More than half of renting households availing of rent subsidies

Almost 300,000 or 54 per cent of renting households in the Republic received some kind of State support to help with the cost of housing in 2020, a new study has found. This is more than double the number in receipt of equivalent housing supports in 1994.

The shift away from building social homes directly to providing rent supports — the so-called bricks to benefits switch — has been one of the defining trends in housing over the past 30 years.

Analysis by the Economic and Social Research Institute (ESRI) found that 293,673 households received supports via one of the Government’s three main rent supports schemes: Housing Assistance Payment (Hap); Rental Accommodation Scheme (Ras); and Rent Supplement (RS) in 2020, compared to just 134,973 in 1994.

The headline figure amounted to 16 per cent of all households in the State and 54 per cent of renting households, said the ESRI.

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Over the past three decades “there has been a shift away from the direct provision of support — through local authority and approved housing body owned accommodation — towards indirect subsidisation of housing costs in the private rental sector,” noted the report.

The Government spent close to €900 million on rent subsidies in the private sector last year, including €542 million on its main rent subsidy scheme, Hap. Spending via this support has risen by more than 80 per cent since 2018 amid criticism that the Government’s increasing use of rent aids is adding to pressure in the rental market.

The ESRI’s report found that direct and indirect supports “do a huge amount” to improve affordability for the households receiving them. It estimated that typical rent-to-income ratios were greater for unsupported renters than for supported even after controlling for dwelling type, location and quality.

However, it queried how well targeted these housing supports are, noting that many low-income renters receive no support for their housing costs and face high rent-to-income ratios, while almost one-in-five (16.7 per cent) of supported renters were in the top half of the income distribution.

The ESRI noted, however, that the qualification criteria for housing supports have become more restrictive in recent years.

“We estimate that the share of households eligible to apply to their local authority for support with housing costs fell from 46.8 per cent to 33.9 per cent between 2011 and 2019, largely because of a freeze to most income limits,” it said.

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The report also found that the rent limits for Hap covered a very small share of properties, particularly in cities for single adults. Across Dublin, only 6 per cent of one-bedroom tenancies registered in 2020 came under the maximum rent allowed for single adults claiming Hap, while only seven out of 31 local authorities had at least a quarter of one-bedroom tenancies below these limits. There was also substantial variation across local authorities in the level of support provided to otherwise identical households.

“The size of the supported rental sector has grown significantly in recent decades, with more of this support now provided indirectly through schemes like Hap. While both direct and indirect supports greatly improve affordability for households, our finding that almost one-in-five supported renters are in the top half of the income distribution raises questions about how well targeted these supports are,” said the ESRI’s Barra Roantree.

Fellow author Michael Doolan said: “Given the expected reliance on Hap to meet social housing needs in the short to medium term, the anomalies created by a highly localised system of differential rents are likely to affect a growing number of households over the coming year”.