Rent Allowance to reduce in budget - Will it drop the floor in private rental prop ?

worded

Ive heard it said that there is a false floor in the rental market as the rental sup is way too high.

What say you?

Oh_Noes

I think it's a cliché that gets thrown around a bit willynilly. When I look on daft.ie or in the papers, most of the places advertised are far above the rent allowance upper limit so wouldn't be available to RA recipients. And I live in a medium sized midlands town.

Renting rooms seems to have crept up in line with inflation from what I've heard from a few friends that do this but rent allowance was cut last year.

I can't really see how €350-€400 per month rent on an apartment is an artificially high floor, that's the most RA allows as far as I know, and places around that range are usualy dumps. The new property tax being talked about at the moment is probably a greater concern for the rental market at the moment because a lot of landlords will be forced to pass some of it on to their tenants.

JaneyMacker

i think its going to make the people on ra who are in nice places now move to lower standard accommodation.
theyll end up in house shares instead of having whole apartments to themselves.

most landlords dont accept ra anyway . and a lot of them that do have either crap places or do so after a sob story from the tenant.

not even wrong

Oh_Noes wrote: »

I can't really see how €350-€400 per month rent on an apartment is an artificially high floor, that's the most RA allows as far as I know

you seem to be misinformed

ted1

We currently recieve 950 a month for a 2 bed house from a tenant on ra. If they drop it we won't get a private tenant to pay that so we're basically slaves to the allowance.


House is in ballyfermont. Probably 95 % of rentals are single mums on ra.

Slydice

Ronan Lyons wrote a blog relevant to this issue recently:
Rent supplement: time for taxpayers to use their market power
29 Nov 2011
http://www.ronanlyons.com/2011/11/29/rent-supplement-time-for-taxpayers-to-use-their-market-power/

To see this, consider the chart below. It shows how the maximum rent supplement compares to the average rent, both at the peak of the market in late 2007 (the blue line) and now (the red line). The closer to 100% it gets, the more the taxpayer has set a floor on rents, as those who are ambivalent to higher rents (those on rent supplement) can outbid the average working tenant.

As you can see, despite the reductions in the supplement, there has been a definite drift towards supplement acting as a price floor. The only segments where this has not occurred (in Connacht and Ulster in 3-4 bedroom homes) were among those segments most distorted to begin with, with rent supplement covering effectively the average mortgage on average.

and later

What to do next?

Ultimately, the problem here is that Rent Supplement tenants are currently being sent into transactions with their landlord, without any incentive to haggle the rent down. The cost, as ever, falls on the taxpayer. Reforming Rent Supplement without addressing this is just a stop-gap.

It’s my own belief that rent supplement should be incorporated into general welfare payments, or ‘social income’ and that this income should be treated as taxable. This would level the playing field between workers and welfare recipients and make it far easier for someone coming back into employment to take a job offer. It would also encourage Rent Supplement recipients to haggle on their rent, as they would see some of the savings.

MistyCheese

One thing I do know is that if the Rent Supplement is reduced by 50% (as I was informed by someone) then I ostensibly have two options; 1) Ask the landlord of 4 months to decrease my rent by 50% 2) Be forced to leave rental accommodation altogether.

Damie

... or do like most, Rent where you can afford

JaneyMacker

MistyCheese wrote: »

One thing I do know is that if the Rent Supplement is reduced by 50% (as I was informed by someone) then I ostensibly have two options; 1) Ask the landlord of 4 months to decrease my rent by 50% 2) Be forced to leave rental accommodation altogether.

If you are in accommodation that nobody else wants, then that will work. But you will lose your deposit if you are under a lease.

But if you are in a nice place that the landlord can get working tenants who dont need rent allowance to move into, then you will have to move to lower standard. Probably house share or a bedsit, or move home.

The knock on effects might have rents across the board reduce in many areas, but anyone on rent allowance will only be able to afford the very bottom rung of accommodation.

Slydice

JaneyMacker wrote: »

The knock on effects might have rents across the board reduce in many areas, but anyone on rent allowance will only be able to afford the very bottom rung of accommodation.

I'd be interested in knowing what "rung" of accommodation you think people who recieve rent allowance should be on. Also, who do you think should be on the "very bottom rung of accommodation"?

JaneyMacker

Slydice wrote: »

I'd be interested in knowing what "rung" of accommodation you think people who recieve rent allowance should be on. Also, who do you think should be on the "very bottom rung of accommodation"?

Stands to reason.
If you cant afford rent, which without rent allowance many cant, then they are obviously going to be on the bottom rung. The cheapest. At the moment students without parents with means are taking the bottom rung.

ted1

Slydice wrote: »

I'd be interested in knowing what "rung" of accommodation you think people who recieve rent allowance should be on. Also, who do you think should be on the "very bottom rung of accommodation"?

obviously the bottom rung. if they can't afford it, they really shouldn't be there.

maybe bein gon the bottom rung will teach them to be self sufficent and get a job that'll allow them to move up.

Damie

Ray Palmer

A big portion of people on RA are in single dwellings. There are a few things that I think will happen if the ra is cut drastically.

• Ra tenants will have to move to a lower standard of accomadation
• Single dwelling places will be reduced or improved. LL will see no money in it so they will either bring it up to a better standard for private dwellings or do away with the single dwellings and join them back to bigger places.
• People on RA will simply have to move in with relatives
• People will become homeless
• Some LL will go bankrupt
• Lower end property could either become empty or fill up hard to tell

Rent may not actually go down as much of RA accomadation working people will not want to live in the area nor put up with poor quality property. As for being dropped by 50% I see that as very unlikely. I have a tenant for 15 years and if she suddenly wants to drop the rent by 50% she would be gone, why should I subsidise her accomadation. I will feel bad a about but in the end of the day that is my income and I could get more for it as is.

JaneyMacker

Ray Palmer wrote: »

A big portion of people on RA are in single dwellings. There are a few things that I think will happen if the ra is cut drastically.

• Ra tenants will have to move to a lower standard of accomadation
• Single dwelling places will be reduced or improved. LL will see no money in it so they will either bring it up to a better standard for private dwellings or do away with the single dwellings and join them back to bigger places.
• People on RA will simply have to move in with relatives
• People will become homeless
• Some LL will go bankrupt
• Lower end property could either become empty or fill up hard to tell

Rent may not actually go down as much of RA accomadation working people will not want to live in the area nor put up with poor quality property. As for being dropped by 50% I see that as very unlikely. I have a tenant for 15 years and if she suddenly wants to drop the rent by 50% she would be gone, why should I subsidise her accomadation. I will feel bad a about but in the end of the day that is my income and I could get more for it as is.

Just being curious here.
Is there a point at which you wouldnt bother letting and just pay the mortgage? ie it becomes more hassle than it worth to let the property. You might as well just leave it empty and take the hit on the mortgage rather than subsidizing a tenant.
Probably more likely if you had no mortgage or a small mortgage on your investment property.

Ray Palmer

JaneyMacker wrote: »

Just being curious here.
Is there a point at which you wouldnt bother letting and just pay the mortgage? ie it becomes more hassle than it worth to let the property. You might as well just leave it empty and take the hit on the mortgage rather than subsidizing a tenant.
Probably more likely if you had no mortgage or a small mortgage on your investment property.

Income is income so probably not. The majority of the bedsit and single dwelings let to ra tenants would not have a mortgage and be quite old properties.

I my case I am actually renting to the tenant below what I could get for the place. She used to get more ra when her son lived there but once he grew up I reduced the rent so she could stay. So she is being subsidised by me already. I could easily kick her out redecorate and rent for 30% more. If RA was cut massively I simply wouldn't be willing to do it. She isn't a perfect tenant but I accept it is her home but she is not a tidy person.

Zamboni

Ray Palmer wrote: »

A big portion of people on RA are in single dwellings. There are a few things that I think will happen if the ra is cut drastically.

• Ra tenants will have to move to a lower standard of accomadation
• Single dwelling places will be reduced or improved. LL will see no money in it so they will either bring it up to a better standard for private dwellings or do away with the single dwellings and join them back to bigger places.
• People on RA will simply have to move in with relatives
• People will become homeless
• Some LL will go bankrupt
• Lower end property could either become empty or fill up hard to tell

Rent may not actually go down as much of RA accomadation working people will not want to live in the area nor put up with poor quality property. As for being dropped by 50% I see that as very unlikely. I have a tenant for 15 years and if she suddenly wants to drop the rent by 50% she would be gone, why should I subsidise her accomadation. I will feel bad a about but in the end of the day that is my income and I could get more for it as is.

1. Surely RA tenants should be in the lowest standard legally compliant dwellings?
2. Rental market simply correcting itself without the artifical floor.
3. That is generally what happened before RA was as generous.
4. See your last point.
5. That would be a shame but they have been in a business largely subsidised by the taxpayer and unfortunately the taxpayer can no longer afford this particular subsidy.
6. A landlord will take some rent rather than no rent on these properties.
But if they are forced to sell than that will just result in the property market being corrected.

Ray Palmer

Zamboni wrote: »

1. Surely RA tenants should be in the lowest standard legally compliant dwellings?
2. Rental market simply correcting itself without the artifical floor.
3. That is generally what happened before RA was as generous.
4. See your last point.
5. That would be a shame but they have been in a business largely subsidised by the taxpayer and unfortunately the taxpayer can no longer afford this particular subsidy.
6. A landlord will take some rent rather than no rent on these properties.
But if they are forced to sell than that will just result in the property market being corrected.

I think you misunderstood me. Effectively I am saying the people on RA will lose out. Not blaming anybody. The artifical floor you are talking about isn't propping rent up it is providing property for people that if isn't paid for will disappear from the market.
What you think of as subsidy is not what you think. LL aren't being subsidised the government is by not having to provide people with accomadation.
The RA is not going to be cut by 50% it would be a disaster for tenants not LL.
The big expense on ra is most likely the lower end of places that will be removed if there is no money in it. It won't happen instantly but it would happen. Again most of these properties are owned outright.

LL are alredy now being taxed in the buget with the PRSI changes. They have provided a service for years that the local councils have failed to provide. What the popular opinion is on this doesn't matter to an extent becasue the government are aware of real world issues if they push it too far. I will be surprised at anything over 10% reduction

Zamboni

Ray Palmer wrote: »

I think you misunderstood me. Effectively I am saying the people on RA will lose out. Not blaming anybody. The artifical floor you are talking about isn't propping rent up it is providing property for people that if isn't paid for will disappear from the market.
What you think of as subsidy is not what you think. LL aren't being subsidised the government is by not having to provide people with accomadation.
The RA is not going to be cut by 50% it would be a disaster for tenants not LL.
The big expense on ra is most likely the lower end of places that will be removed if there is no money in it. It won't happen instantly but it would happen. Again most of these properties are owned outright.

LL are alredy now being taxed in the buget with the PRSI changes. They have provided a service for years that the local councils have failed to provide. What the popular opinion is on this doesn't matter to an extent becasue the government are aware of real world issues if they push it too far. I will be surprised at anything over 10% reduction

I don't think it will be cut anything like 50% either.
However, I do think you are over-estimating the states dependency on landlords to provide accomodation.
I have nothing against landlords. Honestly. To me, this is more about our society's view on Social Welfare and I believe that RA in its current format is wrong.
It is an incentive for a person not contributing to society to reproduce, for people not to marry, for able bodied people not to work and for migrants to come to Ireland instead of being destitute in their native country.
RA like all social welfare payments, should be for people who end up in a needy situation through no control of their own, such as a job loss.

Ray Palmer

Zamboni wrote: »

I don't think it will be cut anything like 50% either.
However, I do think you are over-estimating the states dependency on landlords to provide accomodation.
I have nothing against landlords. Honestly. To me, this is more about our society's view on Social Welfare and I believe that RA in its current format is wrong.
It is an incentive for a person not contributing to society to reproduce, for people not to marry, for able bodied people not to work and for migrants to come to Ireland instead of being destitute in their native country.
RA like all social welfare payments, should be for people who end up in a needy situation through no control of their own, such as a job loss.

I worked on the social welfare system and my friends still do. It is a terrible system with massive inequality. I can assure you that a large amount of people are in private rented accomadation and very few are in accomadation that is owned by the state. The state got rid of a huge amount of its' property stock over the years.

There are masses of people who know nothing other than social welfare. You can't wish them away. Many of these people are pretty incapable of working at this point as are their children. It is a major socail problem that kicking them out on to the streets will not solve. It would actually probably casue more crime

One of the buget changes even seems to be a disincentive for people on lone parents allowance to work. The CE scheme is abused to an extent that it is of no use and massively expensive.

If your argument is take away RA and these people will suddenly start working that wouldn't work. There aren't even jobs for this to happen. You also seem to anybody can walk into the country and claim RA which they can't

Zamboni

Ray Palmer wrote: »

There are masses of people who know nothing other than social welfare. You can't wish them away. Many of these people are pretty incapable of working at this point as are their children. It is a major socail problem that kicking them out on to the streets will not solve. It would actually probably casue more crime

I agree with you that a lot of people are so dependant on social welfare that they know nothing else.
That does not mean we should leave it as it is forever and a day.
We do not kick anyone out on the streets but we remove the cushion of (whichever) benefit going forward.

Want to reproduce? Well clear it with your your folks first because you'll be living with them. The taxpayer won't be footing the accomodation bill for you.

Ray Palmer

Zamboni wrote: »

Want to reproduce? Well clear it with your your folks first because you'll be living with them. The taxpayer won't be footing the accomodation bill for you.

You think these are all planned pregnancies? Baddly educated goes right through. You think contraception is free? You are talking about treating a symptom not the casue.

Contry to some popular opinions very few people have children for the free benifits. THe system does need to change but you can't make any sudden moves as so many people are dependent on it.

There are also a lot of people who can't stay with their parents indefinitely. Why should they either? It sounds like you might not be aware of they way some parts of society are.

Zamboni

Ray Palmer wrote: »

You think these are all planned pregnancies? Baddly educated goes right through. You think contraception is free? You are talking about treating a symptom not the casue.

There is no need to infer what I think. I will tell you.
I believe reproduction is a serious responsibility and should be treated as such by an individual.
I believe the seriousness of reproduction has been diminished because we provide the cushion of social welfare payments.
And I believe these children conceived by people without the resources or potential resources by will be the future generations of welfare dependents because social mobility only occurs on a minority basis.

Ray Palmer

Zamboni wrote: »

There is no need to infer what I think. I will tell you.
I believe reproduction is a serious responsibility and should be treated as such by an individual.
I believe the seriousness of reproduction has been diminished because we provide the cushion of social welfare payments.
And I believe these children conceived by people without the resources or potential resources by will be the future generations of welfare dependents because social mobility only occurs on a minority basis.

Missing the part where your suggestions would actually prevent or change this. I don't think the "cushion" you are talking about makes any difference. The best solution would be to make the pill free and educte people on sex but the idea that RA allowances would be a good method to prevent pregnancy is really laughable. I think the logic you are applying is really odd. It involves the belief that people are mostly making these decisions fully aware.
Having full knowledge of cases within the system the vast majority are poorerly educated. It isn't that education isn't avialble just it is devalued within their section of society. What you are suggesting would just really punish the kid more so than anybody else, and they never had any say.

hidinginthebush

Ray Palmer wrote: »

You think these are all planned pregnancies? Baddly educated goes right through. You think contraception is free? You are talking about treating a symptom not the casue.

Contry to some popular opinions very few people have children for the free benifits. THe system does need to change but you can't make any sudden moves as so many people are dependent on it.

There are also a lot of people who can't stay with their parents indefinitely. Why should they either? It sounds like you might not be aware of they way some parts of society are.

Why should the taxpayer bear the cost of these people getting their own place just because they have a kid (or at all, for that matter)?

Ray Palmer

hidinginthebush wrote: »

Why should the taxpayer bear the cost of these people getting their own place just because they have a kid (or at all, for that matter)?

Becasue some people have pretty hostile home environemts with abusive family members maybe. If somebody has a child if you punish the parent you will also punish the child.

Yes you can get all shouty about why should we pay but their are actual people who need care. I feel old people who haven't saved for their retirement should be held more responsible.

There are people playing the system but it isn't black and white and you would want to pretty narrow minded not to see that.

Zamboni

Ray Palmer wrote: »

Missing the part where your suggestions would actually prevent or change this. I don't think the "cushion" you are talking about makes any difference. The best solution would be to make the pill free and educte people on sex but the idea that RA allowances would be a good method to prevent pregnancy is really laughable. I think the logic you are applying is really odd. It involves the belief that people are mostly making these decisions fully aware.
Having full knowledge of cases within the system the vast majority are poorerly educated. It isn't that education isn't avialble just it is devalued within their section of society. What you are suggesting would just really punish the kid more so than anybody else, and they never had any say.

No I am not.
I am talking about future generations of unborn children, not the children that currently exist.
We need to draw a line and going forward reduce social payments/allowances that incentivise reproduction of welfare dependents.
Of course that is only one factor and education is a large part of that but I am talking about preventing future welfare dependents. Not current dependents. They are already here and we as a society have a repsonsibility for them.

Ray Palmer

Zamboni wrote: »

No I am not.
I am talking about future generations of unborn children, not the children that currently exist.
We need to draw a line and going forward reduce social payments/allowances that incentivise reproduction of welfare dependents.
Of course that is only one factor and education is a large part of that but I am talking about preventing future welfare dependents. Not current dependents. They are already here and we as a society have a repsonsibility for them.

You seem to think removing the RA will make people not get pregnant. I don't think that would work. I doubt you will find many people who think it would either. They system doesn't incentivise anybody becasue that means you are saying people do it to get the benifits. You can try and spin it but that is what you are saying. I don't beleive it and after dealing with said people not one of them was I even suspicous of but certainly suspicious of people commiting fruad. THey new inspectors will make a difference. Good luck with your theory it will never happen.

Plus RA hasn't been reduced as people thought it would. Only change so far is tenants have to pay more themselves.

Oh_Noes

Ray Palmer wrote: »

Plus RA hasn't been reduced as people thought it would. Only change so far is tenants have to pay more themselves.

This makes no sense. It's like increasing the price of a cup of tea and saying "it's not a price increase, you just have to pay more". Of course it's a cut if the tenant pays more, it means that the tenant is paid less by the state. If that's not a cut I don't know what is.

Ray Palmer

Oh_Noes wrote: »

This makes no sense. It's like increasing the price of a cup of tea and saying "it's not a price increase, you just have to pay more". Of course it's a cut if the tenant pays more, it means that the tenant is paid less by the state. If that's not a cut I don't know what is.

Well it just isn't that simple. Tennants have to contribute a certain amount towards their rent. That amount has increased but RA has not changed. So if the LL were to reduce the rent it would not make any differece to the tenant. So RA hasn't reduced just the tenant is paying more. It isn't a cut and you don't know what one is

Newaglish

Was there a change to RA? I couldn't see any mention of it.