CIH Cymru consultation response on the White Paper on securing a path towards adequate housing

CIH Cymru agrees that rent data should be collected by Rent Smart Wales. Yet this data should be collected from all landlords at the start of a tenancy and then on an annual basis. The annual collection of rent data could be as part of the annual property condition report that is proposed elsewhere in the white paper. Any rent data should then be published at ward level rather than at postcode level. The white paper proposes using higher postcode levels to collect rent data. Yet the Office for National Statistics (ONS) outlines that there are limitations of using postcodes as a geographic reference. This is due to the fact that postcode boundaries do not always align with other geographic boundaries. For example, the higher-level postcode CF48 contains address in Merthyr Tydfil, Rhondda Cynon Taff, Powys and Caerphilly. All separate local authority and broad market areas. As such higher postcode level would not be appropriate for collating rent data.

The annual property condition report could include a question on the ward a property is located in to aid Rent Smart Wales in collecting and storing the data. The rent data should also collect the number of bedrooms in the property and the type of property to capture differences in rent paid for property size. It will also then help with accurate calculations for the local housing allowance that is payable in the broad market area.

As outlined in our previous answer this data could be provided as part of the proposed annual property condition report. The data would then need to be anonymised before it is published so that individuals properties are not able to be identified. Once the data is received it can then be used as part of the Power BI dashboard that is already being used by Rent Smart Wales to provide data to the public.

Spatial mapping will be useful, and any rent data should be made publicly available. Having this data available will enable tenants and potential tenants understand the rent levels in the context of rent levels charged in their locality. This data will also be useful for the calculation of LHMA rates and ensure that the rates can truly cover the 30th percentile in a broad market area. Spatial data will also be useful for local authorities in their calculation of the housing need in their area by improving the data available to assess the affordability of homes in their area together with the availability of existing affordable homes. This should help improve calculations of unmet housing need and ensure that we can establish an accurate number of affordable and market homes that will be needed over five years within a local authority due to the granularity of the data available to assess rental affordability.

Yes, there should be a mechanism to challenge a rent increase. This would essentially be reinstating a renters right that was in place before the implementation of the Renting Homes (Wales) Act 2016 but was lost for new tenancies but retained for converted tenancies. This could be perceived as resulting in a two-tier rental system with some tenants having more rights than others. It is vital that tenants have the ability to challenge a rent increase that is above the market rent in their area.

As affordability decreases in the private rented sector it is vital that proposed rental increases above market level in the area should be subject to challenge. This is why it is important that any rent data collected is publicly available to enable tenants to make a reasoned judgment on the fairness of any proposed rent increase. Tenants will also need to be made aware of their right to make this challenge. This could be done by producing a private renter portal that provides information on the rights a private renter in Wales has. This site could be managed by Rent Smart Wales who already provide some information to tenants but could also include a page outlining their rights with signposting to organisations who can advocate for them.

Any application to the rent tribunal should clearly outline the proposed rent increase and how it compares to the current market rent in the area. Protections should also be put in place that the tenant is not served notice as a result of challenging a rent increase. The rent tribunal can also not make a decision that would result in the rent increasing above the market rent in the local area for the property in question.

Yes, this data should be provided annually. However, current proposal is that the license holder provides this themselves. Whilst most landlords will be accurate in their reporting, concerns have been raised that some landlords will say everything is up to standard when there are significant issues. Therefore, whilst licence holders should provide this data this should come coupled with a random sampling mechanism for in-person property visits and a review of the certification that should be in place.  

The property condition records should also be accessible to the current tenant. This could be via the providing of a dedicated login for the tenant and where applicable the joint tenant which can be used to access the property record for their property. If the record does not match the condition of the property, there then needs to be a mechanism for the tenant to challenge the record and ensure that the property condition is improved. There will need to be a system in place that when this challenge is brought by the tenant that they are not served retaliatory notice in a similar way to the protection provided in the Renting Homes (Wales) 2016 Act.

By having these two checks in place it should provide some assurance to tenants that landlords will be held accountable if their property is not of a good state of repair. It will also help ensure that those landlords who are not fully meeting their obligations are challenged and supported to improve their properties and the service they provide their tenants.

The annual property record should allow for the submission of scanned paper documents such as the annual gas certificate and the electrical safety certificate. Another solution is for there to be a mechanism for a certified gas engineer or electrician to upload these to a centralised portal to then be linked to the relevant property record within Rent Smart Wales. Landlords will also need to confirm that the 29 habitability criteria are being adhered to with relevant photographic evidence. For example, a picture of the carbon monoxide alarm and a general photo of each room to show there is no damp or mould present in the property. In addition, if the landlord provides white goods as part of the tenancy, PAT testing certificates should also be provided for these.

As this is an annual record, it would be reasonable for this report to also contain information on the rent being charged, when the rent was last increased, and the amount of deposit paid at the outset of the tenancy. The information on deposit could also help identify instances where the proposed permitted additional payment for a pet is disproportionately increasing the cost of a deposit for those households with pets.

We welcome the proposal for a guarantor scheme in Wales but have outlined below an alternative approach to the guarantor scheme. We have then gone onto outlining some amendments to the eligibility criteria if our alternative proposal is not considered.

An alternative to a guarantor scheme

Whilst the proposed guarantor scheme would negate the need for a rent in advance payment for specified groups it does not seem to fully negate the need for a deposit. The white paper just outlines that discretionary housing payments (DHP) can be used to pay deposits. Often when looking to secure a property a prospective tenant will be asked to pay a month’s rent in advance together with a deposit payment. Yet a household will only be eligible for a DHP if they are currently in receipt of housing benefit or the housing element of universal credit. Some of the groups outlined in the proposed eligibility criteria would not be in receipt of housing benefit or the housing element of universal credit and as such they would not be able to apply for a DHP to cover their deposit. This would be a particular issue for refugees or those households fleeing domestic abuse where they are working but need help with a deposit or rent in advance so they can access safe accommodation.

An alternative is to make landlord insurance and rent guarantee insurance a mandatory requirement of renting out a property in Wales with the cost for this added as a service charge type payment for the tenant. Landlord insurance will cover any damage to the property whilst the rent guarantee insurance will cover the landlord for any loss of income if there are arrears at the end of the tenancy or if the rent is not paid during the tenancy. Many landlords will already take out this insurance, so it is likely to have a minimal impact on existing market. Currently the average annual cost for this is £170. If tenants were asked to pay this, it would add on average £3.26 to their weekly rent for a 12-month tenancy. This would open up access to the private rental market, enable tenants to move quickly when needed whilst giving assurance to the landlord that significant damage or rent arrears can be covered by insurance.

The effectiveness and swift resolution of disputes relating to property condition would be dependent on a robust inventory prior to tenants moving in. Making this insurance mandatory would remove the significant financial burden of the current deposit scheme to secure a private rented property and ensure people can move to a more suitable home quickly and remove a significant barrier to private renting for anyone who wishes to access it.

The eligibility criteria

We agree with the inclusion of the groups proposed within the white paper yet there are some groups we feel should also be included. The homelessness white paper outlined a proposal that certain groups should not be subject to a local connection test so that they were able to move more easily between local authority areas. These included veterans and those who have cohabited with veterans during their time in service, and prison leavers needing to move to a new area as part of their rehabilitation. It makes sense that these groups are also able to access a guarantor scheme to enable them to secure accommodation quickly and in an area of their choosing.

CIH Cymru believes that allowing permitted payments as a tool to enable people with pets to access the private rented sector could work in principle. Yet there would need to be robust checks and balances to ensure that the permitted payment does not disproportionately impact the level of deposit an individual with pets pays in order to secure a private rented property.

If a permitted payment needs to be put in place, the landlord would need to provide proof of the additional insurance payment they have made in order to allow a pet to reside in the property. This should also be added to the annual property condition record as part of the deposit information we have also recommended to be collated as part of this record earlier in our response.

Yet, we would like to take the opportunity to reiterate our proposal for mandatory landlord and rent insurance. Landlord insurance will cover any damage to the property whilst the rent guarantee insurance will cover the landlord for any loss of income if there are arrears at the end of the tenancy or if the rent is not paid during the tenancy. Many landlords will already take out this insurance, so it is likely to have a minimal impact on existing market. Currently the average annual cost for this is £170. If tenants were asked to pay this, it would add on average £3.26 to their weekly rent. This would open up access to the private rental market whilst giving assurance to the landlord that significant damage or rent arrears can be covered by insurance. It would also provide protection for damage to the property from pets or ensuring that pet owners can be afforded the same level of access to the private rented sector as the rest of the population.

A positive will be the widening of access to the private rented sector for those individuals who have pets. A negative could be a slight increase of damage to the property and cleaning the property after vacation to ensure the next tenants are not negatively impacted. A key concern of households who have allergies to cats or dogs. 

This does seem like a good incentive, but the cost implications would need to be carefully considered together with any possible impact on other government priorities. In 2023/24 the tax revenue from the higher rate of land transaction tax was £69.3 million. These tax revenues help fund public services. The integrated impact assessment outlines that the loss of tax revenue could be offset by avoided costs in providing temporary accommodation. The total amount provided in the impact assessment was that the annual cost for temporary accommodation in 2022/23 was £34 million. However, a recent report by Shelter Cymru on the cost of temporary accommodation put the bill for temporary accommodation at £41 million in 2020/21 and £99 million in 2023/24. The data used in the Shelter Cymru report was from a FOI request. The cost of providing temporary accommodation seems to have been underestimated in the integrated impact assessment that accompanied the white paper.

We also have concerns about how the offsetting of loss of income from the land transaction tax from the reduction in cost of temporary accommodation will be realised. The monies used for the provision of temporary accommodation comes from local authority housing budgets. The monies from land transaction tax are collected and managed by the Welsh Revenue Authority. So how will the savings in reducing temporary accommodation costs be realised. This has not been fully outlined in the integrated impact assessment and would need to be fully considered.

Another concern around a refund of the higher land transaction tax is the impact on wider public service budgets including monies available for developing new homes in Wales. There is no consideration in the integrated impact assessment of any possible impact on development budgets as a result of the loss of tax income. This would also need to be fully assessed as part of any decision on whether a refund of the higher rate land transaction tax would be an appropriate incentive to increase the number of landlords joining leasing scheme Wales.

Even if the proposal for refunds of the higher land transaction tax is deemed financially viable the proposal will also need to be considered in line with the current rent levels payable on these properties. Rent on Leasing Scheme Wales properties is fixed at the LHA rate in the local area. Whilst in some areas the land transaction refund would cover the difference between the LHA rate and market rent, it is unlikely to do so in all areas. Rather this proposal would need to be looked at in line with a slight increase in the rents that can be charged as some landlords will remain reluctant due to the difference between the guaranteed rent and their mortgage costs.

There is scope to expand the scheme but the guaranteed rent and well as other incentives need to be looked at in conjunction with each other so that the number of landlords joining the scheme can be increased. Where the scheme is working well it has proved to be a valuable part of the solution to increasing the supply of affordable homes, and reducing the time a household has to spend in unsuitable temporary accommodation.

There should be a six-month period between the purchase of the dwelling and entering a headlease with the local authority. The white paper outlined that the headlease should be for a minimum term of five years yet does not propose what would happen to the refund should the landlord wish to withdraw from the arrangement before the initial five-year period expires. The current Leasing Scheme Wales sets out an expectation that if a landlord wishes to leave the scheme early then any grant paid to renovate the property is fully refunded. We are proposing a similar proposal for the higher land transaction tax refund. If a landlord signs up to the scheme and then seeks to leave the arrangement early, then the whole refund should be repaid. If the landlord is not able to pay back the refund, then a charge should be placed on the property so that the monies can be recouped when the property is sold.

Whilst the Leasing Scheme Wales is working well in some areas and there is a need for incentivising landlords to sign up to the scheme careful consideration will also need to be given to the loss of tax revenue that could result from this incentive. At a time where budgets are being squeezed across national and local governments a robust assessment of the likely impact on monies available to spend on public services would need to be undertaken. According to stats Wales in 2023/24, there was a total £70.1 million land transaction tax collected at the higher residential rate. Of this £65 million was through transfer of ownership. What is not clear from the data is the proportion of transfer of ownership is from second homes ownership or a landlord buying a property to rent out. Whilst some work is being undertaken to provide this split without robust data on the likely tax revenue that could be lost through this scheme it is unclear whether the benefit of providing an additional housing options for those in temporary accommodation outweighs the tax revenues lost through providing this incentive.

Even if a decision is made that this incentive is to be progressed it will not help overcome the issue of the guaranteed rent level for Leasing Scheme Wales only being payable at the LHA rates for the local authority area. We are hearing from members in some areas that this guaranteed rent level is proving to be a significant barrier for landlords signing up to the scheme. It also makes the scheme unviable for the expansion of the provision on one bed properties in Wales due to how the LHA rates differ for single person households with a single person under the age of 35 only able to access the shared LHA rate which is often significantly lower than the rent charged for a one bed property. Consideration needs to be given on the guaranteed level as part of the wider evaluation of effective incentives for landlords to join Leasing Scheme Wales to enable its expansion as a viable housing option in Wales.

This white paper contains some positive steps forward but falls short of fundamental change and ambition which can only be delivered through hard wiring a legal commitment to providing housing as a human right. The issues of fair rent, affordability and access to the private rented sector should be considered separately to the right to adequate housing. It is the right to adequate housing that is the underpinning legislative position that provides a tenure neutral approach to the progressive realisation of the right. It is the right that is the mechanism through which we can increase the number of affordable homes in Wales and rebalance tenure which in turn will improve access to the private rented sector in Wales. The Senedd’s Local Government and Housing Committee in their social housing supply report outlined that to rebalance tenure that social housing should make up at least 20 per cent of the total housing stock. This will ensure more options for households and help balance out prices within the private market.

The right to adequate housing is the mechanism whereby we can increase the level of social housing development in Wales helping to overcome barriers to development and ensuring that everyone can access a safe, suitable and affordable home in a location of their choosing. Legislating for the right will also compel current and future government to make maximum use of their resources to ensure we can progressively realise our joint ambition of ensuring everyone in Wales can access an adequate home. The right would be the catalyst for positive change and the action needed to end the housing emergency and help produce an equitable Wales for this and future generations. As outlined by a response to our sector snapshot survey:

“Housing is not an after-thought. This should be one of the top priorities in Wales and in the UK. With the right housing available, the need for social and health services may be lessened. It’s time housing is put front and centre.

CIH Cymru believes this can be achieved by legislating for a right to adequate housing in Wales.

Visit Welsh government's website for more information on the consulation.

For more information on our response please contact Cerys Clark, policy and public affairs manager cerys.clark@cih.org.