Welsh First Minister hints at rent controls and building thousands of social homes

The Welsh government has claimed it will build 20,000 social homes by 2030 and hinted at introducing rent controls.

Speaking in the Senedd, Welsh First Minister Rhun ap Iorwerth claimed the government would bring in legislation to help tenants and tackle bad landlords.

The news comes as data from Rent Smart Wales reveals small landlords are leaving the PRS.

Rent control plans

Mr Iorwerth told Welsh MPs: “Strengthening the private rented sector is a priority for this government.

“Renters in Wales deserve a safe, warm, secure and affordable home and should feel confident challenging poor conditions.

“Positive change requires good law, and in the first phase of our legislative programme we’ll deliver legislation that protects tenants and tackles poor landlords, making renting more secure.”

When asked by Welsh MPs about the high cost of renting in Wales, the First Minister hinted at plans to look at rent controls.

He said: “You don’t have to think very hard to work out the poverty that somebody is driven into in real terms when they have so little of their income left after paying their rent. In terms of the issues that cause that, there’s a multitude of them. Supply of homes is one of them, and social housing. That’s why we are determined to bring in an extra 20,000 additional social homes by 2030. It’s about bringing homes into use that are currently not in use. It’s about raising the quality of the housing stock as well.

“And then there are things, that we can do through legislation. Actively exploring different measures for regulating increases in rent, for example, is really important. We can look at what’s happening in Scotland. There are learnings from Catalonia too. It’s important that we look at what works well, and also look at potential drawbacks.

“But significant steps need considerable policy development, evidence gathering, and cross-party and cross-sector engagement, which is why we have outlined our ambition to bring forward that second renters Bill as part of a two-phase legislative approach.”

Rent controls do more harm than good

According to the Institute of Economic Affairs (IEA), while rent controls may initially lower rents for existing tenants, they typically lead to higher rents in uncontrolled sectors and reduce housing supply and quality.

Even in Scotland, the rent cap has been blamed for soaring rents, which have increased by 11.6%.

Data by Hamptons reveals Scottish landlords are increasing rents at a faster pace than anywhere else in Great Britain because of rent controls reshaping the market.

Lead analyst at Hamptons, David Fell, said: “The evidence from Scotland suggests that rent controls rarely work as intended.

“At best, they delay rent increases; at worst, they set a new benchmark where landlords feel compelled to increase their rents every year by the maximum allowed.

“Faced with uncertainty over future rules, many landlords choose to raise rents little and often rather than risk falling far below market levels.”