'Rents too High' written on a wall

Last week in the Senedd, Mabon ap Gwynfor MS and Plaid Cymru put down a motion which sought to commit the Welsh Government to implementing rent controls in Wales. The Welsh Government had already pledged to take forward the idea and produce detailed rent controls proposals in the form of a White Paper – it featured in the 2021 Senedd election manifesto, and now forms part of the co-operation agreement between Welsh Labour and Plaid Cymru. Mabon’s proposal, I understand, was designed to commit the Welsh Government to take a stronger stance on the issue and make a firm commitment to formally implementing rent controls. Although the motion was lost, the commitment in principle remains – and we must now feed into the white paper consultation.

I have long supported rent controls and I will back any move which seeks to address the poverty caused by unreasonable rent increases.

The UK housing market is out of control – houses are viewed as financial investments and assets, instead of a home which puts a roof over somebody’s head. The rapid and unsustainable growth of a class of buy-to-let landlords since the 1980s has undone much of the progress in the conditions of tenants, as well as driving an explosion in house prices. Investors, some of whom are extremely wealthy, some buying on specific mortgages from banks engaged in a casino credit financial system – price first-time buyers out of owning their own home.

The increase in house prices then translates into higher rents. People who, 40 years ago, would have either bought a home or lived in a secure and affordable council house, are forced into a private sector that works for profiteers, not ordinary people. In turn, tenants are increasingly forced into poverty because of the proportion of their income that goes on soaring rents, sometimes for houses that are barely fit for human habitation.

The Thatcher government’s right-to-buy policy eliminated the chance of getting a secure social tenancy for many people, whilst more than a decade of austerity has significantly reduced the ability of the Welsh Government to build new social housing. As more and more landlords buy up houses, it means more competition for each house that comes on the market and higher overall prices. These problems can’t be fixed overnight – the problems are structural and the system is fundamentally broken, but doing nothing is not an option.

That’s where, in my view, rent controls are essential.

They help to protect tenants from poverty by capping housing costs, and they make landlordism less financially attractive – which helps to take some of the heat off the housing market. Rent controls also cuts the benefit bill in the huge amount of housing benefit and Universal Credit which is handed out to landlords each week. For those reasons, I backed Mabon’s proposal.

We shouldn’t take a rose-tinted view of this issue, though – it doesn’t represent a magic wand which can fix the housing system. It must be coupled with other policy interventions, primarily the mass building of social housing to increase housing supply and drive down prices.

The failure of Scotland’s rent control system also highlights lessons to be learned for us here in Wales. The 2016 Private Housing Act in Scotland did not introduce nationwide controls, and as such was overly timid and unambitious. The system required local authorities to submit copious amounts of data to the Scottish Government in an application to be designated as a ‘Rent Pressure Zone’, and one Scottish council estimated that it would take them up to five years to gather the data required, at significant cost to the public purse. If an area is designated a rent pressure zone, rent increases are restricted, but only for existing tenants and even then, the controls are linked to inflation. Despite some areas of Scotland experiencing huge annual rent increases, not one zone has been designated to date.

Here in Wales, as we move towards the necessary introduction of rent controls, there are key lessons to be learnt from Scotland’s experience:

  • Only a national system will work. That system may allow for regional variations in levels, but trying to establish whether some areas need controls more than others against an arbitrary standard serves only to thwart the intention of the controls.
  • Bureaucratic hurdles must be minimised. Procedural hoops required to implement controls will only delay action and therefore increase costs to the taxpayer
  • Restricting the impact of controls to existing tenants simply incentivises landlords to increase turnover by refusing to renew tenancies or increasing evictions. Controls must be placed on the property, not on the contract with each tenant.
  • Basing controls on the rate of inflation is a mistake – there is no meaningful link between inflation and either house prices or rent levels. Setting controls on this basis allows the largest rent hike when people can least afford it, during a time when the cost of living rises.

Rent controls should be designed to protect tenants first and foremost, and as a longer term aim, it should discourage landlordism. This will reduce the number of landlords looking to buy houses to let, increasing the number who are looking to sell. This will in turn deflate the housing market, allowing former tenants to buy their own homes, and the expansion of social house building will continue to ensure a home for those who do not wish to buy or who remain unable to.

A system of rent controls should also not shy away from mandatory rent decreases where necessary.

Rent controls are a sensible and necessary step for Wales to take in our fight to fix the housing system. The effects of the housing crisis are felt most keenly by working people, but also by the young. If we fail to act now, we will consign the adults of tomorrow to a future without housing security.

It is our duty to act.


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