What Landlords in Wales should look out for in 2025

As we dip our toes into 2025, the Welsh property lettings market is poised for significant developments. Whether you’re a current landlord or considering becoming one, staying informed is crucial. Below, we outline the key changes and proposals that could shape the rental landscape in Wales this year.

1. Welsh Government support for ‘rent compensation’ scheme

Welsh Housing Secretary, Jayne Bryant, has supported a proposal that would see contract-holders retain their final two months’ rent if served with a six-month possession notice, essentially compensating them for having to vacate. The idea was first suggested within The Local Government and Housing Committee’s recent report, which identified the need for greater tenant protections in no-fault eviction cases.

It’s our view that imposing such financial burdens on landlords will be counterproductive. Landlords are already navigating a challenging landscape of rising tax obligations, increasing mortgage rates, and escalating repair costs. Adding extra expenses risks discouraging investment in the rental market, further reducing the supply of rental properties. This, in turn, could drive rents even higher – precisely the outcome these measures aim to prevent. We believe that increasing the supply of rental properties remains the most effective solution to stabilising rents and avoiding further market distortions. It’s crucial that any proposed legislative changes consider the long-term impact on landlords and tenants alike.

Welsh Government have stated that it will listen to stakeholder feedback, including responses to the proposed ‘compensation scheme’, before making any final decisions. An update is expected by the end of April 2025, and we’ll be monitoring developments closely to keep you informed.

2. Tackling a self-inflicted rent increase problem

Welsh Government are looking to resolve an issue it inadvertently created when drafting The Renting Homes (Wales) Act 2016.

Before the Act came into force, occupiers could challenge rent increases, with a tribunal determining whether the proposed rent aligned with market levels. However, since its enactment, contract-holders have had no formal recourse to dispute rising rents. Some landlords have taken advantage of this by issuing rent increase notices – requiring just two months’ notice – at levels they know tenants cannot afford. In some cases, this has become a faster way to regain possession of properties compared to serving a formal no-fault eviction notice, which requires six months’ notice.

By omitting an appeals process for rent increases, some believed Welsh Government were – perhaps refreshingly – trusting market forces to keep rents in check. However, our sources suggest that’s not the case, and a fix is on the horizon. If the right to appeal is reinstated, we hope it avoids the pitfalls of England’s proposed approach, where rent increases would be paused until a tribunal reaches a decision and not backdated. Given how long tribunal cases can take, this could mean rents sit below market level for a good while.

3. Could Wales Follow England’s Lead on Renters’ Rights?

The Renters’ Rights Bill (RRB), which is set to shake up the lettings landscape in England when it comes into force this Spring, could also shape future policy in Wales. While most of the Bill won’t apply directly to Wales (read on to find out which parts will), Welsh Government have shown interest in adopting certain elements, we’re told.

Key features of the RRB include:

• An end to no-fault evictions, except in exceptional cases, such as when a landlord intends to sell or move back in – which also come with strings attached.
• The abolition of fixed-term tenancies – meaning all tenancies will be periodic, and tenants will be able to leave with just two months’ notice.
• A ban on landlords taking more than one month’s rent in advance.

While nothing is confirmed, there are murmurs that Welsh Government are exploring ways to align their policies with these changes. Given that Labour now leads both Westminster and Cardiff Bay, this wouldn’t come as a surprise.

Learn more about the Renters’ Rights Bill.

4. Limited Effects of the Renters’ Rights Bill in Wales

Although much of the RRB applies only to England, one provision that will impact Welsh landlords relates to anti-discrimination measures. While most landlords already comply with anti-discrimination laws, it’ll be essential that they ensure their policies and practices align with these enhanced requirements.

5. Minimum Energy Performance Certificate (EPC) standards back in focus

After being scrapped by the Conservative UK Government, the proposal to raise the minimum EPC rating for rental properties to a ‘C’ by 2030 has been put back on the table by the Labour Government. There are plans to consult on the matter in 2025, with a view to legislating for improved energy efficiency in the rental sector.

Upgrading properties to meet a ‘C’ rating could require significant investment, especially for older buildings. As always, we’ll be across this topic as it develops and will communicate updates as and when they are released.

6. New Proposals from Welsh Government’s White Paper

In October 2024, the Welsh Government published its White Paper on Fair Rents, Adequate Housing, and Affordability, outlining potential future reforms. Among the key ideas floated were:

• More data collection: Landlords may need to submit annual rent data and property condition updates via Rent Smart Wales.
• Council guarantors: Local authorities could act as rent guarantors but only for unpaid rent, not damages.
• Pet insurance: Landlords may be allowed to request pet insurance payments from tenants.

While these proposals remain under consultation, they signal the Government’s intent to further regulate the rental market in Wales.

Stay ahead of the curve

2025 promises to bring change for landlords in Wales. Our team at Wisemove are here to help you stay informed and compliant with the latest developments. If you have any questions or concerns about how these changes might affect you, don’t hesitate to get in touch on 01656870640 or email enquiries@wisemove.org.