The Welsh government is contemplating imposing restrictions on the rent charged by private landlords, according to recent reports. While no definitive plans have been put forth, officials are eager to gather input from both the public and landlords on various proposals, including price ceilings and freezes.
This development comes as rental costs continue to surge, with statistics indicating the highest annual percentage increase since 2010. Landlords have cautioned against the implementation of rent controls, arguing that such measures would be catastrophic. However, a tenants’ group has countered, asserting that controls represent the bare minimum that the government can do.
Currently, the rental housing sector in Wales lacks legislation governing rent hikes by private landlords, with such regulations only existing in the social housing sector. In Scotland, rent controls have already been implemented, capping increases for existing tenants at 3%.
As part of a broader “green paper” on housing, the Welsh government is seeking public opinion and exploring avenues to support both landlords and tenants. Furthermore, a separate consultation is scheduled for next year to discuss potential legislation, in line with the cooperation deal between the Welsh government and Plaid Cymru.
The Welsh Conservatives have accused Labour and Plaid Cymru of proposing burdensome “socialist and nationalist red tape.” In response, Plaid Cymru, which has previously endorsed rent controls, expressed appreciation for the green paper, considering it a positive step toward rectifying the failures of the housing free market in serving communities.
Last year, ministers resisted calls for a rent freeze, expressing concerns about driving landlords away from the sector. According to data from the Office for National Statistics (ONS), private rental prices rose by 4.8% in the year leading up to April 2023, marking the highest figure since data collection began in 2010. The Neath Port Talbot area experienced a particularly substantial increase of 16% between January 2022 and 2023.
The green paper seeks input on various rent control models, including stringent price ceilings or freezes. It references Scotland as an example, where an initial rent freeze for existing tenants was subsequently adjusted to allow a 3% increase. Other proposals include implementing a “reset” to market levels between tenancies, as seen in Ireland, where the first rent payment for a tenant must not exceed the market rate.
The government’s aim is to gain a comprehensive understanding of the rental market in Wales, particularly regarding the factors influencing landlord behavior in setting rents and accepting tenants, as well as determining what tenants consider affordable and adequate. Climate Change Minister Julie James emphasized the government’s commitment to preserving a viable private rented sector in Wales, where landlords feel confident investing in property improvements, and tenants have increased certainty about the affordability of renting.
Acorn, a tenants’ union, claimed that “big money is being made off the backs of Wales’ struggling communities,” expressing satisfaction that the Welsh government is exploring rent controls as a necessary response to the current crisis, given declining wages and increasing inflation.
The National Residential Landlords Association (NRLA) has encouraged its members to participate in the consultation. NRLA Chief Executive Ben Beadle cautioned against rent controls, asserting that they would further devastate the sector and prove disastrous for tenants, many of whom already face difficulties securing rental accommodation. Beadle highlighted that Minister James had previously dismissed the idea of a rent freeze, and the same rationale applies now.
Janet Finch Saunders of the Welsh Conservatives criticized the proposal as “more socialist and nationalist red tape and consultations” that would not reduce rents or contribute to the availability of affordable housing. She accused Welsh Labour and Plaid Cymru of attempting to drive private landlords out of Wales.
Mabon ap Gwynfor from Plaid Cymru reiterated the cooperation deal’s commitment to establishing fair rents in the private rental market and implementing new approaches to making homes affordable for local income earners. He argued that the free market had failed communities for decades, given that housing is treated as a limited commodity and investment opportunity rather than an essential element of living.