First Scotland – now Wales calls for a rent freeze

First Scotland – now Wales calls for a rent freeze

8:11 AM, 5th October 2022, About 2 months ago 14

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Just a day after the Scottish Government unveiled its legislation for introducing a rent freeze, politicians in Wales are calling for the same measure.

Plaid Cymru says it has forced the Welsh Government to look again at enacting a rent freeze and a moratorium on evictions.

The party’s housing spokesperson, Mabon ap Gwynfor MS, has accused the Welsh Government of ‘dragging their heels’ over starting this ‘critical work’.

Last week in the Senedd committee for Local Government and Housing, Mr ap Gwynfor called for a ban on all evictions and for all rents to be frozen until after winter, as has been announced in Scotland.

In response, the Minister responsible for housing, Julie James MS, confirmed she was looking at options and was ‘actively in contact’ with the Scottish Government.

However, she had not yet reviewed their research.

Scottish Government to freeze rents and ban evictions

The announcement from the Scottish Government to freeze rents and ban evictions came on 6 September, and the Scottish measures are expected to remain in place until the end of March 2023.

Mr ap Gwynfor said: “The Labour Welsh Government is fiddling while Wales freezes.

“There’s no sense of urgency, and in the meantime, the cold fingers of winter creep ever closer.”

He added: “That work should have been commissioned and completed as soon as possible, and yet we find out that the Welsh Government are still at the stage of gathering evidence.

“Plaid Cymru saw this coming down the tracks and have repeated our calls at every opportunity.

“Numerous anti-poverty campaigners and charities, including Shelter Cymru have been calling for this.”

‘The Labour Welsh Government has been dragging its heels’

Mr ap Gwynfor continued: “Scottish Government clearly did their work. Meanwhile, the Labour Welsh Government has been dragging its heels.

“Time is very short, and Welsh Government urgently need to set out their timetable for when action could be taken, because winter will be on us before we know it.”

In First Minister’s Questions, Adam Price, Plaid Cymru’s leader, said that the coming winter could be the hardest on record with people facing stagnating wages and rising costs.

The party, which has a co-operation agreement with Labour in the Senedd, asked what more evidence was needed to prevent homelessness and urged the government to announce, ‘they will freeze all rents and by banning all evictions now.’

A rent freeze would not be a ‘panacea’

However, the First Minister Mark Drakeford warned that a rent freeze would not be a ‘panacea’.

He said that the Welsh government fears ‘unintended consequences’ which would see landlords reacting to a rent freeze by selling-up and leaving the market.

Mr Drakeford pointed out that ministers want to extend a planned extension to the notice for no fault evictions from two months to six months to existing tenants.

And, he added, that the Scottish Government had told him of their fears that there would be a ‘stampede’ by landlords to evict tenants – and there would be a collapse in the supply of homes to rent.

Instead, a White Paper will look at a proposal of rent controls as part of the agreement between Labour and Plaid Cymru.



Comments

Porky

9:52 AM, 5th October 2022, About 2 months ago

Actually for once Drakefird is being more sensible.
What annoys me is a rent freeze clobbers everyone, even those whose rents are currently well below the average for the area and size/quality of property. So if now they want to include a small increase to cope with inflation they won't be able to. It woukd be a sledge hammer to crack a nut.

Beaver

10:55 AM, 5th October 2022, About 2 months ago

Reply to the comment left by Porky at 05/10/2022 - 09:52
Mark Drakeford is bang on here.

Freezing rents whilst interest rates are on the way up will inevitably drive landlords out of the market. Only a fool would think that wouldn't happen. It isn't just a question of landlords taking that decision; mortgage lenders aren't going to lend either if the debt they are providing cannot be serviced. The end result for any council, including a labour council, is having homeless people dumped on them.

Porky

11:30 AM, 5th October 2022, About 2 months ago

Ah now that's another twist. Rent rises in line with inflation is one thing but rent rises to also recover increases in mortgage interest rates is another. The tenant is not buying the house, the landlord is so the landlord will end up with the asset not the tenant. It is the landlords risk if he chooses to finance the purchase with a mortgage. Like any other business if it uses a bank loan to say buy advanced machinery and the bank increases its interest rate mid way through the term the business either has to take the hit or try to raise his prices to customers making it potentially uncompetitive so are likely to see a reduction of orders or losing customers completely. Unfortunately tenants cannot simply choose another landlord without a lot of upheaval. I think it's fair that the landlord swallows the lions share of the interest rate increase or negotiates a better deal from the lender.
Fortunately, I fully own my rental properties so I'm only interested in having the opportunity to raise rents in-line with inflation and I want that to be my choice not the government. Whether I do increase will be based on my care to look after good tenants.

Beaver

11:53 AM, 5th October 2022, About 2 months ago

Reply to the comment left by Porky at 05/10/2022 - 11:30
If you fully own your own rental properties then you are indeed in a fortunate position....probably unlike the majority of landlords.

But it's not just mortgage costs that are going up. And I doubt my mortgage lender would let me invest in Scotland.

Jireh Homes

12:33 PM, 5th October 2022, About 2 months ago

Whilst headlines refer to rent freeze, the real sting is the ban on evictions where tenant chooses not to pay rent.

Porky

12:43 PM, 5th October 2022, About 2 months ago

Reply to the comment left by Beaver at 05/10/2022 - 11:53I agree, other costs going up like annual gas checks, management fees etc are fair game to recover from the rental fee increase as these should be in line generally with inflation. The mortgage increase is the difficult one to argue. Fortunately but unfortunately now interest rates have been low for so many years now most property investors have taken it for granted that they would stay that way. Not the case any more.

Porky

13:05 PM, 5th October 2022, About 2 months ago

Reply to the comment left by Jireh Homes at 05/10/2022 - 12:33
I have not read that Tribunals will cease for evictions based on failure of the tenant to pay the rent.and/or the cause of anti social behavior. I thought it was more to ban so called "no fault evictions".

Beaver

18:05 PM, 5th October 2022, About 2 months ago

Reply to the comment left by Porky at 05/10/2022 - 12:43
It's not so much about arguing anything as about facing reality. Raising interest rates increases risk for most landlords especially when other costs are going up and when raising rent is not an option. Big landlords have more negotiating power when negotiating interest rates; but most landlords are small landlords with a small portfolio. So freezing rents when other costs are rising will dissuade landlords from buying, encourage more to divest, and will also dissuade lenders from lending.

There will be unintended consequences.

Chris @ Possession Friend

0:10 AM, 6th October 2022, About 2 months ago

Reply to the comment left by Jireh Homes at 05/10/2022 - 12:33
Another reason why Landlords should only rent to tenants with an acceptable Guarantor,
Let Mabor stick that where the sun don't shine.

Gavin Putland

7:58 AM, 6th October 2022, About 2 months ago

What's better than rent control? A tax on vacant lots and unoccupied buildings. While rent control makes it less attractive to supply accommodation, a vacant-property tax makes it less attractive NOT to: it induces property owners to build accommodation and get it occupied in order to avoid the tax.

Now here's the kicker: If you're a commercial property investor, a vacant-property tax in nearby residential areas RAISES the value of your property by keeping it supplied with prospective customers and workers. Moreover, the desired *avoidance* of the vacant-property tax would initiate economic activity, expanding the bases of other taxes and allowing their rates to be reduced, so the rest of us—including business operators, and landlords with tenants—would pay LESS tax!

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