WE can all agree that there is a housing crisis in Wales.

Ever increasing house prices, fuelled by successive Labour Government’s failing to build enough houses, has resulted in the average age of first time buyers being pushed ever higher with “generation rent” being left behind.  

To put the problem into perspective, the industry says that Wales needs to build at least 14,000 homes a year and yet pre-pandemic Wales was barely building 6,000. On top of that, there are more empty homes in Wales, than second homes. 

While action is required by governments across the United Kingdom, a rush towards heavy-handed and economically illiterate measures will only exacerbate the problem.

Rather than look to punish aspiration, the Labour Government must support it, providing opportunities for hard work to pay off.  

Action for the sake of action will do little to support people in Wales achieve the dream of buying their home.

Rent controls have been proven time and time again to not only be ineffective at combatting the issue of affordability, but have actually been detrimental to the housing market.

READ MORE: Senedd rent control motion rejected as most Labour members abstain

On top of the mountain of existing legislation, further excessive state intervention can lead to landlords being forced out of the sector, resulting in a decrease in the supply of rental homes for those who cannot or are not looking to buy. 

Case studies from around the world demonstrate the damaging effects that the introduction of rent controls can have.

Look at San Francisco where the housing supply fell by 15 per cent, while in Berlin rent shot up by almost 10 per cent between 2015 and 2017 following the introduction of rent controls.  

A glaring assumption that advocates for rent control make is that if landlords leave the private rented sector, tenants will be able to afford the houses they rent. This is not the case. Rather, the small increase in housing stock will be quickly snapped up by those with the money to buy.  

Therefore, limiting the supply of housing will not benefit tenants especially if the rent cap increase is higher than the current annual increase in rent. This is how markets work, and it is a concept that this Labour government is seemingly failing to grasp.  

It is a gross misconception to assume that landlords drastically increase rent year on year, and when they do, it is often at a rate consistent with inflation. 

It is important to note that the annual rent in Wales has not risen above 1.7 per cent in the last decade, a figure that has risen constantly in line with inflation acknowledging the very recent increase.  

READ MORE: Rent controls: Why Carolyn Thomas supports policy for Wales

However, if a rent cap of up to five per cent were introduced, this could encourage landlords to raise prices up to the cap, thereby increasing rent under this new legislation at a higher rate than before.  

When it comes to supply, it is no secret that successive Labour governments have failed to provide enough affordable housing in Wales. Recent statistics show that only 6,037  dwellings were completed in 2019, a staggering 30.7 per cent fewer than at the start of devolution.  

To put it simply, Wales needs more houses. This task is looking to be an ever increasingly difficult one as the pandemic has affected supply chains across a range of industries affecting the housing sector.

A potential combination of a reduced supply of housing due to landlords withdrawing out of the private rented sector and a further slowdown in house building due to the pandemic on top of Labour mismanagement, has the potential to create the perfect storm to further drive up rent and house prices.  

READ MORE: Rent controls: Welsh Senedd members react to snub

Not only is the introduction of rent controls economically naive, the way in which the issue has been put on the agenda must be addressed.

Much like the recently announced Basic Income pilot, rent control makes no appearance in the Labour manifesto, leading me to question why Lee Waters recently suggested it was. 

If Labour ministers thought this policy was economically sound and popular, then this should have been put forward to the people of Wales ahead of last year’s election. 

What Wales needs is a comprehensive approach to the housing crisis through increased house building, increased job opportunities and support for first-time buyers through tax cuts in Land Transaction Tax, the expansion of Help to Buy for properties in need of renovation and the bringing back of Right to Buy.

Only through this combination of incentive and opportunity can Wales begin to address the housing crisis that affects so many of our aspirational home buyers.  

Janet Finch-Saunders is the Conservative MS for Aberconwy

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