Rent setting practices of social landlords in Wales: summary

This research aimed to understand how social landlords in Wales set rents between 2020 and 2024, and to assess the impact of the Welsh Government’s Rent Standard cap.

To understand rent-setting decisions, the research team analysed self-certification monitoring returns submitted by social landlords in Wales to the Welsh Government. These returns were provided by the Welsh Government and compiled into a database to support both quantitative and qualitative analysis. The aim of this monitoring information (MI) analysis was to gain insight into how rent levels changed over time and the factors that influenced landlords’ decisions. Spatial analysis using Geographic Information System (GIS) helped further identify patterns of variation in rent-setting behaviour across local authority areas.

To further corroborate the findings of the MI analysis, secondary data from StatsWales on average weekly rents across different sized properties and local authority areas was assessed. This provided further insight into rent changes implemented between 2021 and 2025.

In addition, a narrative evidence review was carried out to compare rent-setting in Wales with approaches in the other UK nations and across OECD countries. This review aimed to identify best practices that could inform policy in Wales.

Rent-setting amongst social landlords 

Although individual rent increases varied between providers, most providers reported raising rents by the maximum permitted under the rent cap each financial year.

Spatial analysis demonstrated that some regions had rent increases slightly below the maximum permitted in a given financial year. For example, local authority areas in Mid-Wales and North East Wales had average rent increases slightly below the cap in the 2023/24 financial year.

Overall, there was little difference in the rent increases set by Registered Social Landlords (RSLs) and Local Authority Providers ^{[footnote 1]} (LAPs). The exception was the 2023/24 financial year in which LAP rents were on average 0.8 per cent lower than RSLs. 

Factors informing rent-setting decisions 

Qualitative analysis of the MI data identified several factors that shaped rent-setting approaches amongst social landlords.

The Living Rent approach used by landlords required them to consider local earnings and income when formulating their rents. Landlords also reported using local housing market data and Local Housing Allowance rates to help ensure rents remained affordable.

Social landlords aimed to ensure that tenant affordability was balanced against a number of financial considerations including:

• future new build and existing stock improvement costs
• increased operating costs such as increases in staff salaries
• cost reduction measures to ensure financial sustainability
• long-term business planning

Social landlords in Wales aimed to ensure that their housing offered tenants value for money. Although all landlords undertook some form of tenant engagement to ascertain this, specific practices varied across providers. Some landlords conducted bespoke engagement exercises to inform their rent-setting, while others relied on annual surveys and broader feedback tools to assess affordability and gather tenant input.

When setting rents, social landlords in Wales considered a range of future factors. These included potential changes in Welsh Government rent policy, future service charge costs, the impact of the Welsh Housing Quality Standard and the ongoing impact of economic pressures.

To support the primary data analysis, supplementary analysis was conducted using rent data from StatsWales. This confirmed that rent increases have been restrained in recent years despite rising living costs. Spatial analysis of average weekly rents by property size showed that rent increases were relatively consistent across Wales and proportionally similar across different property sizes.

There are significant differences in how social housing is regulated and how rents are set across the other nations of the UK.

In England, the introduction of affordable rent in 2011 resulted in many social rented tenants paying up to 80 per cent of the market rate for their social housing. For those tenants who still rent their property at a social rent, a formula that considers property value, property size and local earnings is used to determine their rent. A long-term rent settlement introduced by the UK Government in 2017 has limited rent increases for social housing tenants to Consumer Price Index (CPI) +1 per cent.

Unlike England and Wales, Scotland does not have a nationally driven rent-setting or rent increase policy for social housing. Scottish social housing providers are required to consult with tenants each year on proposed rent increases. Many landlords also undertake rent harmonisation exercises. In 2022, the Scottish Government introduced a rent freeze through the Cost of Living (Tenant Protection) Act, which effectively froze social housing rents until the end of March 2023. However, towards the end of 2022, Scottish Ministers reached an agreement with social landlords on implementing below-inflation rent increases for 2023–24.

Northern Ireland differs considerably from the rest of the UK as the Northern Ireland Housing Executive (NIHE) owns and manages nearly two-thirds of the total social housing stock. The NIHE uses a points-based rent system. In early 2024, the NIHE proposed a CPI+ 6 per cent annual rent increase over three years from 2025-26 to 2027-28 (equivalent to 7.7 per cent in year one), but this has not been approved. It is now expected that NIHE rents will follow the English model of CPI+ 1 per cent increases.

Social housing across Europe, including in the UK’s nations and regions, faces a number of shared challenges. These include increasing demand, a shortage of affordable homes, and the ongoing impact of the cost-of-living crisis. Like the UK, most European countries fund social housing through a combination of rental income from current tenants, borrowing, and external subsidies or grants. Recent research has found that cost-based rent-setting used in Austria, Denmark, and Finland can support rent affordability. However, effectiveness depends on how it is applied, with the model being more effective when applied at the organisational level over an extended period.

The analysis suggests the Rent Standard Cap helped control rents during recent years. Although no counterfactual was established through the research, the available evidence suggests that rents may have increased even further without a cap being in place.

It is inconclusive that adopting models from other nations and regions would improve affordability for tenants without major changes. This is due to the distinctive socio-economic conditions, legal frameworks, and rent-setting approaches that exist in Wales.

It is recommended that the Rent Standard Cap is reviewed and taken forward by Welsh Government as there is potential for affordability to be impacted without the cap being in place.

There was significant variation in how landlords engaged tenants in relation to the formulation of rents. It is recommended that Welsh Government work with the sector to develop a more consistent approach to tenant engagement.

To promote fairness, the Welsh Government should strengthen and clarify the Rent Standard to support more consistent rent-setting within areas and between social landlords.

It is recommended that further work is undertaken to identify best practice approaches that promote fair and affordable rents.

The monitoring data received from Welsh Government was of variable quality. To enable more consistent analysis of rent-setting data in future, further efforts should be made to improve and standardise the information collected from these monitoring returns.

The findings of the research caution against radically changing the rent-setting model in Wales. However, Welsh Government should continue to engage with and be mindful of alternative approaches, considering and evaluating if these can inform future improvements in Wales.

[1] This refers to the 11 stock holding local authorities that provide social housing in Wales.

Report authors: Jonathan Webb, Robert Smith and David Leather

Views expressed in this report are those of the researchers and not necessarily those of the Welsh Government.

For further information please contact:
Housing Research Team
Knowledge and Analytical Services 
Welsh Government
Cathays Park
Cardiff
CF10 3NQ

Email: HousingReseachTeam@gov.wales

Social research number: 84/2025
Digital ISBN: 978-1-80633-358-5