Propertymark has urged the Welsh Government to prioritise increasing the supply of privately rented homes rather than introducing measures that could further burden landlords.
This comes in response to a controversial proposal allowing tenants served with a Section 173 possession notice to retain the last two months of rent as compensation.
The Welsh Government’s support for this measure was clarified following an inquiry by the Senedd’s Local Government and Housing Committee into the private rented sector.
Propertymark, which provided written and oral evidence to the inquiry, described the proposal as “concerning” and warned of its potential to exacerbate the challenges facing landlords.
CONCERNS OVER FINANCIAL PENALTIES
Propertymark has expressed unease about the feasibility of the proposed compensation for tenants, particularly given the existing Renting Homes (Wales) Act 2016, which already offers tenants six months’ notice for no-fault evictions—a more robust safeguard compared to the equivalent protections in England.
The organisation argues that further financial penalties for landlords, who are already grappling with higher taxes, rising mortgage rates, and escalating repair costs, will disincentivise investment in the sector. This could shrink the pool of available rental properties, ultimately driving up rents.
Tim Thomas, Policy Officer at Propertymark, says: “The Welsh Government must listen to our advice on the likely impact of awarding two months’ compensation to tenants receiving possession notices.
“Increasing the supply of rental homes is the most effective way to stabilise rents and prevent further market distortions.”
SUPPLY-SIDE SOLUTIONS
Propertymark has outlined a series of recommendations to tackle the root causes of housing challenges in Wales. These include building more social housing – a measure also recommended by the Senedd’s Local Government and Housing Committee. The Welsh Government has committed to exploring the creation of a register for accessible social housing properties.
Reviewing landlord taxation also includes reconsidering the phasing out of mortgage interest tax relief and the additional Land Transaction Tax surcharge on buy-to-let properties, which was increased in the December 2024 draft budget.
Propertymark contends that reducing costs for landlords will encourage investment in the private rented sector, thereby increasing supply and making renting more affordable for tenants. However, these recommendations were notably absent from the Welsh Government’s response to the Committee’s report.
TRAINING SUPPORT
While critical of some aspects of the Welsh Government’s approach, Propertymark has welcomed initiatives to improve training and education for landlords and tenants.
These include better promotion of grants and support under the rapid response adaptations programme.
However, the professional body expressed disappointment that mandatory qualifications for letting agents, akin to those required in Scotland, were not introduced.
Propertymark also commended the government’s acceptance of a proposed register of accessible rental properties, an idea it championed in its evidence to the Senedd inquiry.
The organisation stressed that such a register should be voluntary and suggested that local councils play a role in directing tenants to suitable private rental properties when social housing is unavailable.
NEXT STEPS
The Welsh Government has pledged to engage with stakeholders, including Propertymark, and report back on its findings by April 2025. Propertymark has written to Jayne Bryant MS, Cabinet Secretary for Local Government and Housing, requesting involvement in these discussions.
Thomas adds: “It is positive to see that Propertymark’s positions have been accepted in areas such as improved training and better access to adaptive properties in the private sector.
“The Welsh Government has rightly discounted rent controls for now, but they must also consider the unintended consequences of further financial penalties on landlords.”
As the debate continues, all eyes will be on the Welsh Government to balance tenant protections with measures to ensure a thriving rental market that meets growing demand.
