Household incomes struggling to match rent costs, research shows

Household incomes struggling to match rent costs, research shows

Household incomes are struggling to match the average cost of rental accommodation, according to new research from the Banking & Payments Federation Ireland (BPFI).

BPFI, a banking industry lobby group, has analysed data from the Residential Tenancies Board (RTB) and the Central Statistics Office (CSO). It shows that average earnings in 2012 would cover 94% of rents. By the first quarter of 2019, average earnings could only cover 65% of average rents.

The findings illustrate the pressures dominating the housing market, according to BPFI.

"The mismatch between current demand, as well as pent-up demand, and the supply of new homes seems to have brought average sales prices relatively close to the peak of the previous cycle in terms of sale prices," said BPFI's chief economist, Dr Ali Ugur.

He said the same mismatch also seems to be affecting rental accommodation in pushing up private sector rents where we have significantly surpassed peak rents from the previous cycle.

Meanwhile, the Peter McVerry Trust has called on the government to introduce a tax break for landlords who sell properties to social housing providers or local authorities and allow tenants to stay in situ. It is one of a series of measures included in its pre-budget submission that it says will help to ease the homelessness crisis.

Pat Doyle, chief executive of the Peter McVerry Trust, said the tax break would allow landlords to retire or leave the sector while also protecting a tenant from homelessness.

"Such a measure would also lessen churn and competition in the private rental sector and facilitate a shift from short or long term leasing from the private sector to a more traditional and sustainable model of social housing provision," he said.

The charity also called for the government to allocate €200 million towards the construction of one-bedroom homes in the next 12-18 months. The biggest cohort in homelessness and on social housing waiting lists are single-person households, Mr Doyle said. Ensuring that there is sufficient supply of one and two-bed homes is crucial in solving the crisis, he added.

The charity is also seeking an increase in the income threshold for households to qualify for the mortgage-to-rent scheme, which allows homeowners in mortgage arrears to sell their property to a local authority or social housing provider and lease it back, and the introduction of a bursary scheme for children in homelessness or residential care to support them to pursue third level or further education.

A number of tax measures, including a 0% VAT rate for construction projects that include the re-use of long-term vacant buildings, an increase in the amount of credit available through the interest free loan under the Repair and Leasing Scheme, and an empty homes tax are also included in the submission.

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