Wales rules out private rent controls due to evidence from Scotland

The white paper marks a shift in tone for the Welsh government, which proposed private rent controls in a consultation last year.

It draws a dividing line with Scotland where ministers are pressing on with plans for long-term rent controls, under a new Housing Bill. 

An emergency rent cap and a ban on evictions was put in place in Scotland in 2022 due to cost of living concerns, but this was lifted on 31 March this year. 

However, developers have argued the intervention on rent has hindered investment in new rental homes.

Last year, the Scottish Property Federation claimed that of the 14 investors interviewed with a combined £15bn of build-to-rent assets, nine judged Scotland to be unattractive, including four who view the country as uninvestable under current conditions.

The new Welsh white paper concluded that “rent control measures could have a detrimental effect on private renters, as it could lead to a reduction in the supply of rental properties in Wales, potentially increasing rental costs and in turn increase the risk of homelessness”.

It added: “The available evidence indicates any rent control measures would likely be ineffective in the absence of clear data on market rents.”

Market rents refer to actual rental costs, as opposed to the asking prices for new rentals. The asking price for new rentals often differs considerably from the actual rent paid.

“Without such data it would not be possible to identify where affordability challenges exist and require intervention (particularly those that exist at the local level), or to effectively monitor the impact of such interventions,” the document said.

As a result, the white paper proposed that landlords and agents will be required to provide data to Rent Smart Wales, the country’s landlord registration scheme, to improve data on actual rental costs.

Under further proposals, Welsh ministers will have a duty to produce a housing strategy, which public bodies must consider if they are seeking to discharge their housing functions.

There are also proposals on how to demonstrate a private rented property is “habitable” and how to remove barriers for people renting with pets and guidance around rent guarantors. These include allowing a landlord to cover the cost of an additional premium on their insurance policy relating to “pet damage”.

The white paper began development as part of the previous co-operation agreement with Plaid Cymru, with a green paper published in June 2023.

A consultation on the white paper will run until 31 January.

Jayne Bryant, Welsh cabinet secretary for housing and local government, said: “Affordability is the golden thread between housing adequacy and our work on fair rents in the private rented sector.”

She said that “people across Wales are facing hugely challenging times” and “it is critical that we continue our work to increase access to, and the affordability of, all housing tenures to meet the housing needs of everyone across Wales”.