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Karl just so things are upfront. Are you a landlord (do you have a commercial interest on rent allowance not being reduced)? Are you calling that house “flood Prone” in Bray, just because of the picture?
Hi Eamon,
The analysis is not based upon bias, it is based upon rigour, if you think a bias is evident because of what I do for a living that is one thing, but in general terms it doesn’t matter because the facts speak for themselves.
The ‘flood prone’ property is thus because the area has been flooded in the past, you can get that on a google search of the area, or you can call an insurance company and speak to one of the people who work in the geo-claim section because they keep records of this kind of thing for underwriting purposes.
thanks for coming by!
karl
Like you’ve stated, rent supplement is only really going to only to put a floor on a small section of the market. Just like estate agents, people on the property pin are likely to have their own agenda in wanting rents reduced; thus, this personal bias affects their thinking. It’s actually quite arrogant of Eamonn Moran to expect you to provide disclosure when people like him and the other anonymous bloggers on the property can say whatever they like without providing anything pertaining to their own self interest in this regard.
@Shane
Thanks for coming by to comment. the main point I hoped to make is that far from rent supplement being a ‘freebie’ that in the areas needed it trades at a discount and in the areas it isn’t popular it carries a premium, there is more to be determined from this but one thing that can’t be drawn from it is the original analysis given.
come back again soon!
cheers
karl
Karl,
Lets take an example of an unemployed Dublin couple with one child. According to the figures on thepropertypin link above, such a couple would receive 930 euros per month rent allowance. Page 7 of the daft report shows asking rents across each postcode/area. The 930 euros p/m would allow the couple to rent an ‘average’ apartment in every area of Dublin (including Dublin 4!). Now supposing, as you alude to above, that asking prices are a little higher than actual rental prices – Lets say 10% as this is generally accepted by renters and letters I believe. Assuming this, our fictional couple could rent an ‘average’ two bedroom apartment in every Dublin postcode in Dublin except D2, D4 and D14. In fact they could rent a 3bedroom apartment in 10 of the 25 areas.
I wonder how a low income couple with one child would fare in comparison?
In my opinion social welfare should not provide an ‘average’ standard of living as this is the incentive to work.
The comparison made between the two sets of figures clearly, in my opinion, shows that rent allowance is too high. Whether this is creating an artificial ‘floor’ on rents I cannot say. However I have heard in the past that the Government makes up to 50% of all private rental accomodation. If this is true then clearly the high level of rental allowance is distorting the market.
ps I noticed that you didn’t answer Eamonn’s question above. Do you have a vested interest? If you do not believe that rent allowance is creating an artificial floor on rents then you would be in favour of a cut?
Regards
Patrick
Hi Patrick,
Always happy to see new visitors!
Anyway, the point being made in your analysis is entirely different than mine which is that the premium claimed does not exist in the way it was claimed. Furthermore, there is the uncomfortable reality that people in this country have a preference for houses over apartments so that single fact undoes the argument in another way.
The idea of letting prices being below asking prices is perhaps real, perhaps not, if it was then eventually many landlords would drop their price and it would be reflected in asking prices but instead we are seeing stagnant prices meaning that there is also a likelihood that prices are not going up or down – something I clarified with Ronan Lyons earlier today when I interviewed him on Newstalk.
As for being vested interest, take it that I am, I work in the mortgage industry, if I say ‘I’m not’ the usual clamour is ‘oh but you are’ if I say that I am then it will be ‘see you are vested interest’; the subtle point that is being missed is that my position doesn’t amount to anything even if I owned 100 apartments and they were all let to rent allowance recipients because that is not enough to sway the market – the analysis was wrong and misrepresented – that is the crux of it! Rent supplement is not the majority of the market and therefore cannot create a ‘floor’, oddly – not repossessing houses in arrears (likely to be 70,000+ at this stage) does artificially keep house prices high because that is almost 9% of houses with mortgages on them and it stops clearing prices from readily occurring – but that is a different point/argument
I agree with your point about social welfare not being there to give an average lifestyle to people who don’t work, but that has nothing to do with price floors or an attempt to create them, it is also a different point/argument.
I’m guessing you came here from the propertypin, please come back again soon!
thanks
karl
I think you raise a very valid point MB and I don’t actually disagree with you.
However, it is not necessary for the rent allowance to be above the average rent for the rent allowance to be putting a floor on the market.
The average rent for, say a 2 bed, encompasses everything from the most basic 2 bed apartment to the {link removed} 2 bed in Ballsbridge asking €5k per month. Therefore the average rent includes lots of properties that nobody on social welfare will be in the market for but they push up the average rent overall.
Therefore while the rent supplement could be below the average rent overall it could be above/or very closer to segments of the market.
Hi Karl,
Genuinley miss your views over on the pin
Ref: Rent Supplement; The recipient of rent allowance must pay a minimum of €24 per week for their rent. This makes up the difference between asking prices and the rent supplement in most cases from your tables.
PS I’m living in Limerick city and rent a 3 bed house in a decent area for €600 p/m. Anecdotal, I know but the figures for rent supplement in Limerick City are a disgrace
“The household (this is the claimant and may also include a qualified adult and qualified children) must contribute at least €24 towards rent”
http://www.citizensinformation.ie/en/social_welfare/social_welfare_payments/supplementary_welfare_schemes/calculating_rent_supplement.html#ldbfa0
Oop!
From the website
The rent paid to your landlord (that is, your contribution plus your Rent Supplement) must not be above the maximum rent level set for your county or area.
my theory up in smoke
@Tommy Is it not €24 in total rather than per week?
The household (this is the claimant and may also include a qualified adult and qualified children) must contribute at least €24 towards rent.
Non-dependent household members who are solely dependent on a personal social welfare payment must also contribute €24. However, if Benefit and Privilege has been assessed against your social welfare payment you will not have to contribute €24.
Hi Karl,
The rent supplements are distorting the market, there is no incentive for a rent supplement tenant to get a reduction in the rent as the money saved will not accrue to them.
The state is setting the maximum it will pay (creating a artifical floor).
why not give everyone an allowance still based on family size and let them negotiate with landlords and rent money they save, they keep, provided the accomadtion meets the standards etc.
this open market measure would reduce rents in many areas i bet by 25%.
also in addition the state having such a large share of the private rental market is a price maker not taker.
the rent supplemt scheme ias it stands is part of the hidden welfare state that in this case acts acts a landlords dole.
regards
conor
Karl
I have personally experienced putting in a rental offer on a house that had been vacant for months only to be told “sure we can get more than that on social welfare”.