"At a time when the supply of housing is already a big problem, Welsh Government need to be very careful not to dissuade landlords from spending on their properties and/or cause a mass exodus of landlords from the private sector...
Only last year, Welsh Government ministers resisted calls for a rent freeze, saying they didn’t want to drive landlords away from the sector. Has anything substantially changed since then? Not to our knowledge. They didn’t want landlords leaving the sector in their droves back then because they knew the supply of available rented accommodation was low across all sectors. Unless a raft of new stock has been built that we don’t know about (it hasn’t), the country is in exactly the same – if not a worse – position now, and we don’t expect that to change in the near future.
What isn’t mentioned is that landlords’ costs have increased considerably over recent years, meaning some have had no choice but to increase rents. The Bank of England base rate has risen from 0.1% to 5% in the last three years, causing some landlords’ monthly mortgage repayments to be more than double. On top of this, Income Tax reliefs have been slashed, many have had to pay out in order to meet new Fitness For Human Habitation (FFHH) regulations, and meeting minimum energy efficiency standards continues to cost.
In many ways, landlords are already limited to how much they can increase rent by, as they can only charge what somebody is prepared to pay, else they’re left with a vacant property. Additionally, in our experience, landlords don’t arbitrarily increase rents. Most landlords we deal with are happy to let tried-and-trusted contract-holders pay less than the current market value, and will only seek the true current market value if/when they give notice to leave and the property has to be advertised afresh. Even then, they can’t overprice it as they’ll be left with an empty property bringing in no rent.
In summary, implementing rent controls is not the answer. Whilst it may masquerade as a massive positive to those who rent, it will mean landlords sell up and the pool of properties available to rent gets smaller. Sure, some will get bought up by fellow landlords, which will mean the size of the pool is maintained somewhat, whereas others will be sold to owner-occupiers who have a deposit and a mortgage in principle in place. The latter is no bad thing, of course, but neither outcome makes it any easier to find somewhere to rent. The horror stories of people not being able to find anywhere to live are already all-too-common, so rent controls will just exasperate the problem.
Let’s be clear: the focus needs to be on growing the supply of available housing. Simple ‘supply and demand’ dictates that when the buyer (prospective renter) has a choice, the seller (landlord) must accept less or risk going unsold (unrented)."
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