Report offers new perspective on Wales’ Private Rented Sector

Last week the Public Policy Institute for Wales published a report on The Potential Role of the Private Rented Sector (PRS) in Wales. If you have an interest in housing then it’s worth a read.  Whilst highlighting the rapid growth seen in the PRS the report also alludes to some of the complexities faced in housing, and raises more questions.

‘The shift towards private renting is the largest structural change in the Welsh housing market for at least two generations. Between 2001 and 2013, the private rented sector more than doubled in size, accommodating 80% of the growth in households over the same period. New build over the period, while directed at social and owner-occupied sectors, has hardly affected the scale of provision in these tenures.

The analysis presented here highlights some of the issues and questions that arise from this.

  • If this trend is to continue, it suggests that a significant proportion of future need and demand for housing will be met through the PRS, with implications for government subsidy. 
  • Preliminary analysis suggests that there are areas of growth in private renting where there are concentrations of unemployment, low income and poor quality housing. This needs further investigation, but if true is a cause for concern. 
  • There are areas where the difference between social and market rents suggest that there may be excess supply in the social sector, and the case for further investment in social housing should be carefully assessed.”

The report certainly left me asking many questions:

  • Do we have the capital investment required to build the shortfall of homes year on year?
  • Where should the new developments be sited?
  • Can we fill the gap in supply by bringing empty homes back into use or by using the PRS?
  • Is it sustainable to continue using the PRS to make up the shortfall in housing stock where market rents apply?
  • How can we scale up alternative housing models, such as our own co-operative housing?
  • How well do we understand the PRS in Wales?  I would suggest not as well as we should.

Let’s focus on the PRS filling the gap in supply, for example in areas of high unemployment and social deprivation where the demand for housing is high, but cannot be met by the social sector.  If there are empty properties what more can local authorities do to encourage reluctant PRS landlords to let to tenants  on benefits (who are often wrongly labelled as high risk), in an affordable way? Where the local housing allowance (LHA) covers the weekly rent and no top ups (the difference between LHA and actual weekly rent) are required.

Interestingly, Torfaen and Blaenau Gwent are given as examples where social and private rents are comparable. I wonder if this was driven by supply and demand, or was it by design where the local authorities have developed robust relationships with the PRS? If the latter then let’s share the best practice.

Of course there will always be geographical locations that will bring with them a premium in rent levels. Equally, where there is risk the landlord is likely to want a higher rent or bond but that is no different to any sector.

At the Wales Co-operative Centre we have been working with both landlords and tenants in the PRS for the past three years. Many of the tenants we have worked with on our current project ‘Your Money, Your Home’ are in receipt of full benefits, but still have to pay the difference between LHA and the actual rent.  For some its not a problem and can be as little as £5 per week, but for others it is much higher and leaves them struggling or going into rent arrears. Many tenants would rather be in social housing where rents are lower and the services provided by the landlord are often seen as being more comprehensive.  This needs to change. We need to start working as a single housing sector, one that puts people first and profit second, whose primary focus is housing management. One where supply meets demand, is affordable, and tenants want to live.

The PRS is just one piece of a very complex housing jigsaw, but an important piece whose voice should be represented alongside social and local authority housing providers. I would be interested to hear from any local authorities, housing and support providers who would be keen to explore how we can make this happen.

 

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