Welsh government drops controversial no-fault eviction compensation plan

Industry bodies welcome “common-sense decision” from Welsh government to drop tenant compensation proposals.

Under proposals by the Senedd Local Government and Housing Committee, tenants facing a no-fault eviction would have received the last two months’ rent free as compensation.

However, the Welsh government has rejected the proposals, saying it “could cause tenants to delay securing alternative accommodation and result in more people presenting to homelessness services”.

Unintended consequence of a general increase in rents across the PRS

In a letter to the Local Government and Housing Committee, Jane Bryant, Cabinet Secretary for Housing and Local Government, admitted the two-month rent-free compensation proposal would cause unintended consequences to the private rented sector and would have forced landlords to raise rents.

Ms Byrant explains: “Landlords hold properties in different ways and for different purposes (e.g. business, pension or asset to pass onto children), but regardless of the purpose, all landlords have costs they have to meet in order to pay for or maintain their rental properties.

“There is therefore a risk that any landlord required to forego two months of rental income would likely look to cover all (or a significant part) of 12 months of rent over 10 months to ensure that their costs are met – therefore increasing monthly rental costs.

“As such, the measure proposed in the Committee’s recommendation risks the unintended consequence of a general increase in rents across the private rented sector in Wales. This would impact on all tenants and could see those on low incomes or in receipt of housing benefit pushed into rent arrears.”

Welcome the Welsh government’s common-sense decision

The National Residential Landlords Association (NRLA) says that by rejecting the proposals, the Welsh government has recognised the need to balance tenant protections with landlords’ rights.

Ben Beadle, chief executive of the NRLA, said: “We welcome the Welsh government’s common-sense decision to drop proposals that would have imposed arbitrary compensation payments on landlords using legitimate grounds for possession.

“Confidence in the Welsh private rented sector has been knocked significantly in recent years, but the decision to reject this measure outright is a step in the right direction. I am delighted that our concerns have been listened to.”

Propertymark also welcomed the decision and has campaigned consistently against the proposed compensation measure.

Tim Thomas, policy officer at Propertymark, said: “We are pleased that the Welsh Government agreed with our concerns and have rejected the proposal. Propertymark have campaigned against this proposal right from the start.

“We immediately wrote to the Cabinet Secretary with our concerns and were one of the groups that took part in discussions with Welsh Government officials.

“The proposal gave no regard for the ongoing costs landlords have in sustaining tenancies including mortgage and insurance costs. There have been significant changes in recent years to legislation in Wales and we are keen to continue to work with the Welsh government to ensure these bed-in and landlords, tenants and agents have time to understand and apply the existing rules before further reforms are looked at.”