Sir, – I suggest there would be a consensus that rents are about twice what people can afford, with average rents nationally running at €1,400 and €2,000 per month in Dublin even for tiny flats.
If rents are twice what is sustainable, even for the well paid, why not move to create a pool of property on half-rent?
Multinational companies are saying recruitment is becoming more difficult because of the cost of accommodation in Ireland.
Hospitals and schools have problems hiring and retaining staff. Students who worked hard for high points in the Leaving Certificate are sometimes having to decline places at the big universities in favour of regional colleges of technology so they can live and study at or near home and not face unaffordable rents in the cities. Refugees and asylum seekers who would gladly work if they were allowed are left without hope of being able to pay for their own door key.
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Small private property owners say taxation is the main reason so many of them want to sell up.
Some would rather just leave the place empty and at least hold some value from house price rises.
They say that along with income tax, PRSI and USC levies in their main job, they frequently find rental income subject to a marginal rate of 52 per cent. They complain of not being on a level playing field with large institutional property companies.
The State is paying out in many cases €1,000 per month, and more in the Dublin area, under the Housing Assistance Payments (HAP).
At enormous cost to the national exchequer, the HAP is perversely driving high rents up while what I would call a National Half-Rent and Savings Scheme, though only a restricted pool of property, would have a spillover effect outside the pool with a downward vector.
It could work like this: whatever would be the current market rent in each area would be reduced by 50 per cent by property owners entering the restricted scheme.
They will say the big banks and property funds would be angry. But they should surely see opportunities here for to service higher earning customers looking for better returns.
Strict conditions would mean such rents would always be only part of the market. Should the scheme ever become destabilising, it could be time limited and closed to new entrants, with the mechanism to be used again if rents were to run out of control, which they have now.
In return for undertakings on fixity of tenure and obligations to letting their property for blocks of five, 10 or 20 years owners would be exempt from income tax, capital gains and perhaps any gift tax within their family. Tax benefits limited to one property unit per adult.
The Revenue Commissioners could do the valuations in consultation with other agencies, much as it already does with the local property tax, and identify what half-rent would be in any particular area.
Such a scheme could also be part of a solution to another looming social and economic conundrum.
The State pension can never be more than a subsistence support. The ageing demographic is described as a funding time bomb.
Because of so much job mobility, part-time work, short-term contracts, self-employment and the so-called “gig economy”, many people do not have the benefits of occupational pensions and need alternative forms of long-term savings and investment for themselves and their children. In any event, traditional pension schemes may no longer be the right fit for everybody’s taste after the big changeover from defined benefits to defined contribution systems.
In spite of low returns from bank savings , household deposits in Ireland reached ¤140 billion in mid-2022. This was partly due to under-spending during the Covid pandemic but the figure is still believed to be over €100 billion, way above the European norm.
I heard one of our leading economists say recently that it was not clear why household bank deposits were so exalted in Ireland compared to elsewhere, as if there was some great mystery about it.
But the Central Bank, in an economic letter published last year, identified “limited alternative household investments” as a potential reason for the extraordinary high bank deposits figures at the time.
Current advertising by Irish Life latches on to the theme and urges savers not to just let their money sit there and to consider their financial products.
What better alternative investment opportunity could there be from almost every social and economic point of view than housing.
The Government has the main agency when urgent market adjustments measures are called for. The Minister for Housing has graciously said he is open to ideas about the crisis. Politicians can’t build houses themselves. Their job is legislation.
What they can do is to build a social justice financial product that would meet needs on all sides in this vexed debate.
Almost with the stroke of a pen, they could change the gloom surrounding the imminent harrowing debate on the eviction moratorium. – Yours, etc,
COLM BOLAND,
Sandymount,
Dublin.