Affordability and supply crisis
Figures from the Department for Work and Pensions (DWP) in May 2024 showed nearly 65,000 households were living in the Welsh PRS and receiving the Local Housing Allowance (LHA) as part of their Universal Credit award, and 57% of those households had a shortfall between their rent and their LHA payment.
Across the country, there is a severe shortage of properties available to rent within LHA rates. In February 2024, the Bevan Foundation identified only 32 properties advertised in Wales where the rent could be covered by the LHA, and 16 local authority areas had none at all.
Inadequate rates of LHA not only cause tenants financial hardship, they also result in increased numbers of people becoming homeless and in need of temporary accommodation, which places a significant financial burden on local councils.
MPs call for a guarantee that benefits will be uprated annually
After campaigning over several years, Propertymark welcomes the House of Commons Work and Pensions Committee’s recommendations of an annual uprate of working-age benefits and Local Housing Allowance (LHA).
The cost of temporary accommodation
Around one in 215 of all households in Wales live in temporary accommodation, with just under half remaining there for six months, and one in five staying more than a year. According to the Bevan Foundation, unsuitable or unaffordable housing, the loss of a rented home, or being unable to live with family are the main reasons for people becoming homeless.
Local authorities struggle to find suitable accommodation and commonly use hotels or bed and breakfast accommodations to cope with increasing demand. This is a very costly solution, with Conwy Council alone spending £4.8 million in 2022 / 23, up from £671,000 in 2019 / 20.
Tax reliefs are needed to support supply in the PRS
A summary of responses to the consultation on proposals to abolish land transaction tax (LTT) multiple dwellings relief (MDR) has revealed sector-wide concern about the impact on supply, leading the Welsh Government to commit to further work on the potential benefits, costs and wider impacts on the housing sector.
Agenda for change
Reform of the PRS has been high on the agenda in recent years, with Rent Smart Wales established in 2015 and the Renting Homes (Wales) Act enacted in 2022. The Welsh Government continues to develop its policy on securing a path towards adequate housing, including fair rents and affordability, with a White Paper published in October 2024.
In our position paper, Improving access to the PRS for welfare-dependent tenants, we set out further measures that governments across the UK should consider, including preventing insurance companies from placing restrictions on cover for landlords who rent to tenants in receipt of benefits, liaising closely with agent and landlord groups to improve support and guidance on housing vulnerable tenants, and giving Universal Credit claimants a straightforward option to have their rent paid directly to their landlord or agent.
Propertymark backs call for right to adequate housing
Responding to Welsh Parliament’s Local Government and Housing Committee inquiry looking at how incorporating the right to adequate housing into Welsh law would work in practice, Propertymark stated that it must act fairly to agents and landlords as well as consider any unintended consequences on housing providers and the market.
Propertymark campaigning
LHA was frozen in 2020 and since then it has increasingly lagged behind rising rents, effectively pricing the most vulnerable tenants out of the market for private rented homes. We have consistently called on the UK Government to set LHA levels at least the thirtieth percentile of local rents and for these rates to increase annually to keep up with market rates, and we were encouraged to see the rate unfrozen in April 2024.
However, the cost-of-living crisis and continued economic uncertainty have driven many people into poverty and increased the risk of homelessness. Local authorities are inundated with homelessness requests and housing options are limited for many people.
Setting the Local Housing Allowance to the fiftieth percentile will help reduce cases of rent arrears and ensure stability for landlords and tenants as well as help recipients secure better accommodation. We will continue to urge the UK Government to take decisive action on this.
