The PRS can provide affordable homes alongside the creation of new ones
The private rented sector (PRS) currently accounts for 15% of Welsh housing stock. In February 2025, we reported that in large parts of Gwynedd, a significant proportion of the PRS housing stock is used for second homes and holiday accommodation, with some areas reaching almost 50%. This has severely affected affordability, with over 65% of the local population priced out of the housing market across the whole area.
Whilst the council has now imposed aggressive second homes penalties, which have dropped house prices, it remains a reminder that the PRS can play a crucial role in providing affordable housing, and a balance must be struck between providing new homes and making existing ones affordable, supporting both private and social landlords.
Aggressive second-home penalties drop house prices by 12.4%
Cyngor Gwynedd (Gwynedd Council) was quick to use new tax powers to raise the premium rate for second homes and short-term lets (STLs) to a rate of 150% from April 2023 and went on to be the first council to use an Article 4 direction, removing permitted development rights to change a main home into a second home or short-term holiday accommodation, in September 2024. The outcomes of implementing these new measures are being carefully watched by the housing sector.
Enhancing existing homes
In addition to funding new builds, the loans will support improvement works on 4,397 existing properties, ensuring they meet the Welsh Housing Quality Standard. These upgrades will make homes more energy-efficient, reducing heating costs and enhancing sustainability for future generations.
Mixed tenure developments strengthening communities
Recent developments, such as Michaels Grove in Llanharan, demonstrate the impact of the funding in creating mixed-tenure communities. These projects bring together homes for social rent, low-cost home ownership, and open market sales, fostering strong and resilient neighbourhoods.
By continuing to invest in mixed housing solutions, the Welsh Government aims to meet the growing demand for affordable and energy-efficient homes, supporting individuals and families across Wales.
Continued commitment to housing development
The loan scheme, initially introduced in 2023-24, has already provided over £75 million to RSLs, enabling the construction of more than 450 social housing units. The scheme highlights the Welsh Government’s commitment to maximising investment in affordable housing while ensuring value for money.
