Great to see news that the government are finally taking responsibility for the enormous chaos that is private rental subsidies for social welfare recipients.
The plan is do make local authorities responsible for tenants after 18 months. In other words the money that is currently being spent by health boards on what is an enormous subsidy to middle class property owners to pay mortgages for substandard homes that other people end up living in may change.
A fascinating report was carried by ERSI last week. You can read it here. The suggestion is that the problem is not affordability for home owners, but that the real problem is coming from the private rented sector as modest wage earners are priced out of the rental market and are forced to borrow left, right and centre to pay mortgages that are at least under control.
One of the most frustrating aspects of any study of private rented accommodation is that it almost always focusses on the so-called "bottom third" - those on social welfare receiving rent allowance in urban areas. There is an underlying assumption that those paying the most on the highest incomes and hence paying the largest rents will enjoy luxurious standards. In fact this is a mythology that needs to be explored as the reality is that there is quite a substantial amount of extremely poor quality accommodation being let at a high price to wage earners. The very fact that 50% of properties inspected by local authorities in recent years have been found to be substandard would suggest that the problems of renting are not exclusive to those on social welfare. A great deal of wage earners, some of them on average salaries and better, are also impacted by poor quality but expensive accommodation.
One fact of life today is that there are very few very high income earners in private rented accommodation. A very small minority, mainly ex pats working in multinational companies on medium term assignments make up Ireland's rather small "executive rental sector". In reality this number is very small and probably makes up a tiny percentage of the total. Home ownership is almost exclusively the case for high income earning Irish people, with the exception of small numbers of single people under 35.
It is probable that a study of home ownership in different income classes would reveal that higher income earners are more likely to be home owners. However many of the lower income earners in the rented sector may actually be paying far more in rents than many of them, but for various reasons are excluded from home ownership. The residualisation often described in the sector is not just about those on social welfare, but those on low to average and slightly above average incomes, single people and young adults under 35. In fact this group outnumber rent allowance recipients by 2 to 1, but their needs are almost never considered in studies.
One single fact revealed by the ERSI study is that rents nationwide have soared in proportion to the number of people receiving rent allowance. Since caps were introduced in 2002, rents have started to stabilise or even fall (mostly in the case of very high rents than lower ones). Also the removal of the entitlement to rent allowance for people without a history of renting in December 2003 will have stemed the huge rise in social welfare recipients on rent allowance, which is in total contradiction to the collapse of the dole queues since 1994 (by almost two thirds). There is a real need to study why dependency on rent allowance grew at a time when social welfare dependency was dramatically falling. However anecdotally there is a suggestion that the 6 month limit has caused hardship for some groups, most notably separated families, emigrants and people at risk of homelessness but not actually homeless. The very fact that the allocation of rent allowance has nothing to do with housing need begs for study. Earlier this month, there were 168,000 people officially unemployed, in 1994 this figure was almost 300,000, yet the number of people in receipt of rent allowance soared from 39,000 in 1996 to over 54,000 in 2002 to about 60,000 or more in early 2004 - yet this was at a time when unemployment was supposed to be falling?
How many of these were genuinely in need of housing? One of the features of SWA is that it responds to the immediate needs of tenants, whereas response to people under normal housing schemes, even when a housing need is official declared, is met on a priority basis and is dependent on resources available. The net result of this is that effectively some of those considered to be the lowest priority actually end up getting priority treament - including those deemed by the local authorities to have the lowest priority. This inequity will need to be adressed, and I would think that there will be enormous controversy when it is, at the level of exposure of the exploitation of the SWA system by people who have realistic and feasible housing alternatives, but choose SWA as a perceived entitlement. From my own experience of renting, the real level of the abuse of SWA could be very extensive, with a huge proportion of tenants renting properties that they do not critically need in order to be able to get to work or places of study. One would wonder, for example, just what percentage of SWA recipients have reasonable alternatives, considering that the vast majority of recipients are single people. There is no doubt that single parent families have an established housing need and I would not question their entitlement - but what for a person in their late 20s or 30s, who has no desire to work, living in subsidised rented accommodation while they have relatives with free rooms living close by? When these people's cases are exposed by the new systems, will they continue to be offered alternatives or "struck off" the system?
My experience of SWA tenants is that about 30-50% are mainly younger people on long term social welfare, most of whom don't want to work, but want the independence of adulthood afford to them by living alone or with friends. The remainder are made up of highly vulnerable people, often with mental health issues, who've "dropped out" of the system and who live quietly alone. Many of these have underlying needs that are not met by the health boards or local authorities, and these would benefit most from any changes. The problem group is the professional welfare recipients, the so-called "Welfare Queens". These will be the biggest problem as it becomes clear that their needs are actually desires rather than real needs. Policies will need to be developed to cope with the problem of housing people who do not have real housing problems, but who have been a burden on the state for long enough for a potential future need to develop.
The recent ERSI study made a valid point on the redirection of housing spending towards the mythical 10,000 affordable homes for low wage workers (though these have yet to appear, and the concept of "affordable" doesn't seem to cater for workers on less than an average wage, which is a huge proportion of workers). I presume that one of the intentions of making more low cost purchased housing available in the future is to reduce the demands on the rented sector, thus making more room available for those who cannot or choose not to buy. The first thing that needs to be done is a comprehensive review of the subsidised rented sector, with in depth studies of how subsidies are reflecting real needs, or are being used as subsidies for subsidies sake. The imposition of a 6 month rule, however contentious, will have removed almost the entire abuse factor, as all new SWA recipients will come from people who are currently employed but may lose their job or become disabled, rather than people moving out from the family home whose housing need is less urgent.