What's the point in Rent Allowance upper limits on actual rent?

runswithascript

I do not understand why the state chooses to set an upper limit on rent for the properties people can inhabit to qualify for Rent Allowance.

The upper limit for a single person in Dublin in €529. For a person to qualify for rent allowance in the first place they are most likely on Jobseeker's Allowance which is €200 or so.

If the single person wanted a bigger or nicer place and was prepared to do without something, adding say €50 a week to whatever else they are contributing from their JA to make up the difference between their Rent Allowance and actual rent, why should this bother the state?

Please understand I am not saying there should not be upper limits on Rent Allowance, just that I do not understand why there are upper limits on actual rent.

snubbleste

Well because the State says you have to have a minimum amount to live on, this is currently €188-€26= €162 for a singleton.

The State subsidises 50% of residential rents through rent supplement, therefore a maximum cap needs to be imposed. It is to try to mitigate the problem of landlords saying the rent is €100 whereas the rent the tenant pays is €150. This situation leads to further poverty for tenants reliant on the State and pushes up the rent for everybody

runswithascript

snubbleste wrote: »

The State subsidises 50% of residential rents through rent supplement, therefore a maximum cap needs to be imposed.

Can you elaborate on that? You go on to say why, which I'll get to, but can you explain how?

snubbleste wrote: »

It is to try to mitigate the problem of landlords saying the rent is €100 whereas the rent the tenant pays is €150. This situation leads to further poverty for tenants reliant on the State and pushes up the rent for everybody

What in setting an upper limit stops landlords and tennants pretending the rent is cheaper than it is, and surely the only reason they would lie in the first place would be because of an already existing cap? Though I guess some landlords would lie for tax reasons, but again, if they're going to lie they are not they going to lie, and what in setting a cap prevents this?

Again to be clear, my question is on why the cap on actual rent not rent allowance itself.

Maybe it is simply to keep half the market only able to afford a certain amount keeping the prices down?

snubbleste

Well the maximum cap needs to be imposed because the State is providing the funding, intervening in the private rental market, it wants to get the best value for money for the taxpayer. Ideally it would not intervene at all. It sets a floor for rents - if you are a landlord and the rent supplement guarantees €100, why would you charge less than that guaranteed €100?

The cap on rent is to prevent people who cannot afford housing out of their own resources being worse off then they should be, There is a minimum amount which people need to survive (means-tested), otherwise it can be viewed that the State is failing them.

What is stopping landlords and tenants paying a different rent than on the form is the fact it is an offence to give false information.

The Department sets rent limits as a means of controlling the level of expenditure on rent supplements. Different limits apply for different household types and different areas, reflecting the variation that occurs in market rents. In 2005, rent limits were generally at, or a little below, corresponding average market rates.
In practice, tenants (and landlords) have little incentive to agree rents below the rent limit levels. At end 2005, 84% of rent supplement recipients were paying rents equivalent to the relevant rent limit. Given the number of households dependent on rent supplement, and a combined expenditure on rent estimated at around €440 million a year, the Department should have considerable potential to influence market rents in certain segments of the market, through the rent limits it sets. http://www.audgen.gov.ie/documents/vfmreports/53_Rent_Supplements.pdf

runswithascript

snubbleste wrote: »

Well the maximum cap needs to be imposed because the State is providing the funding, intervening in the private rental market, it wants to get the best value for money for the taxpayer. Ideally it would not intervene at all. It sets a floor for rents - if you are a landlord and the rent supplement guarantees €100, why would you charge less than that guaranteed €100?

I see your point, I really do, but landlords are going to charge more than the guaranteed €529 if similar properties are renting for say €600 or €700.

snubbleste wrote: »

The cap on rent is to prevent people who cannot afford housing out of their own resources being worse off then they should be, There is a minimum amount which people need to survive (means-tested), otherwise it can be viewed that the State is failing them.

Being worse off by say, deciding for themselves how they should spend their own money? That sounds a lot like big government to me, and I'm not conservative.

Say Joe Taxpayer does not own a television set, drink, or smoke, or does without something else many others would not, and subsequently has an extra €50 to spend each week, I believe he should be able to decide for himself if can can put that towards a better standard of living.

snubbleste wrote: »

What is stopping landlords and tenants paying a different rent than on the form is the fact it is an offence to give false information.

snubbleste wrote: »

It is to try to mitigate the problem of landlords saying the rent is €100 whereas the rent the tenant pays is €150.

Okay, let me try ask it like this; you are saying one reason, or the reason, is to stop landlords saying rent is €100, when the actual rent is €150. You are citing this as the cause, and the reaction or effect as the upper limit, but therein is an abstract paradox, at least in my understanding. If the upper limit was brought in to curb the practice of landlord's lying, then before it was brought in, why would the landlords have reason to lie in the first place?

Also, I have still to read fully through the pdf you linked.