Where next for Welsh housing?

The Bevan Foundation’s Head of Policy (Poverty), Steffan Evans reflects on the Foundation’s recent online seminar on housing in Wales 

With thousands of people across Wales struggling to afford a place to call home, the publication of the Welsh Government’s Green Paper on Housing Adequacy and Fair Rents has been much anticipated. As the housing sector gets ready to share its views on the Green Paper, the Bevan Foundation was pleased to hold an online seminar on July 5th to inform discussions. This note provides a summary of the key points from the seminar, focusing in particular on lessons learned for England and Scotland.  

Housing affordability is not a uniquely Welsh problem 

Wales is not alone in facing a housing crisis. There is an acute shortage of affordable housing in many nations, with this also being true of England and Scotland. Despite this crisis being an international one, it is important to understand that the way it manifests itself differs locally. The exact nature of the housing crisis is not the same in Cardiff as it is in Merthyr or Pwlleli. The same is true for London and Sunderland in England, or Edinburgh and Inverness in Scotland. Any national solution must therefore have enough flexibility to enable local variation in implementation.  

The focus of any discussion on affordability must focus on those on low incomes  

High housing costs put significant pressure on households. This pressure extends all the way up the income distribution, but it is especially pronounced for those on the lowest incomes, many of whom are pushed into poverty by their rent or mortgage payments.  

The most common method used to measure housing affordability is the 30% of net income measure. If a household spends more than 30% of their net income on housing costs (rent or mortgage) it is said to be unaffordable.  

The measure doesn’t fully capture the impact of high housing costs on financial hardship. Someone on a high income could spend more than 30% of their income on their housing cost and have more than enough left over to enjoy a good quality of life. Someone on a lower income might spend less than 30% on their housing costs but still be pushed into hardship as a result. 

Affordability is only part of the question 

Housing affordability matters, but if we are to improve the Welsh housing sector we must take a holistic view. High housing costs can push people to live in poor quality housing. Other people are pushed into overcrowded accommodation, meaning that their housing does not meet their needs. By focusing solely on affordability we risk not capturing all these experiences.   

Rent controls have a place but there is need to look at solutions in the round 

Rent controls are a blunt tool to address concerns about housing affordability. They do offer some potential benefits. For example, softer controls, such as those that are in place in Scotland that limit rent rises, can help stabilise the rental market. This has offered tenants some certainty and security at a time when other living costs have increased dramatically. 

There are concerns, however, that the bluntness of the tool could undermine their effectiveness. For example, rent controls may act as a floor, rather than a ceiling, with landlords being encouraged to increase their rents in line with any cap. To ensure that rent controls effectively boost the availability of affordable housing, there is a need to look at their introduction as part of a broader package of measures rather than a stand-alone measure.  

Among the other measures that should be taken at the same time are steps to increase the provision of social housing, a reform of the social security system and action to improve security of tenure. Without taking action across a broad range of areas, rent controls risk acting as a sticking plaster.  

We need to understand the housing sector 

The data that is currently held on the Welsh housing sector is very limited. This undermines both our understanding of the extent that housing affordability is a problem in Wales and our ability to implement solutions. A lack of data has been sighted as one reason as to why there have been no rent pressure zones introduce to date in Scotland for instance.  

The steps set out in the Green Paper to make it a requirement for landlords to share their data appear to be heading in the right direction. For this process to be effective however, it will need to be comprehensive, and take into account other approaches so that people’s experiences of the housing sector are captured and used to inform policy.  

Beware landlord claims 

There will be a temptation for us in Wales to look at the experiences of Scotland as we respond to the proposals set out in the Green Paper. Landlords in Scotland have raised significant concerns that rent controls are pushing landlords to sell their properties and to leave the sector. This is a message that will be common to anyone following Welsh housing, where it is the implementation of the Renting Homes (Wales) Act 2016 which is said to be having the same effect. As with the impact of new legislation in Wales, there is very limited evidence of a mass exit of landlords from Scotland. There is therefore a need for nuance when interpretating any lessons from Scotland and to consider broader pressures on the housing sector,  rather than just focusing on the impact of rent controls.  

Thank you to our speakers  

The Bevan Foundation would like to thank all our speakers for taking the time to join us for the seminar. In particular we would like to thank James Hooker and Guy Delong-Smith of the Welsh Government, Darren Baxter of the Joseph Rowntree Foundation and Deborah Hay of the Joseph Rowntree Foundation, Scotland.