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Pressure grows for ministers to freeze Welsh rents

BBC News 04/10/2022
© BBC

Welsh Labour ministers are facing calls to freeze rents to tackle the cost of living crisis.

Plaid Cymru said the Welsh government should be using "all the tools in its power to shield our most vulnerable over winter".

First Minister Mark Drakeford warned it would not be a "panacea".

The Welsh government fears "unintended consequences", where landlords could react by selling-up and leaving the market.

Figures from Zoopla suggest average rents rose by 12.3% to £750 in the year to last July.

The Scottish government announced it would freeze "most rents" until the end of march next year, alongside a "six month moratorium on evictions".

Adam Price, leader of Plaid Cymru which is in a co-operation agreement with Labour in the Senedd, said: "This winter could be the hardest on record, in the face of rising costs and stagnating wages. Plaid Cymru saw this coming. [The] Scottish government have already acted - incidentally, following a campaign by Labour in Scotland.

"What further evidence do [the Welsh government] need to convince them that preventing homelessness during winter is the right course of action?

"Welsh government must use all the tools in its power to shield our most vulnerable over winter - by announcing they will freeze all rents and by banning all evictions now."

In response to Mr Price in First Minister's Questions, Mr Drakeford said the Scottish legislation "doesn't cover anybody taking up a tenancy, and for existing tenancies there are a whole series of ways in which their rent will be able to go up anyway".

He said when he was in Scotland to meet Nicola Sturgeon last week he said he was told of "two great anxieties" - the "stampede to evict existing tenants" and the "risk there would be a collapse in the amount of property available in the private rented sector".

He said ministers are looking at extending a planned extension to the notice for no fault evictions from two months to six months to existing tenants.

And he said a white paper will look at rent control proposals, as part of Labour's agreement with Plaid Cymru, and he said rents for social tenants will not change until March.

Mr Price said housing charity Shelter Cymru was among those calling for a rent freeze, which was disputed by Mr Drakeford.

But in a Twitter thread calling for a ban on evictions during the winter, the charity said "a rent freeze would have a positive short term impact for tenants facing hardship".

'Knee-jerk'

At a Senedd committee meeting last week, Climate Change Minister Julie James said that while a rent freeze "seems like a tempting short-term measure, it has an enormous immediate unintended consequence, with landlords coming out of the markets or immediately acting before they think a freeze will come in".

"I don't think a knee-jerk reaction without fully understanding what the unintended consequences in the market might be is the way to go," she said.

She added that a moratorium on evictions was "superficially interesting" but that the ban during Covid led to a "tsunami" of people evicted from their homes "when that came to an end".

Ministers have also expressed concern that the housing market could be due to contract.

Fears 'housing bubble will burst'

House purchasers have been facing rising interest rates in recent weeks, as well as a reduction in the number of mortgage products available following the UK government's mini-budget.

Recent figures show that the average two year fix is now close to 6%. House prices in July rose above £240,000 for the first time.

At the meeting of the Senedd's local government committee Ms James also warned the house market "looks like its slow and even reversing now".

"I really do hope we're not going to get a massive crash, as happened last time we had this kind of bubble."

"Unfortunately, I'm old enough to remember the last time this happened, with people in negative equity and all kinds of distressing circumstances.

"So, we're gearing ourselves up to be able to do mortgage rescue packages and to help people stay in their own homes by converting their mortgages into tenancies and helping the local authorities or registered social landlords to buy out properties that are in that position."

Some councils already operate mortgage rescue packages for people facing repossession.

On Tuesday Social Justice Minister Jane Hutt said the Welsh government was spending £1.6bn "on targeted support and universal programmes".

She announced that the Welsh government would provide an extra £1m to help fund foodbanks, and had opened its second round of the winter fuel support scheme, offering households on qualifying benefits £200 payments.

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