State’s reliance on private landlords rises sharply

Spending review shows large variations in contributions paid by social housing renters

 

The Government is spending 20 per cent more of its social housing budget on paying rent to private landlords than it did a decade ago, according to a Department of Public Expenditure review.

In the years leading up to 2008, the proportion of the State’s housing budget paid to private landlords was around 20 per cent. An additional 10 per cent went to other supports such as the provision of homeless services, with the remaining 70 per cent spent on building social housing.

In 2008, €493.5 million of the near €2.2 billion housing budget went on subsidising private rents for tenants who could not meet their own housing needs. By 2011, payments to landlords had risen to €632.4 million, or 48 per cent of the overall budget.

By last year, payments to landlords had reduced to €623.5 million (some 42 per cent of the total budget) but with spending on homelessness and other services bringing the “current” budget – money not spent on either building or buying houses – to €807.8 million, “delivery through construction and acquisitions remains well below previous levels”, the review found.

The HAP scheme, which was introduced in 2014, last year made up 19 per cent of current expenditure. The Government plans it will replace Rent Supplement, which last year accounted for 31 per cent of costs.

Unlike Rent Supplement recipients, HAP tenants can work full-time and their rent is paid directly to the landlord by the local authority. The HAP scheme tenants pay a contribution towards their rent to their local authority and the scheme was showing a 99 per cent collection rate with “minimal arrears”, the review found.

Variance

Tenant contributions were “an important element in the net cost of the scheme”, it said. However, it said there was considerable variance in the contributions paid in different local authority areas where different methods were used for calculating how much tenants should pay.

“As such, two households in similar accommodation in different local authority areas and with similar incomes could pay a different proportion of income in rent,” it said.

The report makes a comparison between Kilkenny, where on average a parent of one child pays €43.18 a week towards their rent and a couple with one child pays €74.95, and south Dublin where a single parent of one pays just €29.92 and a couple with one child pays €43.34.

Consideration should be given “as to what measures could be taken to improve the equity of the system such that tenants with similar incomes and similar accommodation make a similar contribution”, it said.

The Government should also consider “the appropriate scale of tenant contribution” so that “those in receipt of support are contributing to the extent that they can” to ensure the sustainability of the HAP scheme.