Second home-owning Tory MS hits out at rent controls

A second-home owning Tory MS has hit out at rent controls.

Janet Finch-Saunders, the Senedd member for Aberconwy, is worried that imposing them in Wales would lead to a “tsunami of landlords leaving” the private rental market.

The Conservative politician, who according to the register of interests is the Senedd’s most prolific landlord, owning or co-owning 7 properties, claimed that “financial brokers” are telling her that “they or their clients are fed up now with so many controls being placed upon them”.

She was speaking in a debate in the Senedd on proposal for a Bill on rent controls, which was called by Plaid Cymru MS, Mabon ap Gwynfor.

Janet Finch-Saunders said: “There is actual clear evidence that rent controls can have large negative effects, both on landlords, tenants, and, indeed, the quality of housing stock. San Francisco’s 1994 rent control law led to a 5.1 per cent increase in overall rents over the course of the next two decades.

“The overall rise in rents created a cost of £2.9 billion, accrued to current and future renters, and landlords substituting to other types of real estate, which then lowered the housing supply, shifting it towards less affordable types of housing.

“Now, we’re already seeing a pattern that’s quite worrying in Wales. Private landlords, financial brokers, are telling me that they or their clients are fed up now with so many controls being placed upon them, when all they want to do is provide good-quality accommodation for a fair rent in return.

“Many are now selling up their stock or moving over to the holiday let. In fact, between 2018 and 2019 and 2021, Wales has seen over 4,500 private landlords leave the sector. And, Minister, you can shake your head, but I have that figure, firmly, provided to me by Rent Smart Wales themselves, in black and white.

“Now, last week, I chaired an estate agents round-table, and it was made clear that there is an agent in south Wales that manages over 4,000 units, and they know for a fact that owners are voting with their feet, and actually leaving the rented sector.

“Your proposal, Mabon, would make that wave a tsunami of landlords leaving, and the casualties will be the very people that you actually think you’re trying to help.

“Studies have shown that rent controls lead to a deterioration in housing quality, resulting from landlords’ reduced income and an inclination to keep the upkeep of the housing. Germany introduced a nationwide system of rent controls in 2015, but according to research, this had no persistent effect on rental prices, instead resulting in reducing housing quality.”

‘Some will take fright’

In the debate, Mabon ap Gwynfor said: “I know that some will take fright at reading the motion and will instinctively oppose it, referring to examples where policy under the heading ‘rent control’ has failed. And that’s true: some experiments have failed.

“But when they are designed in the right way, when they’re targeted and when they dovetail with other successful policies, then rent control is a policy that succeeds and is popular.

“And they’re popular today, with over two thirds of people supporting a policy of this kind in the United Kingdom, according to a recent YouGov opinion poll. Note that the motion does not propose a particular kind of rent-control system, but it does note the need to impose controls on rents to a level that meets the ability to pay.

“Now, let’s look at some examples. The Government of the Republic of Ireland is not known for being particularly left wing; indeed, it is a more right-wing Government. But there, they have taken steps to control rents, with a rent review no less often than every two years and a 90-day period of notice of change.

“They have rent pressure zones in areas where the pressure is particularly high, which mean that rent cannot increase above the rate of inflation in those areas.

“In Catalunya, the Government there has introduced a regime that limits rents for specific cohorts of people, for example, if rent equates to 30 per cent or more of their income. And, of course, rent controls exist in different states across the United States, having been introduced in a targeted manner.”

‘Cost of living’ 

He also said: “Wages have failed to keep up with inflation; inflation is about to hit its highest level for 30 years; and the cost of living is on the rise. But, on top of all this, rents have increased more in Wales than in any other part of the United Kingdom, with an increase of almost 13 per cent in the past year alone.

“Over half the children who live in rented homes live in poverty. The percentage of people who live in poverty in the rental sector is higher in Wales than in any other part of the United Kingdom.

“Cardiff is having a particularly hard time, with the Joseph Rowntree Foundation estimating that many spend 35 per cent of their income on rent alone. Young people can’t afford to buy homes in their communities and waiting lists for social homes are very long.

“So, the only option is to rent privately or, for some, unfortunately, to live with their parents, so it’s little wonder that ONS figures show that a third of people between 20 and 30 years of age live with their parents here in Wales.

“Shelter Cymru has seen rents doubling in a month in some cases, and Acorn in Cardiff has seen landlords demanding an extra £100 per month in rent from their tenants. Without intervention, we will see more and more people finding themselves living in poverty or even becoming homeless.”