Minimum-wage earners would pay 82% of net income on renting average one-bedroom apartment
Speaking in response to the publication of the Residential Tenancies Board’s Q4 2020 Rental Index, national housing charity Threshold has expressed concern about the lack of affordable housing options for low- to moderate-income workers.
Speaking about the findings of the report, CEO of Threshold, John-Mark McCafferty said: “Despite the fact that Covid-19-related job losses continue to disproportionately impact private renters, rental yields have not been affected, with year-on-year growth around the country.
“The average monthly rent in Dublin, €1,745, is in fact greater than the average monthly income of someone working in the accommodation and food sectors. With 91% of monthly rents in Dublin set at over €1,000, securing affordable, good quality housing is a struggle for all; particularly for young workers, or those on less reliable incomes. That same worker would be better placed to afford a mortgage, if only they could access one.
“Based on average rents, private tenants working in the accommodation and food sectors and living in Galway – where the average monthly rent is €1,166 – would only have €400 to €500 left over after paying their rent. The standardised average rent for a one-bedroom apartment is €1,306, which represents an increase of 2.1% year-on-year; if a person working 40 hours a week at the current minimum wage of €10.20 an hour were to rent at this rate, they would be paying 82% of their net income on rent.
“The report shows large annual increases in rents in certain areas – 11.4% in Leitrim, for example, 9.9% in Longford and 8.3% in Carlow. This might hint at workers beginning to move away from unaffordable cities as remote working options become more widely available. A large annual decrease of 8.3% was observed in Waterford, however; so the sector is still very much in flux.
“It is worth remembering the context that the 2020 data is set against: extraordinary emergency interventions were in place in the market for a large part of the year, including the blanket evictions ban. In spite of these measures, rents continue to grow, albeit lower than the Rent Pressure Zone limit of 4%. Rents in the Greater Dublin Area, however, continue to be significantly higher than rents outside of this region, with price inflation here higher than the Rent Pressure Zone limit of 4%.
“Meanwhile Dublin rents are such that, on average, a one-bedroom house in Dublin costs more to rent than a four-bedroom house outside of Dublin. This must have huge implications for people considering whether to settle in Dublin and on peoples’ ability to remain in the city.
“With rents continuing to increase and the Rent Pressure Zone legislation coming to an end this year, measures will need to be put in place to avoid a return to annual rent increases of 20%, 30%, 40% and more, which we witnessed prior to the introduction of Rent Pressure Zones. An increase in affordable housing supply will be a key measure in moderating and reducing the cost of renting in Ireland.”
Threshold’s helpline remains available Monday to Friday, 9am to 9pm at 1800 454 454, and via its website at https://www.threshold.ie/advice/help for any renter in need of advice or support.