Welsh Government criticised for plans to increase social housing rent cap

Emily Price

The Welsh Government is facing criticism following the announcement of plans to increase the cap on social housing rents in April.

Just before the Senedd broke for its autumn recess last week, Climate Change Minister, Julie James gave a statement confirming the new maximum social rent uplift cap will  stand at 6.7% for the next financial year.

Responding to news of the new cap, the Bevan Foundation said it’s not “practical” or “ethical” to place extra costs on social housing tenants.

Under the current rules, local authorities and housing associations have the responsibility of setting their own rents – but it has to be within the cap set by the Welsh Government.

Last year, the Welsh Government capped the social housing rent uplift below the level of inflation at 6.5%.

The Climate Change Minister said the decision was made because it provided additional support to social housing tenants as they faced pressures from the rising costs of living.

However in April 2024, the Welsh Government will set the maximum uplift cap at the level of inflation – which is 6.7%.

Some social housing tenants in Wales will have their rent covered in full by their benefits. 

However, the Bevan Foundation has warned that for people in work, those effected by the bedroom tax or the benefit cap, the extra rent will place more pressure on people already struggling with their finances.

Hardship

On Friday (October 27) Ms James said the Welsh Government still expected “ongoing commitments” from social landlords in Wales to support tenants struggling with the impacts of the ongoing cost-of-living crisis.

She said: “This will include the continuation of the no evictions due to financial hardship policy for tenants that engage with their landlords.

“This uplift may not feel ‘lower’ to many people across Wales. Landlords are not required to charge the maximum uplift amount and I urge all social landlords to carefully consider affordability and set rents appropriately across their housing stocks.

“Next year will be the final year of the five-year rent policy. We will continue to work in close collaboration with social landlords, the wider sector and other partners to inform our future rent policy, develop a consistent approach to assessing affordability and continue to provide support to both social landlords and their tenants.

“Affordability is at the heart of social rent policies in Wales, and we will continue to strengthen our approaches and work effectively with partners to deliver on our commitments.”

In an opinion article published to the Bevan Foundation’s website on Monday (October 30), Head of Policy (Poverty) Steffan Evans said the way social housing is funded in Wales is “simply not fit for purpose”.

He wrote: “The fact that the Minister reaffirmed that social landlords will commit to not evicting tenants due to financial hardship, is in essence an acknowledgement that her announcement will push more tenants into financial difficulty. 

“Whilst the commitment to not evict tenants is welcome, would it not be more effective to set rents at levels that did not create financial hardship in the first place?”

A 2020 report on poverty in Wales by the Joseph Rowntree Foundation found that rent increases in the social rented sector have led to a “concerning dramatic increase in poverty” particularly in working households.

The Bevan Foundation’s recent Snapshot of Poverty report that 1 in 5 reported sometimes not having enough to cover their essentials once they had paid their rent.

Plaid Cymru’s housing spokesperson, Mabon ap Gwynfor MS, said: “The Welsh Government shouldn’t be passing the buck onto social tenants. Funding for the new Wales Housing Quality Standards and building of new social housing should be paid for by the Government.

“Social housing organisations are in an impossible situation where they are required to do far more work with less income. If we are to tackle this housing crisis then the Welsh Government must significantly improve on its social home building projects at pace.”