Cardiff Lettings Market Update: Welsh Government see sense on future
Two recent announcements from Welsh Government will be welcomed by landlords, as a dose of common sense has prevailed.
1. Proposal to withhold final two months' rent rejected
Welsh Government has officially rejected a controversial recommendation made by the Local Government & Housing Committee, which would have allowed tenants to withhold the final two months’ rent if served with a six-month, no-fault eviction notice.
After consulting with key stakeholders, the Government decided against implementing the policy – and for good reason. The decision was based on several practical and economic concerns:
- Undermining the purpose of the 6-month notice period
Instead of promptly beginning their search for alternative accommodation – and potentially serving their own one-month notice once they’ve secured a new place – tenants may be incentivised to delay moving in order to benefit from rent-free months five and six. This undermines the purpose of the six-month notice period, which was only recently extended from two months to give tenants as much time as possible to plan a move. By delaying, it could mean some tenants don’t find a new property by the end of the notice period, causing them to present themselves as homeless and increase pressure on local services.
- Rent increases across the board
If landlords were forced to forgo two months' rent, many may decide to spread that loss across the rest of the year to cover mortgage, maintenance and other costs. The result? Higher monthly rents for everyone – including tenants on low incomes or housing benefit, who may then struggle to keep up and fall into arrears.
- Mortgage affordability and rental supply could be affected
Buy-to-let lending rules require landlords to meet strict affordability criteria, including rent covering 140% of mortgage payments and passing stress tests at higher interest rates. Losing two months’ rent could jeopardise those calculations, forcing landlords to raise rents or risk failing lending criteria. Over time, this could make borrowing more difficult, discourage investment, and reduce the number of rental properties available.
- Negative affect on low-income tenants and those on benefits
Tenants receiving Housing Benefit or Universal Credit must have a legal obligation to pay rent – without it, their support is stopped. If the final two months’ rent were waived, benefits would likely be cut off just when tenants are preparing to move, making it harder for them to pass affordability checks, pay deposits or cover the initial rent at a new property. Landlords receiving direct payments could also face clawbacks. In some cases, tenants might be forced onto Universal Credit early and lose out financially, putting them at greater risk of arrears. Ironically, the proposal would likely benefit wealthier tenants while creating more problems for those most in need.
- Support already exists for tenants facing financial barriers to moving
Local authorities can already use discretionary homelessness prevention funds to help tenants with upfront costs like deposits or first month’s rent. This existing support is designed to ease the financial pressure during the notice period, making the proposed rent waiver unnecessary for those genuinely in need.
2. Welsh National Housing Survey announced
In a move welcomed by CPS Homes and industry bodies in general, Welsh Government has also announced plans for a comprehensive National Housing Survey. Although not expected to launch for a few years, this is a ‘win’ for the sector, as a more evidence-led approach to policymaking is long overdue.
Robust data is essential to building effective, balanced policy. By grounding future decisions in real-world data – not assumptions or ideology – the hope is that new legislation will better reflect the realities faced by both landlords and tenants across the country.
The information contained within this article was correct at the date of publishing and is not guaranteed to remain correct in the present day.
