Interesting Threshold Study

Threshold have released an extremely interesting study into the feasibility of institutional investment in private rented housing in Ireland.
Sadly, the report is badly tainted by some common assumptions held about private tenants in general. For example only SWA recipient tenants are considered to be "low income." It is not considered that a large proportion of private tenants - possibly even the majority, are in fact on below average incomes. In fact thats very probably why they are in the rented sector in the first place. In property obsessed Ireland, and with high levels of substandard rented property at a price that actually exceeds the cost of a mortgage, it is natural that the aspiration for most tenants is home ownership. Unfortunately the very nature of the Irish private rented sector has made it highly unattractive for all but those who cannot escape it. This point is missed out, not only in the Threshold report, but in almost all commentaries on the sector.
The twin problems of affordability and quality are the key issues facing the tenant today. However to some extent the affordability issue is somewhat skewed even when discussing the problems of SWA tenants since it SWA tenants tend to seek self-contained units rather than shares in properties. While for the 40% of SWA recipients who are families (whether two-parent or lone-parent) this is natural, the remaining 60% seem to have made things more difficult for themselves by largely confining their ideal tenancy to self contained units, which are far more expensive. In contrast, my experience of working tenants is that they tend to accept sharing - possibly because the rent is coming straight out of their own pocket, and not a government subsidy. In fact I would go as far as to say that the willingness of the government to subsidise single tenants in non-shared properties has actually encouraged tenants to confine themselves to a limited sector of the market, not only making more difficult to find suitable accomodation, but also pushing them towards converted pre-63 properties, who are far more likely to be substandard. This is rarely, if ever, discussed in studies.
In contrast, the UK market avoids this problem from becoming an issue by refusing to subsidise younger benefits recipients (those under 25) to occupy whole units. Instead they are only granted the rent to cover the market rate for a room in HMO (homes in multiple occuption - basically a shared house which is not subdivided). This not only forces younger tenants to not confine themselves to more expensive entire units, but also encourages more diversity in the housing market by mixing tenant types. In Ireland, on the other hand, SWA tenants often tend to be concentrated in converted or poor quality properties or less desireable areas - but part of this may actually be encouraged by allowing all tenants to pick property types. I think such a policy would be very useful in Ireland and would diversify the sector.
Lastly there is very little real knowledge of the private non-subsidised tenant, largely since they tend not to apply for the housing list. In fact its not even clear what percentage of tenants are students, how many are migrant workers from abroad (or mobile Irish workers), or if they have chosen renting as an alternative.
One thing that is clear is that the current policy of considering the sector ONLY from the perspective of the SWA tenant is not going to help solve the problems associated with the sector. Also its clear that there are powerful vested interests who gain from ensuring that the sector does not become heavily regulated. Its also critical that the sector is not seen as a temporary solution for those with limited option, whether SWA recipient or working aspiring would-be home-owners.


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