Generation Rent: ‘It’s totally out of your control’
Families are trapped by ‘extortionate’ Irish rents and restrictive house buying rules
André Filipe recently moved into a two-bedroom house in East Wall. He works in a tech company he’s now a short walk from, and he has a back garden for his two small children to play in.
He is delighted to be living there – “It’s wonderful,” he says – but he spent two months crashing on friends’ couches while looking for somewhere for his family to live.
The family couldn’t afford rent and the deposit to move when their rent increased, so his wife and children went back to Portugal, where they’re from, while Filipe stayed to save and search for somewhere new in Dublin.
Beyond budget constraints, the biggest problem he had was finding a landlord who accepted children.
This raised concerns over the security of renting, especially as his children get older and start school.
“It’s definitely a worry, because it’s totally out of your control. Anything that’s out of your control is scary, but especially with children,” he says.
“We did consider buying but it doesn’t seem favourable to get enough funding to be able to afford to buy a good house. It’s nearly impossible to save even the 10 per cent or whatever to fund the deposit, it’s impossible to get that money.”
Felipe is 28, making him five years younger than the average first-time buyer in Ireland.
According to the Real Estate Alliance, people are now entering the property market at 33 on average, and this is something that’s become very obvious to mortgage broker Karl Deeter.
“When I started working in lending in around 2003, people in their 20s were borrowing. Nowadays, your typical applicant is no longer 24 to35, they’re 30 to 40,” he says.
New mortgage lending rules issued by the Central Bank in January say that first-time buyers may borrow only 3-and-a-half times their gross annual income, and they must save a 10 per cent deposit on the first €220,000 of the value of the property and a 20 per cent deposit on any higher value.
Deeter believes these rules are now having an effect on who gets on the property ladder.
“What the deposit rules have done is keep people in the rental sector when they otherwise would have been leaving.
“Because we’re in a period of what you could describe as broadly fixed supply, it compresses the rental sector specifically. I describe it as housing austerity: if you’re a renter, you’re trying to just paddle to stay still,” he says.
Bob Jordan, chief executive of the housing charity Threshold, is also seeing far greater numbers of people continuing to rent.
“The new lending rules mean difficulties around accessing property, particularly in Dublin, which means that a lot of people will be renting for some considerable time to come,” he says.
Anne McCarthy, a solicitor, is looking for her third apartment in 18 months. “I have to find a place in the next four weeks, so I’m up against the wall,” she says.
Paying more than €1,000 on rent per month goes against the grain for her.
“You’re thinking of the rent you’re paying, you could afford a mortgage but you just can’t afford to save to get a deposit, because the rent is so bad in Dublin.
“Half my salary goes on my rent, and I get a good salary so I’d hate to be on less and trying to find somewhere.”
Anne Reid, a 28-year-old PR professional, is currently living with her boyfriend in her mother’s house.
“Extortionate prices” for rentals have precluded her from renting, while she’s discouraged from buying by the quality of housing and the prices.
“For years I never really understood why people would buy because I’ve had such a nomadic life that it just didn’t make any sense to me.
“Now I see that it would make more financial sense, but with the cost as it is at the moment, I will never be able to live in the area I grew up in,” she says.
Stephan Köppe, a lecturer in social policy in UCD, has been studying the generational gap between renters and buyers in the UK.
He believes there are necessary regulations the Irish rental market needs if we are to become a nation of long-term renters.
“Often tenancy agreements are for a year, maximum four years, and then you have to try to renew it.
“It’s not like ‘now I’ve signed a contract and now I can stay in that home for 30 years’. With every renewal, the landlord has the potential to increase rent and there’s no limitation to that so that increases insecurity,” says Köppe.
While Köppe believes the widespread aspiration to home ownership is a very culturally embedded phenomenon in Ireland and the UK, he says many of the positives of home ownership can be found in renting, as they are in many continental European countries, where stricter rental regulations are in place.
“All studies suggest the feeling of home is really important. It has a lot to do with long-term commitment to the dwelling itself, but also the surrounding community.
“After four or five years, we see hardly any difference between renters and home owners. Once you are a long time in your place, you build those social links to the community and have those benefits. It’s really about making long-term rental attractive,” he says.
Certainty and security
Bob Jordan agrees, saying: “People opt for home purchase because they’re in control of their own lives, secure in their homes knowing they’re going to live in that community for the foreseeable future, and for more certainty around the quality of accommodation.
“The reality is a lot of people won’t be able to afford to buy, but there’s no reason that if the private rented sector becomes a more secure housing option, that they can’t live with certainty and security in that sector for the foreseeable future.”
While Karl Deeter also feels we need better rental regulation, he says it’s also a matter of adjusting expectations.
“If you’ve got rich folks and a high-paid job, you’ll be okay and you always were going to be okay. If you’re not in that category, then you’re going to have to seriously think about what you want in life and if a house is one of them,” he says.