The Irish Department for Social Protection has now published the new rules and rates for rent assistance in the State. There are reductions in all categories in all counties – no county or category has been spared. The reductions range from 0.0% in Roscommon for a couple in shared accommodation to 28.6% in Fingal for a single person in shared accommodation. The simple average reduction is 13% . Here are the new rental assistance levels, and it should be noted these are the maximums.
Here are the old rates. Note the new rates split Dublin between “Fingal” and “Other”, the old rates didn’t.
Here are the % changes.
It is estimated that 96,100 households are in receipt of rent allowance – Minister for Social Protection Joan Burton responded to a Parliamentary Question in November 2011 and she said “Between 2005 and 2010, rent supplement expenditure increased from €369 million to €516 million. The number of persons claiming the allowance increased from almost 60,200 in 2005 to more than 96,100 as at 18 November 2011, a 60% increase.”. It is estimated* that 150,000 households in total are renters in the State. Therefore the reductions announced today are will significantly affect the rented market.
What will they do to rental levels? Considering only the reduction in rent allowance, the changes should tend to reduce rents in the State. Many properties that are advertised for rent won’t accept rent assistance, but there is anecdotal evidence to suggest that such properties will acknowledge official levels of state support.
Residential rents in Irelandhave risen by 4% over the past year and looked set to continue rising. This morning’s announcement should temporarily reverse that trend. The prediction on here had been that rents would rise between 0-5% in 2012. With these announced reductions which average 13%, that prediction looks outdated, and it is now the view that rents will reduce in 2012.
*The last census for which we have full results was in 2006 when 128,696 homes were rented out of a total of 1,503,291 households which represents 9% of all households. In 2011 there were 1,709,973 households – if the same % of households rent then that would imply there about 150,000 rented properties in the State.
UPDATE: 9th February, 2012. The quarterly DAFT.ie rental report is now available where Minister for Social Protection, Joan Burton provides a commentary and background information on the decision to cut the levels of rent allowance last month. Minister Burton says “Since 2005, rent supplement expenditure has increased from €369 million to some €503 million in 2011. The number of people claiming the allowance increased from almost 60,200 in 2005 to over 96,800 at end 2011, a 61% increase. In terms of overall share in the market, rent supplement accounts for approximately 40% of the private rental market.” Elsewhere the report confirms that rental prices continue to stabilise with rents up 0.3% nationally in the past twelve months (index rise from 75.5 to 75.7) and that the stock of property is at a 3-year low, but before you run around in panic thinking there’s no vacant property left, remember (a) the stock of vacant property is still nearly 16,000 compared to an all-time high of 24,000 in 2009 and (b) the 16,000 is less than 100 lower than the vacant stock this time last year.