Industry body warns Welsh government’s two-month rent compensation could backfire

An industry body labels the Welsh government’s proposal of two months’ rent as compensation for eviction as ‘counterproductive.’

Propertymark is urging the Welsh government instead to focus on boosting housing supply rather than penalising landlords.

A consultation is currently under way on the proposal, with the Senedd’s Housing and Local Government Select Committee reviewing evidence. A decision will be made in April this year by the Welsh government.

Proposal could backfire

If the rules come into force, landlords would be required to pay tenants up to two months’ rent as compensation if they need to sell or move back into their property.

Propertymark has condemned the move, calling it ‘counterproductive,’ arguing that introducing extra financial penalties for landlords is misguided, especially when they’re already facing soaring costs from tax hikes and rising repair costs.

The industry body warns the proposal could backfire and cause the supply of homes to drop and rents to increase. Instead, it urges the government to focus on supply to help stabilise rents.

Other measures Propertymark encourages the Welsh Government to pursue include constructing more social homes and reviewing the phasing out of tax relief on mortgage interest for landlords, and the extra Land Transaction Tax surcharge on buy-to-let property, which was increased across all bands in the December 2024 draft budget.

Tim Thomas, policy officer at Propertymark, says the government must continue to listen to landlords and letting agents who have concerns.

He said: “The Welsh government has listened to our concerns over the unintended consequences of implementing rent controls in Wales by currently discounting them as part of their White Paper.

“However, they must now continue to listen to our advice over the likely impact of awarding two months’ compensation to tenants in receipt of a possession notice will have on the sector. We are continuing to engage with the Cabinet Secretary on this issue.”

Boost supply

Other measures that Propertymark encourages the Welsh Government to pursue include the construction of more social homes and a review of the phasing out of tax relief on mortgage interest for landlords, as well as the increased Land Transaction Tax surcharge on buy-to-let properties, which was raised across all bands in the December 2024 draft Welsh budget.

The industry body argues that by reviewing taxation, the Welsh Government can implement policies that reduce costs for landlords looking to invest in the private rented sector, which would help boost supply and stabilise rents.

Propertymark also welcomes the fact that several of their recommendations have been accepted by the Welsh government, including improved training for landlords as part of the Rent Smart Wales review and better access to the private rented sector through a local authority database of adaptive properties.

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