Wales Longitudinal Study Wave 3: Investment & the Welsh PRS

Introduction

The Wales Longitudinal Study (WLS) continues to uncover vital insights into the Welsh Private Rented Sector (PRS). Building on Waves 1 and 2, this third instalment dives into the challenges and opportunities of investment in Wales, exploring how financial and regulatory pressures influence landlords' decision to buy, sell, or upgrade properties.

In a landscape shaped by economic uncertainty, regulatory reform, and sustainability demands, the Wave 3 report highlights landlords' own proposals for making the PRS in Wales a more attractive investment opportunity.

 

About the study

The WLS is an ongoing research initiative conducted by the National Residential Landlords Association that engages landlords across Wales to understand the evolving impact of economic and legislative changes. Wave 3 centres onm encouraging investment in the Welsh PRS, including property upgrades, energy efficiency upgrades, and portfolio expansion. 

Landlords were asked to propose solutions they believe could make the PRS in Wales more attractive and would encourage them to invest. The suggestions and proposals outlined in the report reflect the views of participating landlords - they are not necessarily endorsed by the NRLA.

Methodology & analysis

This research wave combines qualitative insights from four focus groups and three in-depth interviews conducted between July and August 2024. Participants were drawn from a diverse cross-section of landlords, ranging from single property owners to full time landlords managing portfolios of multiple properties across both urban and rural areas. 

Analyis was supported by the AI platform Wordnerds. This AI tool delivers robust sentiment analysis and thematic categorisation to identify key trends and actionable insights. It allows researchers to identify key responses and attitudes from small numbers of respondents.   

Key themes in Wave 3

The themes discussed in this round of conversations included:

• Taxation and financial pressures: The impact of Land Transaction Tax, Section 24, and other tax policies on investment decisions in the PRS.
• Energy efficiency and EPC targets: The challenges of upgrading older housing stock to meet evolving EPC standards and the role of financial incentives.
• Regulatory impact: The ongoing effects of the Renting Homes (Wales) Act and the complexities introduced by new compliance requirements.
• Short-Term lets: The rise of short-term lets as an alternative to long-term rentals due to favourable tax treatment and lower regulatory burdens.
• Landlord Confidence: Insights into the factors driving divestment, cautious strategies, and resilience among landlords.

Key findings

1. Declining confidence: Many landlords are adopting a "wait-and-see" approach, with some actively divesting due to rising costs and regulatory burdens.
2. Barriers to investment: High upfront costs, including Land Transaction Tax, and ongoing financial pressures, such as the loss of Mortgage Interest Relief, are deterring new investments.
3. Energy efficiency challenges: Landlords face significant obstacles in meeting energy efficiency standards due to the high cost of upgrades and inconsistent guidance across local authorities.
4. Short-term lets: The rise of short-term lets due to a favorable tax treatment and lower regulatory burdens make them an attractive investment alternative to long-term rentals.

Get involved

Are you a landlord with properties in Wales? Join future waves of this ongoing research project and help shape the future of the PRS in Wales. Contact the NRLA research team to participate.