Government to cut rent supplement

Rabidlamb · 16-01-2012 1:52pm #1

http://www.rte.ie/news/2012/0116/rent.html

The reductions in rental payments to landlords by social welfare tenants will amount to as much as €270 a month in some parts of the country.

The Government aims to save €22m a year on its €500m annual rent bill, which is paid to landlords for social welfare tenants.

Minister for Social Protection Joan Burton said letters are being issued advising welfare tenants of the new maximum levels for their rental supplements when their lease is due for renewal.

€22m is far less a cut than many had feared although the €270 figure quoted would seem disproportionate.
Perhaps it's being weighted higher in more expensive areas.

Permabear · 16-01-2012 1:57pm

This post has been deleted.

antoobrien · 16-01-2012 4:35pm

Rabidlamb wrote: »

http://www.rte.ie/news/2012/0116/rent.html

€22m is far less a cut than many had feared although the €270 figure quoted would seem disproportionate.
Perhaps it's being weighted higher in more expensive areas.

They'd do better looking at what they're renting for their own use. The HSE are renting dozens of buildings in Galway, while buildings and facilities that they already own are not being used. A house bought in 2000 for 400k, which was supposedly for use by the Regional Occupational Health Service, was still empty 9 years later.

Bullseye1 · 16-01-2012 7:40pm

How much on average (per month) are people getting on rent allowance? I recall one poster mentioning €600. Can it really be that high?

Dirk Gently · 16-01-2012 7:55pm

About time landlords dole was cut. Just seen a property owner rep on the news make an extraordinary statement.... " It's unacceptable that the state can artificially lower the market rate". Wtf?

It's acceptable that the state can keep filty bedsits artificially high though, pricing some working people out of renting because of the huge allowances.

gurramok · 16-01-2012 8:01pm

Bullseye1 wrote: »

How much on average (per month) are people getting on rent allowance? I recall one poster mentioning €600. Can it really be that high?

New rates.
http://www.citizensinformation.ie/en/social_welfare/social_welfare_payments/supplementary_welfare_schemes/rent_supplement.html

Its gone down alright. Off the top of my head(for DCC area), it was 930 for a couple or one parent family, now 875.

Couple with no kids has gone down from 800(i think) to 700.

A couple with 3 children or one parent family with 3 kids its gone down from 1100 to 950.

From reductions in previous years, this time the cities have been targeted in a meaningful way. Previous reductions were just a few euro.

Bullseye1 · 16-01-2012 8:03pm

gurramok wrote: »

New rates.
http://www.citizensinformation.ie/en/social_welfare/social_welfare_payments/supplementary_welfare_schemes/rent_supplement.html

Its gone down alright. Off the top of my head(for DCC area), it was 930 for a couple or one parent family, now 875.

Couple with no kids has gone down from 800(i think) to 700.

A couple with 3 children or one parent family with 3 kids its gone down from 1100 to 950.

From reductions in previous years, this time the cities have been targeted in a meaningful way. Previous reductions were just a few euro.

Are these payments made indefinitely? How can the rest of the population be expected to subsidise this going forward?

gurramok · 16-01-2012 8:10pm

Bullseye1 wrote: »

Are these payments made indefinitely? How can the rest of the population be expected to subsidise this going forward?

People(95,000) have been on RS for years, the bill rising to over 500m euro straight into the hands of private landlords. RS controls 50% of the private rental sector market hence huge distortion against working people who rent.

Attached are the rates for 2010 & 2011.(swiped from Victor;))http://www.welfare.ie/EN/Press/PressReleases/2010/Pages/pr100610.aspx

n97 mini · 16-01-2012 8:18pm

A friend is a landlord. Not only is the Rent Supplement being reduced but the tenants have been told that unless the rent itself is below €850 that they won't pay the RS (currently €790) at all.

Rabidlamb · 16-01-2012 8:22pm

Jaysus, Kildare has been severely cut.
Family with 2 kids was €1,110 in 2009, now €725 if I'm reading those right.

bbsrs · 16-01-2012 8:39pm

Why are people on rent supplement not moved to houses under nama control instead of giving out RS or is it not that easy?

hmmm · 16-01-2012 9:07pm

bbsrs wrote: »

Why are people on rent supplement not moved to houses under nama control instead of giving out RS or is it not that easy?

Because in theory NAMA are supposed to be trying to sell those houses to recoup the money the taxpayer has put in to buying them in the first place. The houses are not "free", they are a valuable asset for the taxpayer.

Now if NAMA ever got the finger out and started selling them, the above would make sense.

Alwayson · 16-01-2012 9:13pm

bbsrs wrote: »

Why are people on rent supplement not moved to houses under nama control instead of giving out RS or is it not that easy?

Would you like cattle trains to be used to move the people? I am on rent supplement because I've been unemployed for 3 years and ran out of money. I didn't apply until that happened. I have two kids living with me. When I was working my rent was 1300, I gradually negotiated it down to 930 with the landlord and now I'll have to ask him to bring it down to 875. And if he doesn't agree, I'll lose the entire supplement and we'll have to move out. I think the tenants are a pawn between the government and the landlords - its the tenants who are getting the letters from Social Protection about the cuts, so I assume we are expected to confront the landlords, not the SP.

thebman · 16-01-2012 9:30pm

Rabidlamb wrote: »

Jaysus, Kildare has been severely cut.
Family with 2 kids was €1,110 in 2009, now €725 if I'm reading those right.

If you look on daft, that is about right TBH.

cast_iron · 16-01-2012 9:43pm

Alwayson wrote: »

I think the tenants are a pawn between the government and the landlords - its the tenants who are getting the letters from Social Protection about the cuts, so I assume we are expected to confront the landlords, not the SP.

Which makes perfect sense. It's the tenant that applied for the supplement, not the landlord. The landlord has the choice to do as he pleases, as he owns the place in a private capacity. The tenant is reliant on the state, so his contract (so to speak) is with them, and it's this agreement that is being altered.

Icepick · 16-01-2012 9:49pm

This is a good start.
1 and 2 beds are still overpriced (in Dublin) because of RA.
The state controls about 40% of the rental market and should do more with such enormous market power.

COYW · 16-01-2012 10:01pm

Icepick wrote: »

This is a good start.
1 and 2 beds are still overpriced (in Dublin) because of RA.
The state controls about 40% of the rental market and should do more with such enormous market power.

Hopefully, these cuts will cause rents to go down in the major cities. Rent allowance has been killing the rental market for far too long. It was the base rate for years. 1 beds are particularly overpriced across the board.

Bullseye1 wrote: »

Are these payments made indefinitely? How can the rest of the population be expected to subsidise this going forward?

Of course they are. Once you are in receipt of RA, it doesn't reduce or stop, unless your situation changes of course.

Alwayson · 16-01-2012 10:25pm

cast_iron wrote: »

Which makes perfect sense. It's the tenant that applied for the supplement, not the landlord. The landlord has the choice to do as he pleases, as he owns the place in a private capacity. The tenant is reliant on the state, so his contract (so to speak) is with them, and it's this agreement that is being altered.

In yesterday's Irish Times Joan Burton said that "she was aware of the difficulties that landlords faced, but said she was also sure landlords could understand that the Government had to look for savings...We’d like to see the Department and the taxpayer getting good value for money from landlords, from providers of accommodation, in relation to those 97,000 people who are supported on rent allowance.” The Government clearly has landlords in its sights, but is in a position to use the tenants to do the negotiation on its behalf.

thebman · 16-01-2012 10:43pm

Alwayson wrote: »

In yesterday's Irish Times Joan Burton said that "she was aware of the difficulties that landlords faced, but said she was also sure landlords could understand that the Government had to look for savings...We’d like to see the Department and the taxpayer getting good value for money from landlords, from providers of accommodation, in relation to those 97,000 people who are supported on rent allowance.” The Government clearly has landlords in its sights, but is in a position to use the tenants to do the negotiation on its behalf.

Did they not introduce a household charge, isn't that going directly after landlords?

What do you want them to do, negotiate rents on the rent allowance recipients behalf?

Alwayson · 17-01-2012 12:11am

thebman wrote: »

Did they not introduce a household charge, isn't that going directly after landlords?

What do you want them to do, negotiate rents on the rent allowance recipients behalf?

The Social Protection doesn't negotiate, they publish a limit which is non negotiable. The tenant and the landlord are left to negotiate something which is non negotiable. This doesn't add any value to the process. The SP has the landlords PPS and they know how much rent they are charging the tenant. If they want the landlord to lower this, I don't see why they can't write directly to him and tell him. If he agrees, the SP continues to pay the tenant a rent supplement, at the reduced rate. If the landlord doesn't agree, then the SP reduces the rent supplement to ZERO, leaving the tenant with no choice but to leave the property.

What actually happens is that the Social Protection sent me rent review forms in May, then again in Dec and in both cases I sent these onto the landlord to confirm the rent. SP then reduced the rent limits in January, so when the Dec form comes back it will be rejected for being over the limit, I will be sent a new set of forms which I will fill in again, send to the landlord again in the hope he will agree to the reduced amount, and when I get those back for the second time I will send them to Social Protection. Lots more form filling, form checking and paper consumption than if the Social Protection contacted the landlord directly.

Bullseye1 · 17-01-2012 1:34am

It's funny how the government has landlords who provide accommodation to LA tenants but they are doing nothing about upward only rents on commercial properties.

A Disgrace · 17-01-2012 2:23am

There is confusion (amongst people who don't recieve Rent Supplement) as to what the entitlements actually are.

Some people here see 'single person living alone in Dublin, maximum rent supplement- €530' and assume they get €530 per month towards their rent. They don't. They get €530 minus their contribution, which roughly works out as €410 per month towards the rent, the rest they pay themselves.

Since the changes, the same person, now only gets €475 towards the rent, and has to contribute more per week. And if their monthly rent is greater than €475, then they are no longer entitled to any supplement.

My feeling on this is that some landlords will renegotiate, but most won't. Remember a lot of them have mortgages that are greater than the rent they take in, so it's not in their interest. So, we'll have a glut of evictions, people leaving homes they've lived in for years, and overall rents staying the same

A much fairer way (for unemployed tenants anyway) would have been to increase their contributions even more. I think most people on Rent Supplement would take that now, but instead it seems we have a government decision based on improving the property market, whilst making the cuts they needed in Social Protection the easy way.

There's a minor ground-swell about this developing, and it'll only get worse once people start receiving the letters. It could get interesting and I wouldn't rule out some sort of review of the whole thing.

gurramok · 17-01-2012 10:19am

A Disgrace wrote: »

My feeling on this is that some landlords will renegotiate, but most won't. Remember a lot of them have mortgages that are greater than the rent they take in, so it's not in their interest. So, we'll have a glut of evictions, people leaving homes they've lived in for years, and overall rents staying the same

If they do evict, who will be the new tenants? There are not queues of tenants waiting to fill the gap. Remember alot of those landlords who run old bedsits are more likely to be mortgage free or have tiny mortgages, each landlord's financial position is different.

A Disgrace wrote: »

instead it seems we have a government decision based on improving the property market, whilst making the cuts they needed in Social Protection the easy way.

Its about improving the lives of workers who are paying extortionate rents to compete with welfare tenants and its about saving taxpayers money. Nothing to do with 'improving the property market'.

murphaph · 17-01-2012 1:48pm

gurramok wrote: »

If they do evict, who will be the new tenants? There are not queues of tenants waiting to fill the gap. Remember alot of those landlords who run old bedsits are more likely to be mortgage free or have tiny mortgages, each landlord's financial position is different.

That's an interesting point. I have RS tenants in D15, in a modern (1990s) property. I have a managable mortgage on the place as I bought well before the peak and never bought it as an investment (used to live in it), so have room to reduce the rent a bit (have done with previous reductions in RS as my tenants are good and worth keeping) but I reckon many of the better properties (built 2000->) could have substantial (investment: read higher interest rates) mortgages on them and these are the ones that will see evictions as landlords are forced to give up trying to cover mortgages from their own pay/dole.

Could we see a situation where owners of grotty bedsits (who are more likely to be mortgage free) can keep their rent steady (it'll still be cheaper than a nice 3 bed house) due to demand from tenants evicted from suburban properties by bankrupt landlords?

Interesting times ahead.

n97 mini · 17-01-2012 2:04pm

murphaph wrote: »

Could we see a situation where owners of grotty bedsits (who are more likely to be mortgage free) can keep their rent steady (it'll still be cheaper than a nice 3 bed house) due to demand from tenants evicted from suburban properties by bankrupt landlords?

Interesting times ahead.

Indeed. One thing I know is happening is people are moving from the more expensive counties to some of the better value counties as their RS, even though lower, goes further. For example €450 will rent you something bigger/nicer in Leitrim than €750 will Fingal. I know three people who have done this in the last six months. It's a form of welfare tourism I suppose.

A Disgrace · 17-01-2012 3:23pm

gurramok wrote: »

Its about improving the lives of workers who are paying extortionate rents to compete with welfare tenants and its about saving taxpayers money. Nothing to do with 'improving the property market'.

To say that private rents are high because of rent allowance is wrong. Only about 15% of landlords accept rent allowance in the first place, so I find it very hard to believe that such a minority are suddenly responsible for the high rents in this country.

I paid €1100 a month for a 1-bed appartment four years ago, roughly about double the maximum limit of Rent Supplment at the time. Rent Allowance has very little affect on overall rents. The only place where it might have some influence, is on bedsits and studios which are over-priced

gurramok · 17-01-2012 4:45pm

A Disgrace wrote: »

To say that private rents are high because of rent allowance is wrong. Only about 15% of landlords accept rent allowance in the first place, so I find it very hard to believe that such a minority are suddenly responsible for the high rents in this country.

I paid €1100 a month for a 1-bed appartment four years ago, roughly about double the maximum limit of Rent Supplment at the time. Rent Allowance has very little affect on overall rents. The only place where it might have some influence, is on bedsits and studios which are over-priced

Wrong. Rent Supplement controls 50% of the private rental sector market. Some RS tenants are long term(like some of my neighbours) hence lack of adverts.

You paid 1100 as a single person for a 1bed, the RS limit was about the same for a couple for a 1bed at the time. RS allocation is based on number of humans claiming, not on the number of beds needed.

snubbleste · 17-01-2012 4:48pm

A Disgrace wrote: »

To say that private rents are high because of rent allowance is wrong. Only about 15% of landlords accept rent allowance in the first place, so I find it very hard to believe that such a minority are suddenly responsible for the high rents in this country.
I paid €1100 a month for a 1-bed appartment four years ago, roughly about double the maximum limit of Rent Supplment at the time. Rent Allowance has very little affect on overall rents. The only place where it might have some influence, is on bedsits and studios which are over-priced

There is no question that taxpayer-funded rent supplement distorts the private rental market, it creates an artifical floor for rents throughout the State.
An exception would be where the supply of accomodation exceeds demand such as in rural Mayo, asking rents have fallen well below the local maximum ceilings for rent supplement.

Nothingbetter2d · 17-01-2012 4:53pm

the government should just move all those getting RA into Nama controlled housing and force the private sector landlords to drop the rent prices & upgrade those grotty little bedsits into proper flats with all the basic amenities in order to be able to find tenants

antoobrien · 17-01-2012 5:05pm

Nothingbetter2d wrote: »

the government should just move all those getting RA into Nama controlled housing and force the private sector landlords to drop the rent prices & upgrade those grotty little bedsits into proper flats with all the basic amenities in order to be able to find tenants

There is a legal minimum standard for rented accommodation, so the people in those grotty bedsits should be reporting the landlords to the PRTB.

cast_iron · 17-01-2012 5:25pm

Nothingbetter2d wrote: »

the government should just move all those getting RA into Nama controlled housing and force the private sector landlords to drop the rent prices

Basically turn NAMA into a social housing body?
I think someone above said it too, but that's not what NAMA was set up for, and would end up costing alot to the taxpayer more if that's the path it took. It's there to sell the assets it bought, and unless it does this, the tax payers face (even bigger) losses on the whole property collapse debacle.

Icepick · 17-01-2012 8:37pm

I also find it ridiculous that:
1, RA is paid in cash to the claimant and it's their duty to pay the landlord. If they don't pay, the landlord has to go through a gruelling eviction process, which costs time and money.
2, Database of landlords with RA tenants is not compared with PRTB and Revenue databases to identify tax evaders

A Disgrace · 17-01-2012 9:33pm

If this move reduces rents across the board, then I'll be happy. I simply do not see it happening though. And with people renting rather than buying now, surely that'll only drive prices higher?

woodoo · 17-01-2012 9:38pm

Icepick wrote: »

I also find it ridiculous that:
1, RA is paid in cash to the claimant and it's their duty to pay the landlord. If they don't pay the landlord has to go through a gruelling eviction process, which costs time and money.

Yeah that needs to change.

MagicSean · 17-01-2012 9:42pm

Hopefully this will be repeated in 6 months.

jased10s · 17-01-2012 10:31pm

nama is a joke and an old boys bailout club.
It does not know it's arse from it's elbow.

My partner deals with nama everyday and she is so frustrated by them.

Tragedy · 18-01-2012 1:44am

Can anyone clarify the "50% of the market is controlled by RS"?

The figures I could find on total amount of people renting in Ireland were very fuzzy, and seemed to indicate that there were 200,000 HOMES registered with PRTB, not 200,000 tenants. This would make the % of the market 'subsidised' by rent supplement much, much smaller.
Also, why no estimates for unregistered renters? Most people that I know of in College in Limerick were renting and only a handful in accommodation registered with the PRTB, and those in college accommodation also wouldn't be counted.
Similar story in Dublin(though a vastly higher proportion living at home, obviously). Also know plenty of working people renting off the books.

I really don't buy this 50% figure, and I honestly don't feel that these cuts will have anything but a negligible impact on rental prices - they'll have more than a negligible impact on a lot of lives though.

Also, could anyone explain why single people sharing in Dublin had their RS cut by almost 25% yet plenty of others seemed to get off easy?

gurramok · 18-01-2012 9:45am

Tragedy wrote: »

Can anyone clarify the "50% of the market is controlled by RS"?

I really don't buy this 50% figure,

http://www.dsfa.ie/GA/Press/PressReleases/2010/Pages/pr100610.aspx?cssFont=Contrast

“The Department of Social Protection funds approximately 50% of the private rented accommodation in the country and with that level of influence on rents, it is essential that the maximum rent limits for rent supplement reflect real prices so that landlords are charging a fair rent and the State pays a fair price,” Minister Ó Cuív stated today (10th June 2010).

“Our priority is to ensure that the 95,000 households supported by rent supplement can secure quality accommodation at a fair rent and that landlords are not charging artificially high rents. Reducing the rent supplement rent limits to reflect real prices will assist us to do that and will promote a fair rent.

snubbleste · 18-01-2012 1:56pm

Could someone clarify this scenario?
The Dept. have imposed lower maximum rent supplement ceilings and increased the minimum contribution the tenant has to make by €6 (€11 for a couple).
In the Dáil last year, the Minister stated that if there was an increase in the tenant's minimum contribution by €5pw would save the State €25m. As it happens the increase is far more.

So does the lowering of the ceilings save the Dept. another €22m on top of that?

djpbarry · 18-01-2012 3:12pm

gurramok wrote: »

“The Department of Social Protection funds approximately 50% of the private rented accommodation in the country...

This figure doesn't make sense to me either. For example, €500 million is alleged to have been spent by the state on rent supplement in 2009. If 95,000 properties are in receipt of the supplement (granted, I’m mixing figures from different points in time), that works out at an average of just under €440 per household per month. I find it very hard to believe that this is sufficient to cover the rent on half the private rented accommodation in Ireland.

Furthermore, as far as I am aware, people renting properties from local authorities can claim rent supplement, so there’s no reason to believe that all of that €500 million went to private landlords.

gurramok · 18-01-2012 3:41pm

djpbarry wrote: »

This figure doesn't make sense to me either. For example, €500 million is alleged to have been spent by the state on rent supplement in 2009. If 95,000 properties are in receipt of the supplement (granted, I’m mixing figures from different points in time), that works out at an average of just under €440 per household per month. I find it very hard to believe that this is sufficient to cover the rent on half the private rented accommodation in Ireland..

Houseshares and rural dwellings?

djpbarry · 18-01-2012 3:57pm

gurramok wrote: »

Houseshares and rural dwellings?

What about them?

antoobrien · 18-01-2012 4:01pm

djpbarry wrote: »

What about them?

1 person in a house/aparment share means that the property would be counted as a dwelling getting a payment

gurramok · 18-01-2012 4:02pm

djpbarry wrote: »

What about them?

Perhaps they contribute to the 'low' figure in response to your statement?

that works out at an average of just under €440 per household per month. I find it very hard to believe that this is sufficient to cover the rent on half the private rented accommodation in Ireland.

djpbarry · 18-01-2012 4:23pm

antoobrien wrote: »

1 person in a house/aparment share means that the property would be counted as a dwelling getting a payment

It sure would, but gurramok is telling us that 50% of the entire rental market is covered by rent supplement. Now, I don’t know whether that’s 50% of the value or the volume, but I don’t see how €500 million could possibly cover either.

djpbarry · 18-01-2012 4:23pm

gurramok wrote: »

Perhaps they contribute to the 'low' figure in response to your statement?

I still don’t know what you’re getting at – see my post above.

gurramok · 18-01-2012 4:39pm

djpbarry wrote: »

I still don’t know what you’re getting at – see my post above.

Write to the Minister if you need clarification or do not believe the figure.Also RS is based on the amount of humans claiming than how many beds you need.

djpbarry · 18-01-2012 4:43pm

gurramok wrote: »

Write to the Minister if you need clarification or do not believe the figure.

I don't need to - it quite clearly doesn't add up.

I seem to recall challenging you on this 50% figure before - are you still going to stick by it even though, based on the available data, it clearly doesn't make sense?

gurramok · 18-01-2012 4:55pm

djpbarry wrote: »

I don't need to - it quite clearly doesn't add up.

I seem to recall challenging you on this 50% figure before - are you still going to stick by it even though, based on the available data, it clearly doesn't make sense?

I'd rather stick by an official figure than one that maybe made up on a forum. What figure do you think it should be?

antoobrien · 18-01-2012 5:15pm

djpbarry wrote: »

I don't need to - it quite clearly doesn't add up.

I seem to recall challenging you on this 50% figure before - are you still going to stick by it even though, based on the available data, it clearly doesn't make sense?

It'd be interesting to see how much RS is being paid to people in shared accommodation vs renting the property. If the majority of the money is being paid for a room in a house share, it'd distort the average figure (which I think is the point that gurramok is attempting to make).

ardmacha · 18-01-2012 5:15pm

50% of the rental may (or may not) be covered by RS. But it is unevenly distributed. RS may have little or no relevance to rents in D4, but considerable relevance in D11. Google employees may not really be in competition with those receiving RS, so there may be an impact on the market.

Government to cut rent supplement

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