Tenants warned rent supplement may be cut to preserve social welfare

As landlords and tenants heap criticism upon the Government for its latest cap on rent supplements, opposition party politicians have warned the payment could be cut again in this year’s budget if social welfare payments are to be preserved.

The National Organisation of the Unemployed has said the third cut in rent allowance in four years has created “huge uncertainty” among those on social welfare as many are being forced to move out if their landlord won’t accept a cut in rent. Rent supplement has been cut in 2008, 2010, and 2012.

Sinn Féin Senator Trevor Ó Clochartaigh said when these people are forced to move on, they find it “increasingly difficult to actually find houses and apartments that are being rented at this rate”.

“We’re hearing of people in cities who spend days looking at websites to find houses in their area that will meet the rent supplement criteria. When they find them, the houses are often snapped up in a matter of minutes as there are so many in the same boat,” he said.

The Irish Property Owners Association said many landlords can’t afford to take the cut in income.

Up to 55% of its landlords have restructured their mortgages due to rising costs such as interest rate increases, obligatory BER certificates, the €200 NPPR charge, 25% cut in mortgage interest relief, and the €100 household charge.

“The rental cap is effectively rental control. But often there isn’t an alternative there. As rent supplement is cut, it will disadvantage these tenants as they won’t be able to compete with someone who can afford to pay market rent themselves,” Margaret McCormick, a spokeswoman for the association, said.

The department funds about 40% of the private rented sector, and since 2005, rent supplement expenditure has increased from €369m to more than €500m in 2011. This year, it is estimated to fall to €436m.

The numbers claiming rent supplement has increased from almost 60,200 in 2005 to more than 93,314 this year.

A department spokes-woman said that “these new limits have been tested extensively and will not cause or create homelessness for anyone in receipt of rent supplement”.

Fianna Fáil’s finance spokesman Michael McGrath, said some landlords are “very co-operative” while others can’t afford to absorb the reduced rental income.

“There is doubt that the cuts to the supplement have created huge difficulties for people and there are a great many landlords in deep financial trouble out there who can’t afford to absorb the cuts,” he said.

“On the ground there may be no further scope for cuts but a huge sum of money is being spent on this now and if the Government honour the commitment not to cut welfare, they will have to look at any ancillary payments such as this.”