Wales sets 6.5 per cent cap on social rent increases
The Welsh government has unveiled a new cap on social housing rent increases meaning landlords will be able to raise the amount they charge by a maximum of 6.5 per cent for the next financial year.
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Announcing the move on Wednesday, Welsh climate change minister Julie James stressed that the figure is a “maximum not a requirement or a target” for landlords.
But she said the new cap is “well below the rate of inflation”, which yesterday hit 11.1 per cent – the highest level in 41 years.
This is the second intervention by Ms James on social rents since the Welsh government announced a five-year settlement in 2019.
The settlement, which was due to run until the 2024-25 financial year, allowed registered providers and councils to increase social rents by Consumer Price Index (CPI) plus one per cent, as long as the CPI was not higher than three per cent.
However, Ms James last year introduced a cap of 3.1 per cent – the rate of CPI at the time – for the 2022-23 financial year.
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The latest intervention comes as social housing landlords in England are awaiting the outcome of a government consultation on a new rent cap.
Industry figures are expecting news in today’s Autumn Statement, with rumours that the cap on increases could be seven per cent.
In Wales, Ms James acknowledged that any increase could affect social housing tenants who pay all or part of their own rent.
“These tenants, in particular, need to be protected from being placed into financial hardship through trying to cover the costs of keeping a roof over their heads,” she said.
In addition to the rent cap, Ms James has introduced a ban on social housing evictions due to financial hardship for the 2023-24 financial year, as long as tenants “engage with their landlords”.
In Wales, around three-quarters of social housing tenants have all or part of their rents covered by benefits, so the increase will be covered by benefits paid by the UK government, according to the Welsh administration.
But Ms James added: “No landlord is required to charge the maximum, and I know all landlords will carefully consider affordability and set rents as appropriate across their housing stock.
“Within the overall settlement landlords may freeze, lower or raise individual rents based on a number of local factors of which affordability is a key consideration.”
A campaign is also set to be launched across Wales encouraging tenants to talk to their landlord if they are experiencing financial difficulties and ways to access support.
The Welsh Labour government had previously set a target to build 20,000 new social homes. However, Ms James reportedly said last month that this plan is “hanging by a thread”, partly due to supply chain problems and staff shortages in the construction sector.
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