Landlords, letting agents and student groups have hit out at the growing crisis facing Cardiff's rental market with properties being sold off and more than 100 people fighting to secure every home listed.
Landlords say recent rule changes are driving up rent and harming tenants desperately looking for accommodation, while a leading student group say there is not enough housing to meet growing demand.
Various lettings agents in the capital have added that the new regulations are causing a "supply crisis" and those on the market are at higher rents. One landlord, Dave Watkins, who rents several Cardiff properties to postgraduates and young professionals, said: "What we're seeing right now is the upshot of what happens if you over-regulate and over-tax the private rental sector."
A number of landlords claim the recent regulatory changes have put them on the verge of "just giving up" and selling their properties. The Welsh Government have described the changes as "the biggest change to housing law in Wales for decades" and provide "greater transparency and consistency" for renters.
Landlords say the changes mean they can no longer deduct mortgage interest payments from their tax bill, restricting the income tax relief they can claim on their mortgage interest payments. The new regulations stem from the Renting Homes (Wales) Act 2016, passed by the Senedd to simplify the renting process and introduce standard-form contracts for tenants, and section 24 of the Finance (No. 2) Act 2015, which introduced the tax changes that only come into full force this year.
Mr Watkins said: "[Section 24] is giving landlords a massive tax hike - we're effectively not allowed to deduct our mortgage interest payments off our income which is totally and utterly absurd."
He explained that the interest payments were a business expense and likened it to the concept of chip shop owners not being able to deduct the cost of potatoes from their tax. He added: "If I have £100,000 worth of rent and £50,000 worth of mortgage interest payments, the Inland Revenue considers me to be earning £100,000."
Mr Watkins also criticised the changes ushered in by the Senedd, which will take effect in December, saying they overcomplicate contracts and introduce too many things for landlords to be aware of. He said: "A lot of older landlords are just giving up - you need a bloody PhD to be a landlord nowadays with the number of things you need to know about.
"I've been doing this for 23 years and I think the Renting Homes (Wales) Act 2016 is kind of the straw that breaks the camel's back."
Tighter regulation of landlords has long been called for by tenants, and The Renting Homes (Wales) Act, for example, means you'll get two months' notice of a rent increase and you'll have stronger enshrined rights when it comes to making sure your home is safe and fit for habitation.
The Act will also change the notice period for a no-fault eviction from two months to six months in Wales, but Mr Watkins said this restriction could put landlords off investing in properties because they wouldn't have the security of being able to repossess them quickly. The Act also enshrines a full list of rights and responsibilities to go with each private rental contract.
If you take a look at the properties listed for sale on Rightmove, you'll find a 20-bedroom block of flats on sale by JeffreyRoss, an 11-bed block of flats on sale by CPS Homes, and 16 other flats, houses and blocks of flats listed either as licensed HMOs or "investment opportunities" - and that's just within the Cathays area of Cardiff alone.
Director of lettings at JeffreyRoss Jon Hooper-Nash said: "Most of our clients seem to be facing a torrent of legislation changes and safety measures that landlords are having to put up with, with costs attached.
"With the growth that we see in Cardiff and south Wales, a lot of people buying these properties are owner-occupiers living in them, which has taken stock out of the rental market."
He said this has resulted in over 100 people enquiring for each property listed - a figure Mr Watkins said was closer to 150. Mr Hooper-Nash continued: "[The Renting Homes (Wales) Act] gives tenants more rights to their name which is a good thing, but when you have a landlord who is looking at a little nest egg, it has to become more of a business.
"We’ve seen the growth of the property market and a lot of landlords have gone ‘I’ll just sell it.’ Unfortunately that’s what we’re seeing."
With the values of these properties being so high, they do stay attractive as an investment. Mr Hooper-Nash said a good number of properties stayed in the market, but the number exiting the market combined with the current high demand is a worry.
He said it's especially a worry for students: "I’ve never known there to be as many students looking to rent as in the last 12 months. The rent is so high due to the lack of properties and the demand."
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Some students say they are having to stay in hotel rooms and Airbnbs while they wait for accommodation and pay high rent when they do find somewhere.
Rebecca Deverell, Cardiff Students Union's vice president welfare, said: "Our independent advice service has already seen over 100 students come forward to them saying they’ve got no accommodation and their course starts in September. For Erasmus and placement students here for a short period, who aren’t here as long as other students, they’re really struggling.
"In the private market in Cardiff properties are too expensive and there’s not enough to go around - the root of the problem is that there’s just not enough housing. Because Cardiff is so lively and students often find work opportunities here after graduating, they’re staying in the student houses they have been renting.
"Whilst there’s a lack of student housing there’s also a lack of care for students coming out of first year because they’re being taken up by students wanting to stay here as young professionals. With the cost of living as well, it’s becoming a desperate situation for students faced with either deferring their course or thinking about the financial aspect of whether they can go to university without a flat or a room to stay in."
For this reason, she spoke up in favour of the city's somewhat-controversial blocks of student flats, saying: "With student accommodation blocks, having a space where a student can study, feel safe, be social in groups with other students from Cardiff University or across Cardiff itself… having lived in one of those blocks myself, the community feel is much better.
"I’d rather a student had a bed and a place where they felt safe to study than students arriving with nowhere to go or having to face living in a hotel for a few weeks. If more blocks were to go up, that would help the strain."
Nathan Walker, sales director for Cardiff estate agent CPS Homes, shares the concerns of other landlords and lettings agents. He said: "The Government’s mission is to allow renters to get on the homeowner ladder, but the way they’re going about it is counterproductive. Turning landlords away from the rental market is causing a supply crisis at a time when demand continues to soar, resulting in rents going up, making it even harder for tenants to save for a deposit.
"Landlords in Wales feel like they’re under a sustained attack. In particular, those who let properties in the student market – which accounts for a large proportion of the HMOs provided across the city – believe they’re undervalued for the essential service they provide to a transient demographic."
He described the Renting Homes (Wales) Act as "the straw that broke the camel's back," and said it leaves landlords wondering what the next obstacle is. CPS Homes has noticed a trend in long-time landlords "opting to bow out under the mounting red tape."
He echoed Mr Hooper-Nash in saying new landlords are picking up the reins in established buy-to-let areas like Cathays.
Mr Walker added: "This concern is greatly reduced amongst the landlords for whom we manage properties as they recognise and appreciate that we have their best interests at heart, all whilst being here to buffer and support them."
The Renting Homes (Wales) Act comes into full force on December 1, 2022 and the Welsh Government's website describes it as the "biggest change to housing law in Wales for decades."
A Welsh Government spokesperson said: "The Renting Homes (Wales) Act 2016 will bring much greater transparency and consistency to renting a home, protecting the interests of both landlords and contract-holders.For the first time, landlords are required to provide to each renter a written statement containing all the rights and responsibilities of both parties, which will make things simpler and fairer. To help landlords ensure they include all mandatory terms and explanatory information, model written statements have been produced which they can choose to use if they wish."
But Mr Watkins reiterated that he doesn't feel the changes are making anything simpler. He said: "If there's such a massive demand, why aren't landlords stepping in to fill that gap in the market? Well, it's becoming far too complicated to be a landlord these days.
"It's year after year after year of more regulations and legislation. I'm supposed to know everything from Legionnaires' disease to you name it - it's insanely complex now."
He added: "The rental market is just in freefall. I try and keep some restraint on my rent increases and a lot of my long-standing tenants are on rent below the market value for sure. It's just gone ridiculous."
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