services include third sector organisations, which deliver personal advice and information by telephone or in person at advice centres. Citizens Advice and Shelter Cymru are two prominent providers. It also includes representative bodies, such as private landlord representative organisations, which update their members as part of their day-to-day functions.

270. There are numerous providers but for the purposes of this exercise, the assessment of costs focuses on the prominent providers, which provide assistance to people who rent their homes from local authorities, housing associations and private landlords. Advice and information often comes to the fore when things go wrong and the tenant is seeking help.

271. A general point to emerge during the Bill’s development was that stakeholders providing advice, information and assistance/guidance or representative services did not consider the legislation in Option 3 would carry significant additional costs. The majority considered that such changes would be similar to, and absorbable into, their normal operating costs. They regularly update their information for their services as and when the law changes, whether as a result of new legislation changes or case law.

272. Costs considered include changes these stakeholders would need to make to adjust, including staff training, new advice documents, and updated information on the information systems used by advisers. Although stakeholders did not indicate any significant impacts, efforts have been made to try and assess notional costs.

273. There are twenty Citizens Advice Bureau offices in Wales delivering services from over 375 community locations with more than 790 volunteers and 440 paid staff. In 2013-14, they helped over 134,000

Wales to the Citizens Advice Bureau website and 42,000 telephone consultations were undertaken. Housing related enquiries were 5 per cent of the total enquiries.

274. The Citizens Advice online public resource “Adviceguide” is continuously updated to ensure content is current, as is “Advisor.net”, the online tool for advisors. Content is created remotely by writers working in specialist areas of advice and guidance, with specific workers ensuring content is appropriate for the devolved nations. 275. Citizens Advice estimates that the cost of updating its current

information for the Bill is a one-off cost of approximately £45,000, inclusive of translation. This would result in new content and links within the web-based resources to ensure housing advice and information is correct for Wales and reflects the changes in the law. 276. Citizens Advice estimates the cost of developing and delivering training

at £23,000. This is based on a day’s training course being developed and then delivered throughout Wales, with attendees then cascading the information to others in the organisation. Given the nature and scale of its operation, the costs are considered to be the highest costs a provider would occur. The table below illustrates the cost and its main components.

Table 11: Nominal cost of Option 3 to a large third sector provider 2015-16 £ 2016-17 £ 2017-18 £ 2018-19 £ 2019-20 £

Training and development 0 23,000 0 0 0

Updating information 0 45,000 0 0 0

Total costs 0 68,000 0 0 0 277. The above illustrates the cost of the legislation for one large provider. This figure would increase depending on the number of providers that needed to do the same. In reality, however, the costs for other, smaller, providers would be markedly less. The costs are nominal and are likely to be absorbed with the day-to-day running costs of the organisation(s). If a provider was not updating its information with changes arising from the Bill once enacted, it would not necessarily be saving money. The time would be utilised on updating its information on other matters. The cost of holding awareness-raising sessions would be met by the Welsh Government

development activity. The cost in the table below is based on one day per solicitor.

279. The estimate draws on the same information as that used for the estimate for Option 2. There are 522 solicitors firms in Wales comprising approximately 2,600 solicitors. The estimates are based on figures provided by the Law Society and additional research into solicitors’ pay.

Table 12: Estimated costs of Option 3 to legal professionals 2015-16 £ 2016-17 £ 2017-18 £ 2018-19 £ 2019-20 £ Familiarisation 346,000 0 0 0 0 Total cost 346,000 0 0 0 0

Assessment of other costs

280. Many of the provisions within the Bill clarify and simplify the existing law, which carry with them no additional costs. The Bill includes a number of new elements for which assessing any additional costs is more difficult. For completeness, the following paragraphs set out the conclusions of consideration of any additional costs that stem from these individual requirements.

Tenants

281. When new contracts are issued, tenants are usually encouraged to read their tenancy agreement to ensure they understand their rights and responsibilities. The same is expected when, as proposed in the Bill, existing agreements will be converted. The guidance to be produced on the new occupation contracts will help in this. Many tenants will take time to read the information provided and some may contact their landlord with a query.

282. It has therefore not been possible to estimate any costs due to the difficulties outlined. The costs are not considered to be actual costs to the individual but a nominal cost attached to the period of time they would devote to reading information.

Other Government Departments

283. Careful consideration has been given to the wider impacts of the Bill. The provisions of the Bill will pose additional issues for Her Majesty’s Courts and Tribunal Service, such as claims relating to fitness for human habitation. These may require some adjustments to the process and systems for considering cases, which may or may not incur

overall intended effects of the Bill, one of which is to reduce the number of disputes that occur as a result of a lack of understanding or confusion on the rights and obligations of landlords and tenants.

284. There are currently around 4,500 possessions claims each year in Wales, which fall within the scope of the legislative matters covered by the Bill. Details of the grounds for each possession are not available, which makes it difficult to estimate the precise impacts. Therefore it has not been possible to estimate any costs due to the difficulties outlined. . It is recognised that there could be some additional costs but there will also be savings. Overall, the conclusion is that the Bill will be cost neutral.

Fitness for human habitation

285. The introduction of a requirement for a landlord to ensure a property is fit for human habitation underpins existing law. Landlords already have a repairing and maintenance obligation to current tenants. There is confidence that community landlords meet their obligations and in most respects, such as by achieving the Welsh Housing Quality Standard for example, go much further. Experience gives less grounds for confidence in landlords in the private sector, given quality in this sector can be poorer and, in some cases, unacceptable.

286. Requirements under current legislation mean landlords should already be providing accommodation that is of a reasonable standard. However some stakeholders, such as Shelter Cymru, would argue this requirement is all too often not met by some landlords. Lack of awareness of rights and obligations is seen as a key contributory factor. There is presently no requirement for a landlord to issue a written contract and, where a contract is issued, there is no requirement for it to contain the landlord’s repairing obligations. This does little to provide current tenants with any clarity on their landlord’s obligations and enables some landlords to avoid these obligations too easily. However, taken together these factors mean many instances of poor practice remain hidden and so quantifying the true extent of this issue is extremely difficult.

287. The Bill seeks to address the problem by raising the awareness of current rights and obligations, thereby raising the incidence of compliance with current requirements, rather than by placing a higher expectation on landlords overall.

288. Setting out within the provisions of the Bill a requirement of fitness for human habitation that is based upon the current Housing Health and

accommodation can already be forced to make improvements through existing law such as the powers available to local authorities under the Housing Act 2004.

289. The Bill therefore makes existing rights and obligations of landlords and contract-holders clearer. As a result of ensuring existing requirements are applied more consistently, there may be some additional costs for those landlords who have chosen not to comply with current requirements previously. These costs, however, are not an additional direct cost that can be attributed to the Bill. They stem instead from the unwillingness of a landlord to provide accommodation that is line with current requirements. While a small minority of landlords may choose to exit the sector rather than improve their management practices, this will ultimately benefit those seeking to rent a home, as well as the majority of landlords who are complying with current requirements. Removal of Ground 8 possession

290. Some housing associations maintain that removing Ground 8 will increase rent arrears. There is little, if any, evidence to support such a