Tag Archives: rent cap

Welsh Government unveils a social housing rent cap Buy to Let News, Landlord News, Latest Articles, Property News, Wales

Social housing landlords in Wales will face a rent cap of 6.5% from next year – and there’s an eviction ban on tenants who engage with their social housing landlord.

Climate change minister Julie James has confirmed the cap for social rents for the next financial year, along with a package of support for tenants.

The minister outlined a series of commitments she had secured with social landlords including ‘no evictions due to financial hardship for the term of the rent settlement in 2023-24’ where tenants engage with their landlords.

‘Need to set rents for the next financial year’

Ms James explained: “I have been clear that no social tenant will experience any change in their rent until April 2023, but I do need to set rents for the next financial year now to give the sector time to plan.

“From April 2023, the maximum limit which social rents can charge will be 6.5% – an increase well below the rate of inflation.

“This is the maximum any landlord can charge across all of their properties.”

‘Landlords will carefully consider affordability’

She added: “No landlord is required to charge the maximum and I know all landlords will carefully consider affordability and set rents as appropriate across their housing stock.

“Within the overall settlement, landlords may freeze, lower or raise individual rents based on a number of local factors of which affordability is a key consideration. The rate is a maximum, not a requirement or a target.

“We know that any increase in social rent may impact those social tenants who pay all or part of their own rent.

“These tenants, in particular, need to be protected from being placed into financial hardship through trying to cover the costs of keeping a roof over their heads.”

‘Builds on existing engagement with tenants in rent-setting decision’

She continued: “Finally, our agreement with social landlords builds on existing engagement with tenants in rent-setting decisions, including explaining how income from rent is invested and spent.

“Working in partnership with tenants, the Welsh Government, funders and other partners will develop a consistent approach to assessing affordability across the social housing sector in Wales.”

In Wales, approximately three-quarters of social tenants have all or part of their rents covered by benefits – so any increase in rent will be covered by benefits paid by the UK government.

‘A direct result of the Labour-made housing crisis’

In response, the Conservative party says the Welsh government rent cap on social housing is ‘a direct result of the Labour-made housing crisis’.

The Welsh Conservative shadow minister for housing, Janet Finch-Saunders, said: “It is incredibly disappointing that Labour ministers are having to resort to rent caps in Wales to combat rent rises which are a direct result of the Labour-made housing crisis.

“As a result of Labour’s failures, only 6,000 houses are being built per year, less than half of what we need.

“If Labour ministers spent half the time addressing the shocking shortage of housing across Wales as they did planning on putting more politicians in Cardiff Bay, a lot more could get done.”

Why a rent freeze in England just took a giant step forwards Landlord News, Latest Articles, Property News

Where to begin? With the media buzzwords? With various organisations calling for a rent cap in England? Or the real reason a rent freeze is coming which was revealed on Thursday (which I will come to)?

Leaving aside that there is a perfect storm brewing, is there really a private landlord anywhere in England who doesn’t believe that a rent freeze is on its way? And with it, a moratorium on evictions too.

Scotland led the way with an ill-thought-out scheme before finalising the legislation which was full of holes.

Wales tried to follow with Plaid Cymru saying that rents should be frozen this winter, and not people. That’s a clever turn of phrase and surprisingly, the Labour Party refused to impose a rent freeze saying that their Scottish friends are fearing that landlords will leave the sector – which will push rents up because there will be fewer homes to rent.

And then we come to England.

Groups stamping their feet demanding a rent freeze

We’ve had all the usual groups stamping their feet demanding a rent freeze to help deal with the cost-of-living crisis. There’s never any mention of landlords struggling financially, it is always focused on the tenants.

That’s why I was taken by a report from Crisis, which I read on Property118 about the choice of housing for those on housing benefit.

The homeless charity says that just 11% of one-bedroom homes in England are affordable to those in receipt of HB. That’s down from 17% in April.

There’s no doubt that the gap between the actual cost of renting and housing benefit rates is an issue and, according to Crisis, has grown by more than 40% in just five months.

That means there are naturally fewer homes for people on housing benefit to choose from with the situation being compounded by the fact that lots of landlords (or their lender) are not interested in dealing with those on benefits.

So, having accepted that there is a growing issue, particularly in London, with people struggling to afford to pay rent, it’s worth noting that the government looks set to impose a rent cap on social housing from next April.

There’s been a consultation to see whether it should be set at 3%, 5% or 7%.

Protect the most vulnerable households

The councils and social housing landlords have flagged up the problems that will come with this, but the government seems intent on implementing it – they say it will protect the most vulnerable households in exceptional circumstances during the year ahead.

But there’s no doubt that if it’s good enough for social housing tenants, then it must be good enough for private rental sector tenants too?

And I can’t see the government waiting until April before the rent cap is brought in for social housing tenants – I think it will come in sooner. And it will be set at 0%.

Persuaded to introduce a rent freeze in the PRS

I also think the government may well be persuaded to introduce a rent freeze in the PRS because this will play well for people on low incomes.

And, let’s face it, every landlord knows the Conservatives have not been a friend to us for many years.

We often see in the media various buzzwords like the cost-of-living crisis being splashed regularly when referring to escalating prices for food and energy and that people should prioritise these things rather than paying rent.

Well, I don’t believe they should. I think they should pay.

The government is now working on a timescale

I mentioned at the beginning that there is a perfect storm brewing, and you need to focus on what I’m about to say by understanding that the government is now working on a timescale – and that timescale is dictated by the last date on which they can hold a General Election.

That means there are some issues they need to deal with and a few supertankers they need to turn around.

Having Michael Gove back in government – he’s certainly not a friend of landlords – means that there may be some unpalatable decisions being taken that will leave landlords out of pocket.

This brings me to a perfect storm and it’s one that will leave landlords well and truly drenched.

This came to me on Thursday when I read the Bank of England statement about why they were putting the base rate up. It’s no surprise that the base rate is now 3%.

Landlords will be paying more for a new mortgage

The knock-on effect means that landlords will be paying more for a new mortgage – if they pass the ever-stricter stress testing being imposed.

That means rents will rise and they will probably increase substantially so this will become a political hot potato.

The government could put some cash into the situation to help pay rent, which has already been hinted at, but I don’t think that is what they will do.

That’s because the Bank of England statement makes clear that we are about to head into a prolonged period of recession which may see the number of unemployed people doubling and businesses going broke. This recession will end at, or near, when the next General Election must be held.

A simple solution, and one that will save the government billions of pounds, is to introduce a rent freeze in the New Year for all tenants in England, including those in social housing.

If this happens, then it is the starting gun for an election campaign and landlords will be paying the heaviest of prices for it.

Expect the rent freeze to last at least six months, if not longer.

Bound to be a moratorium on evictions

In addition, there’s bound to be a moratorium on evictions which will cause chaos in the PRS because lots of tenants will realise that they don’t have to pay rent and it could be years (I’m not joking here) before a landlord gets possession of their property.

As I said, it’s a perfect storm of rising interest rates and mortgages, fewer homes to rent and a recession that landlords can do little to avoid and all we can do is hope the government doesn’t decide that a rent freeze will be the simplest of solutions to a very tricky housing problem.

If you see me in this storm – it isn’t the rain or floodwater that I’m covered in. It’s the tears of fed-up landlords wondering what they did wrong to have such opprobrium poured over them.

Until next time,

The Landlord Crusader

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