Maman Poulet | Clucking away crookedly through media, politics and life

Rent Allowance cuts and government attacks on tenants

April 7th, 2009 · 9 Comments · Irish Politics, Recession

Well it’s no surprise that our government are cowards but reading the fine print of the social welfare cuts I can’t believe the measures outlined in reference to rent allowance and the way tenants are being manipulated in an effort to reduce the social welfare spend and again landlords are being let off the hook.

Changes are being made to the Rent Supplement scheme to achieve savings of €50 million in 2009 and €78 million in 2010.
-Entitlement is being restricted to individuals who have been an existing tenant for at least six months or who have been placed on a local authority housing list following a full housing assessment. This measure is intended to avoid people moving into private rented accommodation simply because of the availability of Rent Supplement. -The minimum contribution that recipients of Rent Supplement & Mortgage Interest Supplement make towards their rent or mortgage is being increased from €18 to €24 per week (This will bring rent supplement contributions more in line with local authority differential rents).
-The maximum rent limits that will apply to new Rent Supplement payments are being reduced to reflect reductions in private rent levels in recent months. Reductions will be 6% to 7% on average, ranging up to 10%, depending on the geographical area and household size.
-In order to encourage landlords of existing rent supplement tenants to reduce their rents given the reductions in the market as a whole, the payments currently being made to tenants are being reduced by 8%. While tenants are contractually obliged to pay the rent agreed to in their lease, it is hoped that landlords will decrease the rent in recognition of the fact that rents have fallen generally and that there are now a large number of vacant rental properties nationally.

In order to encourage landlords to reduce rent the Government is reducing the rent allowance by 8 percent and increasing the amount tenants must contribute. And they are expecting tenants to do the negotiating to get their rent decreased! Incredible!

It’s so astonishing it’s worth paraphrasing and repeating –  Limits are being reduced creating ghettos and allowances being paid are also being reduced and rental contributions from tenants are being increased – a triple whammy.

As I said previously rents on properties in the rent allowance sector are not falling as quickly as they are in other areas of the market. Rents outside of Dublin are not falling as quickly either.  Finding a property and landlord which accepts rent allowance is very difficult no matter how much rents are falling due to issues of tax avoidance and landlords not wishing to rent to people in receipt of social welfare payments.

Unless discrimination against tenants who receive rent allowance is barred (and this is very unlikely as property owners rights remain sacrosanct!) we will see tenants becoming homeless and living on even lower incomes as they become afraid to raise the issue with landlords in case they are unsuccessful or are unable to find somewhere else to live.

Landlords and developers still remain protected. And apartments will remain empty and sites unfinished and the homeless list growing as no money will be available for social housing.

And oh yes landlords still get €500million in tax relief on their mortgage interest after today’s budget. Fairness!

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9 Comments so far

  • SeanR

    I feel like saying shite and onions. This budget is completely disasterous for the reasons you outline and others. Lenihan was shown on Primetime to not have clear grasp of his brief and Bruton ran rings around him. Lenihan balefully smiled about fairness, but was out of his depth.

    Later in the programme (ok I switched to Scrubs for authentic entertainment!) I think Joan Burton alluded to something similar to the problem you identify (above) in relation to mortgage reliefs for ordinary punters versus properties which are bought to let. Property owners/ renters are getting away with it. Homelessness will increase again, and people are being codded with the idea that the budget isn’t as bad as it could have been. Wait til the next fecking budget, you FF muppets… the scam in this one is nothing to do with economics, it is to minimize the ‘electoral damage’ to the soldiers of density party BEFORE the Euro elections. After the June poll, all bets will be off and Cowen’s glove puppet will be at it again!

  • barratree

    “In order to encourage landlords to reduce rent the Government is reducing the rent allowance by 8 percent and increasing the amount tenants must contribute. And they are expecting tenants to do the negotiating to get their rent decreased! Incredible!”

    As opposed to a centrally demanded nationwide rent cut? Rents have fallen if not as quickly as house prices. landlords are hardly in a position to throw out tenants who raise the issue – who exactly is going to take their place? Demand ain’t really that high and some rent is better then none.

    And yet you admit that there is mass vacancy of housing (c9.2 per cent in Dublin as per CSO 2006 statistics – most definitely increased). The idea that we’ll suddenly see hundreds more on the streets really lacks creditability for me.

    B

  • Maman Poulet

    Barratree,

    Threshold and housing and homeless agencies continue post Celtic Tiger to report difficulties for tenants in accessing housing no matter how many housing units are vacant. The RAS scheme is the tip of the iceberg in this regard in providing housing for those in receipt of the allowance and for example yesterday we saw 30milion in cuts announced for Dublin City Council so there will be no new staff available to expand the scheme. At least under the RAS the negotiating for a lower rent will not be the tenants responsibility!!!

    PPP is an absolute failure in addressing the provision of social housing . There is no housing policy in the state and the numbers on the local authority housing list grow each year.

    For parents and people with disabilities on social welfare who are in the private rented sector (through no fault of their own – there is not enough housing for them in the public sector and no/little attempt to provide it!) there are double disadvantages in finding housing that is suitable and will take rent allowance.

    Penalising tenants and not addressing their housing need or quality of housing whilst rewarding landlords with tax relief on mortgage paid does not a housing policy make.

    What advice will the government give to tenants in how to negotiate a lower rent? Will the PRTB be involved or permitted to be involved to assist tenants to reduce rent?

  • Caromom

    The whole “bludget” was a farce – and a total exercise in delusion – both in the sense of trickery and an inability to feel the pain of the average Irish person at the moment. How can they state they are leaving social welfare payments alone but in the same breath say that they will no longer pay the Christmas bonus – that in itself is a 2% reduction there and then? What sense does it make to have so many properties empty and/or unfinished and then target the tenant population for more money? Surely it would make more sense to re-introduce some sort of certificate of reasonable valuation and for properties for rent? As for the assertion that Child Benefit will be either taxed or means-tested – while I can see the logic of taxing it to some extent, in that it is a blanket payment regardless of income, how much time and money will be taken up in means testing everyone in the country who is entitled to Child Benefit? And just exactly how has this bludget targeted the people who are the top earners in this country, the self-employed including the property developers? Can you please tell me exactly how those people who have made an absolute killing on the property market over the boom years are now going to be made pay for the situation we are now in? The whole thing just sickens me. Life is beginning to feel rather Dickensian and I for one expect “more”.

  • SeanR

    Ah Caromom, I’m with you on this. People will want more, and they’ll let the govt know that come the Euro elections! But as I said above, the govt held the really bad stuff back until the next budget (probably due for July 2009 at this rate!) so as not to completely melt the FF vote into some the PDs would be proud of. I’ve a nice shiny voting pencil at the ready…

    MP, I’m with you on the delusional policies about social housing. Firstly, many adverts of property to let (we’re looking!) refuse rent allowance entirely, which they should not be allowed to do.

    Secondly, as an observer, I don’t detect much “give” in rentals of studios, etc. Where rentals seem ‘reduced’, they’re in crappy areas of the city. If anything, I detected a bit more stringency from some property owners (who might have had bad experiences), as some adverts cited how tenants should have bank accounts, speak English or not remove furniture from properties, etc.!

    And snappily-attired (!) Bob Jordan from Threshold just commented on TVAM how landlords are not obliged to drop rents, and he called for the Minister for Soc Welfare to make the naive “hope” for rent reductions into concrete initiatives.

    The budget is a complete mess for the poor and needy, Lenihan is living up to his nickname of the absentee landlord (given as we never see him in D15!). Where are the incentives, the rumoured car scrappage scheme, the long-term policies that people need to be able to plan their lives and their finances? Oh, wait, they can’t plan their finances, it just follows that I shouldn’t be able to do so either huh?

  • SeanR

    A final quip, and then I’ve got to head to work… perhaps (perhaps contrasting the video clip of Cowen), I spotted this on Andy Sullivan’s blog and it lifted my spirits about the budget if only for moment today,and just sighed that my other half of 20+ years has two left feet…

    http://andrewsullivan.theatlantic.com/the_daily_dish/2009/04/the-resistance-to-marriage-equality.html

    The dancers are just brilliant…

  • The Unemployed Budget « The Unemployed Blog

    […] Also unfair is the cut in rent allowance. It’s not so much the cut that’s the problem but the reasoning for it. According to Lenihan’s speech this is merely in tune with the drop in rent prices, a remark quite similar to Goodbody’s Marie Antoinette-esque belief that a cut in social welfare is justified due to a drop in inflation. This supposed that those on social welfare noticed an corresponding drop in their expenses, conveniently forgetting that the inflation drop was fuel by a general consumer race to the bottom. For people already at the bottom there is nowhere else to go. Well, the same is true for Brian and his perception of rent prices. Suzy has gone into more detail on this here. […]

  • niamh

    i think the cut in rent allowance is unfair becuase when rent and house prices were increasing, there was no increase given in the maximum rent allowed. in galway its 65 euro per week for shared and 460/480 for studio. there is little chance of finding suitable accomadation in these price brackets, in particualr for studio, living on own as i do. i had to lie on my form and say i was paying 480 and pay an extra 170 out of my own pocket. it was the only way i could get accomation in my price bracket. find me a one bed in galway for 480 and ill eat my hat. so anyway now i dont how ill be able to afford it and im sure im not the only one in this situation. im on disability allowance btw

  • christine

    hi there, can anybody tell me if you find a cheaper accomodation on rent allowance is the contribution going down as well or does it stay the same so the tenant has less to contribute
    i live in kerry and the contribution is so little that u CAN ACTUALLY NOT survive on it so i am forced to move again (just moved in here in july and suddenly cuts happened and cant afford it anymore). this budget KILLS the LITTLE people. and jobsituation HORRENDOUS! trying to get back to work but as lone parent with small child and STILL CHILDCARE i have many sleepless nites how to afford all of that.

    so help can u tell me if the contribution changes (to the worse of course like all in the moment) if u find cheaper rent?

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