There have been a few headlines recently about some families losing their rental accommodation as rents increase and becoming homeless (see these stories: one, two, three, four; also listen to this radio piece on RTE). It is reported that homelessness is on the rise and a homeless crisis is emerging in Dublin in particular. According to Dr Dáithí Downey, Deputy Director of Dublin Region Homeless Executive (DRHE), paraphrased in Saturday’s Irish Times, the homeless crisis is ‘bloody awful and getting worse’, with Jan O’Sullivan TD, the Minister for Housing, admitting that there is ‘no doubt’ that the issue of homelessness among families is a growing issue.
So what is the situation in Dublin at present?
According to DRHE, in 2013 a total of 4,613 unique individual adults used homeless services in Dublin (across all funded NGO’s and statutory services – a full report for 2013 is available from DRHE upon request). The demand has strengthened and changed in character since Autumn 2013 with more families with child dependents experiencing homelessness. The Simon Community report that in 2012, there was an increase of 24 per cent in those using their services, to over 5,000 individuals and families.
During the week beginning April 28th 2014, the DRHE confirmed there were 184 households with dependent children accommodated in 21 commercial hotels across the Dublin region in lieu of provision of more suitable emergency accommodation for families due to a lack of capacity in usual emergency accommodation. The majority of these families were welfare dependent private tenants. The decision to use hotels is seen as a last resort taken in order to prevent any increase in rough sleeping in Dublin, especially among adults with dependent children.
Dublin’s homeless services secured an exit to tenancies and independent living for 793 persons in 2013. This is down by 10 per cent on the previous year’s 879 exits, and a similar downward trend exists for 2014.
So what is causing the rise in homelessness, especially amongst families in Dublin?
Here’s what I think is happening.
1) From 2012 onwards there has been an increasing shortage of supply of property for purchase and rent in Dublin city due to in-migration and lack of construction.
2) The increasing demand for tenancies has led in turn to a rise in rent due to demand outstripping supply.
3) The rise in rent has been bolstered by new institutional investor owners, and by buy-to-let landlords facing a move from forbearance to foreclosure, seeking a certain yield by squeezing tenants – moving rents up at a rate significantly above inflation (25% to 30% increases in some cases)
4) Families who are income insecure – low wage, uncertain hours, flexible working, dependent on welfare – cannot afford the increase in rent, and rent supplement is not sufficient to cover the gap. They are being priced out of their homes in favour of those who can afford the new rental price. Such pressure is not aided by tenants often not knowing their full rights or seeking redress through the Private Residential Tenancies Board.
5) These families find it difficult to find alternative private rented accommodation due to rent inflation across the rental sector and landlord preferences for tenants not reliant on rent supplement and discrimination against such tenants. This is also reducing exit routes from homelessness.
6) There are nearly 90,000 households on the social housing waiting list and it is therefore almost impossible to parachute newly homeless families immediately into social housing. Consequently, those pushed out of the private rental sector end up in emergency homeless accommodation.
7) This process of creating new homeless families is likely to continue as rents rise given the present reliance on private rental sector for new social housing provision. Moreover, it might be bolstered if repossessions increase as expected from this summer onwards, with former homeowners becoming homeless.
So what is the solution?
DRHE recognise that the use of hotels is both an inadequate and inappropriate way to meet the housing needs of homeless families and can only be considered a short-term respite from being shelter-less and also that it is financial unsustainable. They are projecting a final year cost of over €4.5m for the use of hotels in 2014 if no alternatives are brought forward. So what is required?
First, the state needs to invest in creating new social housing – both refurbishing empty, unoccupied and derelict housing stock in the city and creating new suitable stock in control of the local authorities not private landlords. The Dublin local authorities have already submitted plans to government for the acquisition and refurbishment of stock for homeless households that will requires a projected capital budget of at least €10.5m to realise.
Second, rent control needs to be introduced that limits unregulated rent increases that are far in excess of inflation. This needs to be accompanied by an increase in tenant rights that offers them enhanced protections as is common in continental Europe.
Third, there needs to be an additional investment into homeless services to provides the resources that will enable them to more adequately deal with the crisis. Wishing it will to go away will not work.
Rob Kitchin
May 6, 2014 at 2:01 pm
Hi Rob,
Interesting post. Just on the sentcene:
“Second, rent control needs to be introduced that limits unregulated rent increases that are far in excess of inflation.”
The problem as you’ve outlined is a lack of housing supply. Part of your solution is rent controls. Given that most (if not all) evidence shows rent control has a large negative effect on supply (and quality) of rental housing how do you sqare the two when there are other mechanisms (ie site taxes, encouraging supply through zoning changes or incentives and as youve mentioned government provision of social housing) out there?
May 6, 2014 at 3:36 pm
The issue is not simply supply. The key factor in pushing people out of their home and into homelessness is not being able to afford rent rises. In many cases rent is increasing way in excess of inflation rates (10%-30%). For those that have low incomes simply cannot afford such jumps. I am not arguing that that there should be no rent increases, but that they should be linked to inflation or capped in some way and not left open to simple profiteering. We work very hard at keeping mortgage interest rates low and non-volatile, but seem to have a problem with the same notion with regards to rent. This seems to be a very imbalanced situation to me and decidedly imbalanced with respect to who it affects.
May 12, 2014 at 12:52 pm
As a person with skin in the game, I think it’s a little unrealistic to think that you can just ‘introduce rent control’ and not have negative outcomes. Any time an exercise is done that looks at an asset only side of the statement of financial position without considering contingent liabilities (debt, taxes etc.) you can get a misrepresentation of fact.
That will put a lot of people into dire financial situations while ensuring lower investment in the sector. Again, this is speaking as a person who does and has invested in housing and who puts roofs over many peoples heads (gladly may I add).
There is a level of rent control already, it’s called ‘the renewal date’ and it can be resolved with ‘longer leases’.
We offer 2-5 year leases with fixed reviews halfway through and a collar on the amount (generally 10%) that it can go up or down, this gives certainty to the client, but Irish people, and renters in general, don’t want that so they opt into annual reviews, that behaviour cannot be ignored, nor can it be dismissed by simply saying ‘landlords won’t honour it’ or ‘tenant rights are (insert excuse here)’.
Rents are back where they were 10 years or more ago when compared to CPI (link here: http://www.mortgagebrokers.ie/blog/economics/rent-control-a-misguided-policy-that-just-wont-go-away/ near bottom of the post). The big elephant in the room is the state! They have jacked up state owned housing rents to the tune of 80% over the same period! Where is the outrage for that?
Site taxes, reduced up front costs such as eradicating up front levies (now that we have LPT) and the like would do more for this than rent price fixing.
Germans have the right to build enshrined in constitution, there is a very good comparative planning study that includes Ireland and Germany which I can send you.
The issue is in part planning as planners effectively create a false scarcity of land you can build on, that shouldn’t be the case, it also directs reward and gain toward the special few who obtain zoning.
June 2, 2014 at 11:43 pm
Hi Rob, you may be interested in my recent posts on some other issues (and solutions) I see within the property market at the moment.
http://www.hapennythoughts.com/category/property-prices/
November 2, 2014 at 6:12 am
Reblogged this on Citizens, not serfs.
November 22, 2014 at 8:49 am
I am one of the welfare dependent people you refer to. I need a place to live, the rent allowance cap is a huge hindrance because rents have risen and the rent caps don’t reflect this. Most landlords won’t accept rent allowance because they know they can get more rent from people who don’t rely on rent allowance.
It’s almost impossible to find a decent property, where the rent meets the cap limit and where the landlord accepts rent allowance. It’s a crazy system which excludes welfare recipients, that’s not fair and is probably breaking some kind of equality law, but people on welfare will never mass protest because they’re too busy and exhausted just trying to survive each day, scrabbling around for loose change to get from week to week.
September 9, 2015 at 6:26 pm
Surely, people who are dependent on Welfare and not working in Dublin shouldn’t be subsidised to live there by the State. There’s plenty of available housing, up and down the country at cheaper rates. The State is exacerbating the problem by not freeing up housing blocked by Welfare dependants. Having to live close to one’s “Ma” isn’t a good enough excuse to be gouging the taxpayer any longer. Free up the city accommodation for workers so that they don’t have to commute from surrounding counties please.
November 24, 2014 at 1:51 pm
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