Elen Grantham reports on how Shelter is challenging outdated affordability metrics to better reflect the real struggles of Welsh private renters
We’ve been talking about the housing emergency in Wales for what can sometimes feel like a very long time at Shelter Cymru. The previous Welsh Government and MSs officially recognised a housing crisis in June 2021, 15 months after the first Covid lockdown – those surreal experiences certainly feel like a lifetime ago. The point is they knew about and recognised the issue a long, long time ago.
The consequential 2021-26 Housing Action Plan, Homelessness legislation reforms and the 20,000 new social homes target were all responses to this official recognition by the then Welsh Government. Yet, despite it having been five years (or a full Senedd term) since this recognition and the obvious reality that the private rented sector is fundamentally broken and people are struggling to access and afford it, Welsh Government officials continued to bury their heads in the sand where private rent levels were concerned. During the last Senedd term, monthly private rents in Wales shot up by 35%.
The government stance
In the 2024 White Paper, Welsh Government rejected the need for formal rent controls in the private rent sector, stating the need for a data-driven approach. While people renting privately have struggled to cope with drastic rental charges or live in fear of such increases, Welsh Government officials stuck to their rhetoric that a lack of evidence meant that nothing could be done.
Challenging affordability metrics
In April, Shelter Cymru launched its new report Understanding Affordability: Who does the private rented sector in Wales work for? And how do we change it? The report looks into the affordability of renting a home privately in Wales and challenges the existing model of “affordability”.
Our research determined that part of the problem when recognising and measuring the affordability of private renting is the methodology itself. The current, generally accepted model of affordability Welsh Government relies upon is based upon the ONS (Office for National Statistics) assumption that affordability equates to a private renting household spending less than 30% of their total gross income on rent. Shelter Cymru has challenged this assumption as we believe it does a disservice to private renters in Wales, failing to reflect the real-world pressures that they are facing. It also fails to reflect different household types across Wales.
Seventeen per cent of all homes in Wales are rented privately. The PRS is the second largest tenure following owner occupation in Wales. Every week, between 40-50% of the casework undertaken at Shelter Cymru comes from people who are privately renting – a significant part of our work. The people who come to us are often struggling with affordability. Many are at risk of homelessness or have already become homeless because of affordability. It affects all types of households across the whole of Wales. However, official ONS data tells us that private renting is unaffordable in only two local authority areas in Wales: Cardiff and the Vale of Glamorgan. There is a real disconnect between the ONS data and what Shelter Cymru is seeing on the ground.
Alongside complex data analysis, we worked with our Private Renters Advisory Group – people with real lived experience of affordability issues in the PRS, and are now proposing a new model of affordability; one that better reflects and better serves the hundreds of thousands of households privately renting in Wales. Our new model of affordability is rooted in the real experiences of private renters in Wales. The new model is based upon net rather than gross incomes and includes rent and other essential household costs such as council tax, water charges and energy charges. We have looked at a range of different households and incomes, and also gathered extensive data on private rental charges.
The reality for renters
Unsurprisingly, our research showed us that private renting isn’t a viable, sustainable option for thousands of people living in Wales. It is too expensive compared with people’s actual incomes. Renting privately is unaffordable across the whole of Wales and to people of all ages. Households of all makeups are struggling under the weight of continuing to afford their privately rented homes. Everyone is affected, but single people, especially those on low incomes, more so, as there are no viable options for them. At no point in someone’s life is it financially viable to be a single-income household privately renting in Wales.
Many of the people we spoke to told us they felt “trapped” living in their privately rented home as there was nowhere else they could go. One person described living in fear of their landlord increasing their rents and being afraid another landlord might be worse, a situation of “better the devil you know”.
The private rented sector now only offers sustainable homes for a very narrow window of renters. These being households with two full-time earners, with no or less than two children and living in mid-Wales.
People are forced to rent privately because of a lack of alternative options. The reality is that renting a home privately is the only option available to many in a failing housing system. Despite private renting being the tenure of last resort, it’s a section of our housing system that continues to grow. Over two decades, the number of private renters has almost doubled and there are now over 230,000 households in Wales who are privately renting.
A call for change
It is thus inconceivable the new Welsh Government adheres to the status quo of the previous government and continues to ignore the reality of unaffordable private rents in Wales. The first change in government in Wales since devolution almost 30 years ago presents a new chapter with a real opportunity for change. With the PRS being the second largest tenure in Wales, too many people are struggling and they deserve better. Unaffordable renting increases homelessness, impacts people’s health, has serious financial implications for households and public spending. It traps people in a system that isn’t working for them and it’s time that Welsh Government stepped up and acknowledged the reality of private renters in Wales and acted for them.
Shelter Cymru has had very positive responses to the report from others working in the housing and homelessness sector and beyond. While there was some surprise at the boldness of challenging the ONS model of affordability there has been strong support for the new model, with many organisations saying they would adopt and use it. Shelter Cymru is encouraging all our professional partners and sector friends to refer to the report when challenging affordability in order to strengthen the case for a long overdue overhaul of the PRS in Wales.
Fixing the private rented sector in Wales is possible with the right political will, the right policies and the necessary urgency. There is no quick fix but there is an evidence-backed roadmap to making sure that everyone in Wales has the safe, secure, genuinely affordable home that they need.
June 2021 was a long time ago… let’s not allow another Senedd term to pass us by.
Elen Grantham is policy and research officer at Shelter Cymru.