Bob: To Ease Homelessness, We Need Rent Certainty

Ireland is facing an unprecedented homeless crisis. An increasing number of people are losing their homes, simply because they cannot afford to pay high rents.

As of the end of July 2015, 3,285 people, including more than 1,300 children, were homeless across the country, with the vast majority of those affected in the capital.

The private-rented sector has more than doubled in size in recent years and is now home for one in five families in Ireland. Many tenants have been forced to rent as they have no other option, and are now finding that they cannot cover the rent increases being sought by landlords. Because of this, they are facing losing their homes.

Rents have reached unaffordable levels for many, especially in Dublin, but also in other urban centres around the country. From 2011 to 2014, average rents increased by more than one-third (34.5 percent) in Dublin. Last year, Dublin rents increased by 11 percent and rents in other cities by between five and seven percent.

In Threshold’s experience, average rent figures tell only half the story, because they mask the severe problems experienced by tenants living at the lower end of the market, where competition for accommodation is at its most desperate. As a national housing charity, Threshold regularly assists tenants who are facing demands for 20- to 40-percent rent increases which they simply cannot afford.

Rising rent levels mean that households dependent on the State’s rent supplement face losing their rented homes, with rent supplement limits now effectively frozen at 2013 levels. The family homelessness crisis in the capital is the inevitable consequence, with more than 40 families a month now becoming homeless.

What is to be done to deal with this growing crisis?

Almost everyone agrees that building more homes is the solution. But the reality is that new housing supply takes time and it simply won’t come quickly enough for the thousands of individuals and families who will continue facing unaffordable rent hikes over the next 18 months to two years. More immediate action is needed.

There is less agreement over what this immediate action should be. Threshold believes that a package of measures, including increases in rent-supplement limits, reform of the rent-supplement scheme, and the introduction of rent certainty are the immediate actions needed to address this crisis.

As Lois Kapila pointed out in last week’s Dublin Inquirer article “Would Increasing the Rent Supplement Increase Rents?”, increasing rent-supplement limits has not been a popular action with the government.

The Tanáiste and Minister for Social Protection, Joan Burton TD, has effectively ruled out an increase due to concerns about a possible inflationary impact on overall rents. Some flexibility is available on a case-by-case basis for existing rent supplement claimants; while this is welcome, it doesn’t go far enough.

As the government’s strategy has been to rely on the private market as an alternative to social housing, tenants have little choice but to pay market rates. It is clear from the figures above that the current rent-supplement limits are not leading the market; rather, they are trailing behind, and tenants need support to remain in the market. A question also arises as to the purpose of rent supplement limits: if limits don’t go up when rents are surging, then when should they increase?

Concerns that increasing rent-supplement limits will push up rents can be addressed by introducing rent certainty. Threshold has developed a rent-certainty proposal which we presented to the Minister for Environment, Community and Local Government, Alan Kelly TD, in June 2015.

The proposal seeks to link future rent increases in areas of high rental inflation to the cost of living, as is the case in many other European countries. Rent certainty is not just about addressing the immediate crisis but it is an essential component of a well-regulated housing market, and benefits both landlords and tenants by ensuring that rent increases (and indeed decreases) are predictable and reasonable.

(“Rent control” was in the past associated with freezing rents and this was found to be unconstitutional in 1981-82. “Rent certainty” is a modern form of rent regulation that exists across Europe, regulates the rate of rent increases and would pass the constitutionality test.)

Rather than impacting negatively on supply as some have predicted, rent certainty may provide the basis for increased investment from financial institutions, such as pension funds, that are interested in predictable returns over time. Such investment would also have a positive impact in reducing the private-rented sector’s reliance on small-scale landlords, with more than 90 percent of Ireland’s landlords currently owning just three properties or less.

As Kapila pointed out, the way that rent supplement is delivered is important. Unfortunately there is no guarantee that more landlords will be willing to take on rent-supplement tenants, even if rent-supplement limits are increased, due to the way that it is currently administered.

The administration of rent supplement needs to be streamlined; currently, tenants must find a willing landlord before they can gain approval for the rent-supplement payment. The red tape that follows often results in tenants losing out on accommodation and landlords having to wait an unnecessarily long time for their rent payments.

There is no reason why tenants could not be pre-approved, in much the same way that home-buyers can be pre-approved for mortgages. Other key changes include: making rent payments directly to landlords; simplifying documentation requirements; and developing clear and consistent policies for cases in which a receiver is appointed to a rented property.

Keeping families in their homes is the most cost-effective and humane way to address this crisis. No single measure will solve the problem, but there are immediate actions available that could go a long way towards alleviating it.