Threshold, the national housing organisation, has called for urgent measures in the forthcoming budget to ease the hardship being faced by tenants during our current climate of rent hikes.
Bob Jordan, Director of Threshold, said “spiralling rents are putting enormous pressure on people living in rented accommodation. Unless measures are introduced by the Minister for Finance to assist them, we will see increased problems with rent arrears and evictions in the coming year.”
It is estimated that, nationally, rents increased by 9% in the last 12 months. However, many of Threshold’s clients living in high-demand areas have experienced increases of up to 20%.
“Political attention has focused heavily on the plight of first time buyers over the past year. Concerns over interest rates and property costs prompted political consensus to abolish stamp duty for first-time buyers during the summer.
“Meanwhile, the real pressure is being felt among renters who are struggling to cope with excessive rent increases. It is time that their pressures were addressed in a realistic way through increased reliefs and exemptions, which already apply to homeowners.
In its pre-budget submission, published today, Threshold has called for the doubling of rent relief for tenants. “The current relief for a single person is €360 which – for many – is now only equivalent to a week’s rent. This provides very limited income benefit and is completely out of line with levels of mortgage interest relief for homeowners.
As another measure to assist tenants to cope with rising rents, Threshold has called for an increase in stamp duty exemption for leases on rented accommodation. “As it stands, stamp duty at the rate of 1% applies to any one year lease with a rental value of over €19,050. Families and those sharing accommodation are increasingly being charged rents that now exceed this stamp duty threshold. This means that they have to budget for another €200 or more to cover their annual rent costs.
“According to the latest Daft.ie report, the average rent for two-bedroom accommodation in the Dublin 2 area is now €1728 per month, adding up to a yearly rent of €20,736. A tenant would have to pay stamp duty on a year-lease for this accommodation.
“In light of the abolition of stamp duty for first-time buyers, it is both logical and fair to increase the stamp duty threshold for renters, as these are the people who cannot afford to get their foot onto the property ladder in the first place. In this budget, measures should be introduced to exempt leases under €35,000 from stamp duty.”
According to Threshold, rents have been rising due to demand but also because landlords are passing on interest rate increases to their tenants. This is driving up the market for rents, especially in city centre areas, and is putting tenants under enormous pressure.
Threshold has called for a local area rents register to be published online. “By giving the Private Residential Tenancies Board the power to publish such information, comparison can be made for the purpose of calculating the going market rent for an area. This is required by tenants if they wish to challenge a rent increase,” added Bob Jordan.
In its pre-budget submission, Threshold has also called for the following measures:
Measures to assist low-income groups to include: the payment of rent supplement in advance, and not in arrears; increasing rent supplement rates in line with market rents; and income assistance for low-paid workers in rented accommodation.
Private Rented Sector Reforms to include: the introduction of legal aid and advocacy support for tenants; the establishment of a rental deposits board under the Private Residential Tenancies Board; and the introduction of promised new inspection standards for use by local authorities when inspecting dwellings.
Measures to Meet Housing Need to include: the delivery of 9,125 new housing units for 2008; the provision of social housing for single people and a renewed impetus for the Rental Accommodation Scheme.
Fiscal Reforms to include: Tighter control of property investment relief to ensure that the dwelling is occupied in order to enable the investor claim the relief; tax investments to encourage institutional investment in the private rented sector and revised tax relief for the refurbishment of private rented accommodation.