Time to reset Welsh housing policy?

Environment A street of terraced housing
ViewsAugust 12th, 2020

Is now the time to reset Welsh housing policy?

Steffan Evans reacts to the Welsh Government’s proposed Tenant Saver Loan Scheme

Wednesday 11th August saw the Welsh Government announce a new Tenant Saver Loan Scheme. The scheme will see the Welsh Government provide loans to tenants who have or are expected to fall behind on their rent due to the impact of coronavirus. A tenant who is successful in their application will see the funds paid directly to their landlord, with the tenants having five years to repay the loan at 1% interest.

The scheme has been broadly welcomed by the housing sector in Wales as a means to prevent a spike in homelessness.  But there are some concerns that landlords will be able to pocket the money and still evict a tenant, unless possession notice periods stay at 6 months until at least March or beyond. While any action to assist those who have been hit the hardest by coronavirus and prevent homelessness is welcome, this policy should make us pause and reflect about what’s gone wrong with Welsh housing policy over the past two decades.

The aim of the Tenant Saver Loan Scheme is to assist tenants and prevent homelessness.  But it does this by providing a bail out to private sector landlords. The Welsh Government will be providing money directly to private landlords and, at the same time, holding all the risk if the borrower defaults. The scheme can be justified as an emergency measure, but points to a more fundamental issue with Welsh housing, namely the shortage of social housing and an over-reliance on the private sector to house people on low income or who have additional needs.

The rise and rise of the private rental sector

The private rented sector in Wales has doubled over the last two decades, now accounting for 15% of all homes in Wales. Staggeringly a quarter of homes bought in Wales in the 2019/20 financial year were either bought as holiday homes or as buy to let properties. In Gwynedd the proportion of such homes purchased was an eyewatering 40%.

Instead of countering this shift, the policies of the UK and Welsh Governments have facilitated the growth of the private rental sector. Housing benefit and the housing element of Universal Credit are directly transferring money from the state to private landlords, allowing them to pay off their mortgages and purchase more properties. Policies adopted by the Welsh Government to support people at risk of homelessness in the private sector due to a lack of social housing, whilst being well intentioned, further feed this problem.

What can be done?

It is clear that we will not be able to end our reliance on the private rental sector to house people on low income overnight. Constructing the number of new social housing we need in Wales and buying up empty properties and returning them to the social sector will take years. Coronavirus presents us with a unique opportunity, however, to start to turn the tide of the previous two decades.

It is right that the Welsh Government is taking emergency action to support private renters at a difficult time. But all parties, ahead of next year’s Welsh Parliamentary elections, should commit to building a new generation of green social housing at a scale we have not seen for decades. Constructing social housing provides jobs at a time when they are expected to be scarce, allows us to meet our commitments to decarbonise and will provide affordable homes for those who need them the most.

Back in 2016 the Bevan Foundation calculated that £1 billion was spent on housing benefit in Wales alone. We called for those powers to be devolved to Wales at the time so that some of the money could be spent on constructing new social housing to prevent housing affordability issues rather than on subsidising rents. Those calls were not heeded then and if anything, our reliance on subsidising rents has increased in the following years.

The question for us all to consider ahead of next year’s election is if now is not the time for a radical rethink of our housing policy in Wales then when is?

Steffan Evans is a Policy and Research Officer at the Bevan Foundation 

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