The Government must protect the most vulnerable in society by maintaining current levels of rent supplement payments. That’s according to Threshold, the national housing organisation, which has also identified a number of reforms aimed at making real savings for the State.
According to Aideen Hayden, Chairperson of Threshold, structural reform of the rent supplement scheme would achieve greater efficiencies in the long-term than any spending cuts. She was speaking today (08.10.10) at the annual pre-Budget forum for the community and voluntary sector, which was attended by Éamon Ó Cuív TD, Minister for Social Protection.
“The recession has seen a doubling in the numbers of households moving onto rent supplement,” said Ms. Hayden. “There are now over 96,000 households reliant on rent supplement, and it looks likely that this number will continue to rise.
“People in receipt of rent supplement are very vulnerable. Those who avail of the scheme are already on the breadline and have very little – if any – disposable income; for them, rent supplement is a vital safety net. So cutting individual payments would simply lead to greater hardships and increase their risk of homelessness.
“The annual budget for the rent supplement scheme is over €500 million. However, rather than succumb to the temptation to reduce this budget, Threshold is calling on the Government to maintain existing levels of payments. Instead of cuts, we would urge the Government to make reforms to improve the scheme’s cost-effectiveness and
efficiency for all concerned.”
According to Threshold, the main reform required is for rent supplement payments to be made directly to landlords rather than tenants. This would enable the State to achieve cost savings through negotiating cheaper rents and ensuring all landlords were fully tax-compliant.
“At present, rent supplement is paid to tenants, who are then obliged to negotiate directly with landlords to source suitable accommodation and agree rates of rent,” said Aideen Hayden. “The indirect nature of this relationship means the State is reliant on tenants to negotiate a good deal on its behalf.
“If the system was changed to one whereby payments were made directly to landlords by the State, there would be significant improvements for all concerned. The State could negotiate cheaper rents with landlords and ensure only those who met all their legal obligations rented properties under the rent supplement scheme.
“Landlords would benefit from the reassurance that rents owing would be paid directly into their bank accounts each month. And tenants would benefit from greater security and greater access to landlords in mainstream markets – at present, because rent supplement is not paid directly into landlords’ accounts, many landlords refuse to accept rent supplement tenants. This reform would enable tenants to avail of better quality accommodation because they would have access to wider choice.”
According to Ms. Hayden, reforming the rent supplement scheme would also allow the Government to ensure all landlords were fully tax compliant.
“There is a small minority of landlords who specialise in renting poor-quality accommodation and who fail to comply with their legal obligations,” she said. “In our experience, a landlord who is non-compliant in one area is often non-compliant in others as well.
“If the Government was making direct payments to landlords, they would be in a position to ensure all landlords were fully tax compliant. We would suggest a withholding tax on rent supplement payments for cases where landlords had not established they were fully compliant. We would also like registration of tenancies with the Private ResidentialTenancies Board to be a condition of continued payment of rent supplement. This would ensure all landlords receiving payments were meeting all of their legal obligations.”
Ms. Hayden pointed out that the rent supplement reforms being suggested by Threshold are existing features of the Rental Accommodation Scheme, which was established in 2004 to cater for long-term social housing needs.
“With the Rental Accommodation Scheme, the State pays rent directly to landlords and ensures that only accommodation units meeting the minimum standards set down by law are considered for rent,” she said. “So there is a precedent there for the reforms we are suggesting. The effective doubling of rent supplement applicants in recent years has imposed a huge administrative burden on the State. But, by incorporating these reforms into the forthcoming Budget, the Government could ensure a more secure, efficient and cost-effective process.”
Rent supplement is the income support that assists people living on social welfare incomes to meet their housing costs. Threshold’s pre-Budget submission is available to download.
Threshold was founded in 1978 and is a not-for-profit organisation whose aim is to secure a right to housing, particularly for households experiencing the problems of poverty and exclusion. Its main concentration of work is within the rented sector. The organisation operates a national office, based in Dublin, and three regional offices.
Further information is available at www.threshold.ie.