The Welsh government is carrying out a consultation on proposals for fair rents. This has been widely reported as the Welsh Government proposing or considering rent controls. But the current consultation is a long way from that.

The Welsh government is having an initial consultation on fairer rents. But this is only a Green Paper and so it is not a specific statement of policy options. Assuming this progresses that would be for a White Paper. The Green Paper/White Paper process is a classic means of policy development which has somewhat fallen out of fashion on the basis that it takes longer than governments tend to like these days. However, a more considered approach generally makes for better policy and for something as important as this a more cautious approach is to be welcomed.

The Welsh government already asked UK Collaborative Centre for Housing Evidence (CaCHE) to assess the evidence on rent controls which is included as part of the package with the Green Paper. However, that research is, at best, equivocal. In short it makes the point that the causes of rent unaffordability are complex and it is “not public policy on the cheap”. This is a point well made and many of those who casually call for rent controls in England and Wales at the moment fail to appreciate that rent controls are complex, significant, and risky interventions and that simply stating they have worked (which is in itself debateable) elsewhere does not mean they will work in the very different conditions that exist in England or Wales or that they will not do irreparable damage to the property sector. CACHE has recommended that more research is needed in the Welsh sector and the Welsh government has listened to this, hence the Green Paper.

The Welsh government has also asked Alma Economics to look at the housing sector in Wales. This report is also in the evidence pack. It paints a complex picture of enormous variability in deprivation and housing quality, even in quite small areas. This hardly supports a blunt tool intervention such as rent control.

There is no doubt that good quality, affordable, homes are a highly desirable and important requirement in Wales, as they are everywhere. There is also little doubt that there is insufficient numbers of such homes. However, the evidence does not immediately suggest that rent controls are a means to fix that problem, or even part of it. At the very least they are not effective alone and they may in fact achieve the opposite effect.

So what is the Welsh government considering. They talk of the concept of “fair rents”. However, this is not the same as has been used historically. Fair rents were concept under the Rent Act 1977, and was simply a form of rent control. In Wales the idea of fairness seems to wider and is being used to refer to “equitable” rents, meaning that they should “be fair and affordable to all parties involved” as well as fair in the sense of being proportionate to tat local area. However, that leads to a potentially highly complex structure which will mean different types and levels of control in different areas. Scotland tried to do something like this by having rent pressure zones to control rents in areas where they were unusually high. However, no local authority successfully managed to meet the criteria to implement one and so they never did anything at all.

The Welsh Green Paper looks at the various control mechanisms in the other parts of the UK. But as well as more classical control mechanisms it makes the point that rent can be controlled by other means. Interestingly, one of the mechanisms it highlights is the proposals in the Renters (Reform) Bill to make rent increases more predictable. I have written about this elsewhere.

There is no doubt that the Welsh government wants to make housing in Wales more affordable. However, it is a bit of a leap to say that they are now considering rent controls and I do not think this Green Paper represents evidence of that. Rent control is certainly one of the possibilities but it is not the only one and the Welsh government is clear that it does not know enough or that this is the only option on the table.

I have been clear on many occasions that I do not think that rent control works and that its side effects and negative outcomes outweigh any benefits it might create. In addition, the manner in which the Welsh government is considering controls is likely to be very complex as it tries to take into account the very different considerations across Wales. This is pretty risky when Wales is already engaged in reforms which are difficult to understand and full of traps for landlords. Adding another one is likely to have additional negative effects.

The Green Paper is open for responses until 15 September 2023.