Letting agents have warned that stifling rental home supply in Wales through higher taxes or by landlords passing on costs to tenants could jeopardise the PRS.

It follows the Welsh Government’s decision to introduce a 1% increase across all bands for Land Transaction Tax when buying an additional residential property in the country.

The Senedd has approved its Final Budget which contains the measure, along with proposals designed to help those with the greatest housing needs and to stop homelessness.

It increased Housing Support Grant funding for 2025-26, which has been ringfenced to local authorities and approved a £21million increase to bring the final level of funding up to £204million.  

The industry body Propertymark said although it supports these homelessness measures, it disagrees with the decision to increase Land Transaction Tax.

It believes implementing more financial penalties for landlords is counterproductive as this could further thwart the supply of rental homes, and cause rents to increase.  

Tim Thomas, of Propertymark, said: “Stifling the supply of homes to rent in Wales through higher taxes or ensuring landlords pass on these costs to tenants through higher rents will not help renters with the cost of living or ensure a viable private rented sector in Wales.”

Recent data from Rent Smart Wales found that the Welsh private rental sector has lost a worrying 1,107 landlords in the last five years, coinciding with tougher rules around evictions and new tenancy agreements.   

Last month the Welsh Government dealt another blow to landlords when it agreed to let renters keep the last two months of their rent as compensation when experiencing a no-fault eviction, for instance where a landlord needs to sell or move back into their property.

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