The Wales Longitudinal Study: Landlords in the Welsh PRS
Introduction
This is the first of what will be a series of Working Papers produced by the NRLA research team to highlight the supply-side impact of policy and regulation change in the Private Rented Sector (PRS).
The Wales Longitudinal Study commenced in the Autumn of 2023. The NRLA engaged independent, residential landlords who let properties in Wales ("Welsh landlords"). A planned series of in-depth conversations with these Welsh landlords over the next eighteen-month to two-year period will provide continuous dialogue and an understanding of how the PRS operates.
Wales has seen a period marked by significant economic and regulatory changes. The NRLA wish to understand how residential landlords who operate in Wales have navigated these changes.
Through this study, the NRLA will have an evidence base outlining the implications of policy on rents and the longer term supply of PRS properties.
Wales Longitudinal Study: Legislation and Regulation
About this wave one study
This initial wave of consultations focused on how landlords navigated the Renting Homes (Wales) Act, as well as other regulatory and legislative changes introduced by governments in both Cardiff and London over the last decade. The NRLA consulted landlords of differing portfolio types and size through a series of online interviews and focus groups.
Key findings
Regulatory framework
The study provides insight into how private landlords have responded to a complex array of regulatory milestones which have redefined the Welsh PRS. The introduction of the Renting Homes (Wales) Act has been the most significant - but by no means the sole - legislative hurdle to overcome.
- The Act brought about a climate of uncertainty and eroded confidence, made worse by what landlords attributed to a lack of support and guidance.
- Landlords felt overburdened by what they saw as bureaucratic red tape during this period of upheaval.
The result led to a portion of landlords contemplating the sale of properties or exploring alternative markets such as holiday lets.
Specific challenges of Renting Homes (Wales) Act for landlords with smaller portfolios:
Landlords with smaller portfolios, faced specific challenges upon the Act's introduction. This group, with limited resource, faced much difficulty in comprehending and implementing new legal obligations.
Rent controls
On the back of the Green Paper published by the Welsh government, landlords were asked about their reactions to the possible introduction of rent controls. Concerns centred around the ability to keep pace with market rents and protect against future shocks.
Many landlords signalled that, as a result of the Green Paper (which is not itself policy change) they would re-evaluate their current approach to rent increases. Many landlords would also consider divestment.
Views on future prospects for the PRS
There was a general feeling of pessimism when landlords were asked about the outlook for the PRS in Wales (and the wider UK). Some key factors underpinning this pessimism included:
- The shortage of housing, especially in the social sector.
- Inconsistencies and inadequacies in enforcement of housing standards.
- Changes in tax allowances and incentives (for example the abolition of Mortgage Interest Relief).
Wave two
Wave two of the Wales Longitudinal Study was carried out in early 2024. This set of discussions focused on the macro-economic environment. Landlords were asked to take a deeper look at the impact of rising interest rates, inflation and the wider cost of living crisis had had on their business.
In the second wave, landlords were asked for their views on why confidence in Wales had picked up since the first conversations reported here.
Wave three
Wave three will take place in the early part of the Summer of 2024. It will focus on the motivations to remain a residential landlord and how landlords choose whether to continue as a landlord or close their residential business down completely.
If you would like to participate in future waves of research, please drop the research team a line via the NRLA's contact page.
Wales Longitudinal Study: Legislation and Regulation
