Dr. Rory Hearne: It’s simple
THE PRIVATE RENTAL SECTOR has broken down in this country and is no longer suited to its needs. It does not provide affordable rents or stability and security for tenants.
It does not need to be simply “corrected” as the government is currently reviewing. It needs to be overhauled and reconfigured in order to provide affordable, secure, lifelong housing of decent quality.
If owners can have a home forever, why can’t renters? Renters are equal citizens too, just as important, just as valuable, so why can’t they have a place they can call home? As a society, it’s time to rewrite the tenants’ social contract.
I have been advocating for this for years, like many others like Threshold, but it has reached a breaking point. We’ve heard horrific stories this week about the intolerable conditions tenants in their 40s and 50s face on RTE’s Liveline. A caller, Sandra, spoke of her shame about her situation, living in a shed with no running water because she cannot pay the rent.
Country of political dreams
The government and landlords need to realize that rental properties are people’s homes. Tenants are totally dependent on their rented property for their basic housing need. Housing is a human right, but tenants in this country do not have the right to housing.
The plight of tenants highlighted on LiveLine contrasted sharply with comments from TÃ¡naiste Leo Varadkar, who said the government could not implement a rent freeze because it had to take into account landlord income issues. TÃ¡naiste’s comments reflect the policy of successive governments that have put the interests of landlords and investors ahead of the needs of tenants.
A historic change has taken place in the private rental sector’s way of life. It is no longer a place of passage for young people before they buy housing on the âproperty ladderâ. The scale of ownership has been removed from Generation Rent which is now stranded in the private rental sector.
I write extensively in my book, Housing Shock, about the enormous societal and economic ramifications of this situation. The number of tenants has increased considerably from 10% of households in 2006 to 20% in 2016. We have grown from 145,000 tenant households in 2006 to over 300,000 households today.
Thus, 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, families with children and the elderly. It’s one of the scariest things tenants in their 40s and 50s talk about – a future where their pensions won’t cover their rent. They risk homelessness after decades of work and paying taxes. There are 58,000 people in their 50s renting in Ireland, in a state of insecurity and fear for their future.
Rents crucify tenants. The standardized average rent in 2013 was â¬ 760 per month. It is now â¬ 1,320 per month. One in five renters in the private sector pays more than 40% of their net income in shelter costs, and almost one in 10 pays more than 60%.
Everything revolves around the banks
The government has allowed rents to increase year on year. They ignored calls to freeze them, RPZ rent caps have had minimal impact, and new rental and renovated properties are exempt from any cap. The change this year to link rent to inflation seems to make little difference with inflation hovering around 3%. There is therefore no rent freeze, despite the demands of the Minister of Housing and the TÃ¡naiste.
Raising rents has been government policy since 2011 in order to attract funds from vultures and real estate investors and increase property values ââfor the benefit of banks.
It’s hard to hear, but your unaffordable rent is the result of government policy that prioritizes landlords and investor funds. Institutional real estate investors who buy Irish real estate and develop co-living and build-to-rent don’t want tenants to be able to buy or rent an affordable home, they want them permanently locked into renting their tiny micro -units.
This is their overall investment strategy – to create a permanent rental class. Due to their refusal to fund public construction of social and affordable housing over the past two decades and the promotion of rental as an investment product, government policy has turned tenants into a cash cow for investor funds.
We have seen the lack of serious tenant action in the government’s homes for all plan. They were the idealized couple (and mythical at this point because they only exist in the minds of government ministers) with two incomes and allowing them to buy a house. Although he subsidizes the developers and associates the mythical poor couple with additional mortgage debt.
The tenant is the cash cow
Why does no one ask the question of the economic justification for the rent increase? Where is the evidence of rising homeowners’ costs to justify a 100% increase in rents in a decade? It is necessary to account for the decisions of the owners. There is no rent fairy who decides what the rents should be. Each landlord raising the rent has done so as an individual (or business). We must question the rationale for this decision.
There is also a gap between Irish national small landlords who pay tax on their rental income and private investor fund owners who pay little or no tax. Additionally, a tenant in Ireland pays more tax on their income than the multi-billion investor fund that takes rent from the tenant.
The fiscal injustice between tenants and Real Estate Investment Trusts is Dickensian in its inequality. Investor funds must be required to pay the appropriate tax and the real estate tax break must be removed if we are to keep society together. Why do we have tax breaks for high net worth homeowners and no relief for troubled tenants?
This leads to a yawning chasm of inequality as a generation gives up its opportunity to buy a house – not even an investment asset – just a house – as this generation has to pay a large chunk of its income in rent to a small one. part of society – owners and global real estate investment funds, who earn income and accumulate assets and thereby get richer. It is an inequality that has profound social and political implications.
It’s simple – change the policy
The solution is to provide a rental sector with affordable rents and secure rentals for life. How can we make it happen? We have to make it a policy and tell landlords and investors that if you are offering rental accommodation in Ireland it has to be affordable and safe. You provide housing to tenants and your investment should be made on this basis.
We also need a significant supply of âcost-effectiveâ housing – rental housing available on an affordable and secure basis for life for all. It must become a key part of our housing system. This is how Vienna in Austria has such a successful housing system – more than half of its housing is provided on this basis. The government’s plan for universal housing aims to provide a tiny amount of it. We should deliver 15,000 rental units at cost per year. Look how the rents would go down then.
Government policy must work to reduce rents. This means implementing measures to bring them down to affordable levels. For a person earning â¬ 30,000 per year, a rent based on 25% of their net salary is equivalent to â¬ 480 per month. For someone earning â¬ 40,000 per year, an affordable rent is â¬ 625 per month. If we really want to offer affordable rents, then current rents have to go down in the order of 50%.
The solution is for the state to implement emergency measures for tenants – a five-year eviction ban to give tenants some stability and security, an immediate general freeze on rent increases, a rent freeze. all new and renovated rents, and a rent reduction. strategy where rents are calculated based on property size and income affordability.
There are homeowners who for whatever reason, whether they have mortgage arrears or cannot cover their costs, leave the current housing market. For âaccidentalâ or reluctant owners, the state should offer to buy their homes. A state-backed housing association with a â¬ 1 billion seed fund could immediately start buying these homes and re-let them at affordable rents to tenants.
Landlords should understand themselves as committing to a larger social contract which is the provision of housing to tenants, not investment assets. Landlords must agree that their property rented to a tenant is the tenant’s home. This should be the new deal when you become a homeowner. The days of people buying homes as an investment for ever higher rents, then selling and returning properties are no longer ethically, socially or economically acceptable.
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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 to clarify that there is a right of tenants to safe and affordable housing. The government must hold this referendum immediately.
Dr Rory Hearne is an assistant professor of social policy at Maynooth University, host of the Reboot Republic podcast and author of Housing Shock.