THE PRIVATE RENTAL sector is broken in this country and no longer fit for purpose. It does not provide affordable rents or stability and security for renters.
It doesn’t need to be just ‘patched up’ as the Government is currently looking at. It needs to be overhauled and reconfigured so that it provides affordable, lifetime secure, decent quality, homes.
If homeowners can have a forever home, why can’t renters? Tenants are equal citizens too, equally important, equally valuable, so why can’t they have a place that they can call home? As a society it’s time to rewrite the social contract for renters.
I’ve been making the case for this for years, as have many others like Threshold, but it has reached breaking point. We heard horrendous stories this week about intolerable conditions faced by renters in their 40s and 50s on RTE’s Liveline. One caller, Sandra, spoke of her shame about her situation, living in a shed with no running water as she can’t afford the rent.
Political dreamland
The Government and landlords need to realise rental properties are people’s homes. Renters are utterly dependent upon their rented property for their basic fundamental need of shelter. A home is a human right, but renters in this country have no right to a home.
The plight of renters highlighted on LiveLine was in stark contrast to the comments made by the Tánaiste, Leo Varadkar, who said the Government couldn’t implement a rent freeze because they needed to consider the income concerns of landlords. The Tánaiste’s comments reflect the policy pursued by successive Governments that have put the interests of landlords and investors before the needs of renters.
A historical change has taken place in how the private rental sector is lived in. It is no longer a transitory place for young people before they buy a home on the ‘property ladder’. The property ladder has been pulled up from Generation Rent who are now stranded in the private rental sector.
I write extensively in my book, Housing Shock, about the huge societal and economic ramifications of this. The number of renters has increased dramatically from 10% of households in 2006 to 20% in 2016. We went from 145,000 households renting in 2006 to over 300,000 households today.
So for three-quarters of a million people in this country, the private rental sector is their home. Increasingly, this includes people in their 30s and 40s, and families with children, and older people. This is one of the most frightening aspects that renters in their 40s and 50s talk about – a future where their pension will not cover their rent. They face potentially retiring into homelessness, after many decades of working and paying taxes. There are 58,000 people in their 50s renting in Ireland, in a state of insecurity and fear about their future.
Rents are crucifying tenants. The average standardised rent in 2013 was €760 a month. It’s now €1,320 a month. One in five tenants in the private sector pays over 40% of their net income on housing costs, with almost one in 10 paying over 60%.
It’s all about the banks
The government allowed rents to rise year after year. They ignored calls to freeze them, the RPZ rent caps have had minimal impact, and properties new to the rental market and refurbished are exempt from any caps. The shift this year to link rent with inflation looks like making little difference with inflation running around 3%. So there is no rent freeze, despite the claims of the Minister for Housing and the Tánaiste.
Rising rents is Government policy, and has been since 2011, in order to attract the vulture and real estate investor funds and raise property values to benefit the banks.
It’s hard to hear it but your unaffordable rent results from Government Policy prioritising landlords and investor funds. The real estate institutional investors buying up Irish property and developing the co-living and build-to-rent don’t want renters to be able to buy or rent an affordable home, they want them locked permanently into renting their tiny micro-units.
That is their global investment strategy – to create a permanent renting class. Because of their refusal to fund the state-building of social and affordable housing for the last two decades, and the promotion of rental as an investment commodity, Government policy has turned renters into a cash cow for the investor funds.
We saw the lack of any serious measures for renters in the Government’s Homes for All plan. It was all about the idealised (and mythical at this point as they only exist in the minds of the Government Ministers) two-income couple and enabling them to buy a home. Although it subsidises developers and lumps the poor mythical couple with additional mortgage debt.
The renter is the cash cow
Why is no one asking the question about the economic justification of rising rents? Where is the evidence of an increase in costs of landlords to justify a 100% increase in rents in a decade? There is a need for accountability of landlords’ decisions. There’s no rent fairy deciding what rents should be. Each landlord increasing rent did so as an individual (or company) decision. We need to question the justification for that decision.
There is also a discrepancy between domestic smaller-scale Irish landlords who pay taxes on their rental income, and the corporate investor fund landlords who pay little if any tax. Also, a tenant in Ireland pays more tax on their income than the multi-billion investor fund taking the tenant’s rent.
The tax injustice between renters and Real Estate Investment Trusts is Dickensian in its inequality. The investor funds have to be made to pay a proper tax and the Real Estate tax break needs to be removed if we want to hold society together. Why do we have tax reliefs for wealthy investor landlords and no relief for hard-pressed tenants?
This is leading to a gaping gulf of inequality as a Generation is forgoing their possibility of buying a home – not even an investment asset – just a home – as this Generation has to pay a huge part of their income on rent to a small section of society – landlords and global real estate investment funds, who gain an income and accumulate an asset and thus grow wealthier. This is an inequality that is having profound social and political implications.
It’s simple – change the policy
The solution is to provide a rental sector with affordable rents and lifetime secure tenancies. How do we get there? We need to make it policy and tell landlords and investors, if you are providing rental housing in Ireland, it must be affordable and secure. You are providing a home to tenants, and your investment has to be made on that basis.
We also need a major supply of ‘cost-rental’ homes –rental homes available on an affordable and lifetime secure basis for anyone. This must become a key part of our housing system. That is how Vienna in Austria has such a successful housing system – over half of its housing is provided on this basis. The Government’s Housing for All plan aims to deliver a tiny amount of these. We should be delivering 15,000 cost rental homes per year. Watch how rents would fall then.
The Government policy must work to reduce rents. That means implementing measures to make them fall to affordable levels. For someone earning €30,000 a year, rent based on 25% of their take-home pay equates to €480 a month. For someone earning €40,000 a year an affordable rent is €625 a month. If we actually want to provide affordable rents, then the current rents need to fall in the region of 50%.
The solution is for the state to implement emergency measures for tenants – a five year ban on evictions to give tenants some stability and security, an immediate actual blanket freeze on rent increases, a freeze on all new built and refurbished rents, and a rent reduction strategy where rents are calculated relating to size of property and income affordability.
There are landlords, who for whatever reason, be it that they are in mortgage arrears, or can’t cover their costs, are leaving the current housing market. For those ‘accidental’ or unwilling landlords, the state should offer to buy their units. A state-backed housing association with a €1bn seed fund could immediately start buying up those units and rent them back out at affordable rents to tenants.
Landlords need to understand themselves as engaging in a wider social contract which is the provision of homes for renters, not investment assets. Landlords need to accept their property rented to a tenant is the tenant’s home. That should be the new deal when becoming a landlord. The time when people bought houses as investments to have ever-rising rents and then sell and flip properties is no longer ethically, socially, or economically acceptable.
This again highlights the need for a referendum on the right to housing – to balance the constitutional protection of the right to private property and make it clear that there is a right of tenants to a secure affordable home. The Government must deliver that referendum immediately.
Dr Rory Hearne is an Assistant Professor in Social Policy at Maynooth University, host of the Reboot Republic podcast and author of Housing Shock.
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