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The role of private renting in Wales

The growth of the private rented sector is the largest structural change in the Welsh housing market for at least two generations, according to a report for Welsh Government.

To let signs in Cardiff (Julie Nicholas)The report by the Public Policy Institute for Wales and London School of Economics says policy makers must take account of this fundamental shift.  The trend must be significant for policies on new building, the allocation of supply subsidies, rent determination and the role of social and intermediate housing.

The private rented sector more than doubled in size in every local authority in Wales between 2001 and 2013.  Some 80 per cent of the growth in private renting came via transfers within the existing stock.

The report concludes that: ‘Cardiff shows the greatest evidence of shortage in terms of both market rent levels and relative rents between market and social sectors. On the limited evidence presented here any institutional investment in the PRS is likely to be restricted to Cardiff and the surrounding area.’

However, initial analysis suggests that there are areas of growth where there are concentrations of unemployment, low income and poor quality housing.

The report finds that the spatial pattern of social rents varies relatively little across the country as compared to the PRS. It argues: ‘The rent ratios suggest that there are areas where there may be excess supply in the social sector and the case for investment in new social housing should be carefully assessed.’

Estimates of housing need and demand by Alan Holmans for PPIW suggest that 8,700 homes a year will be required to 2031, of which 37 per cent will need some form of subsidy. Over half of the total requirement will be in Cardiff (27%), Swansea (11%), Wrexham (8%) and Newport (6%). The report argues that recent trends suggest that the private rented sector is likely to play a significant role in meeting this requirement.

The Potential Role of the Private Rented Sector in Wales by Christine Whitehead and Kath Scanlon is published by Public Policy Institute for Wales.

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