ESRI: 17% of people receiving rent support from taxpayer are in top half of earners!

Brendan Burgess

Brendan Burgess

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More housing madness today.

More than half of renting households receive support for housing costs

www.esri.ie www.esri.ie

Almost 300,000 (293,673) households received support for their housing costs in 2020, up from 134,973 in 1994. This amounts to 16 per cent of households overall and 54 per cent of those renting. Over this time there has been a shift away from the direct provision of support – through local authority and approved housing body owned accommodation – towards indirect subsidisation of housing costs in the private rental sector, with Housing Assistance Payment (HAP), Rental Accommodation Scheme (RAS) and Rent Supplement (RS) combined assisting around one-in-three supported renters today, compared to just one-in-five in the early 1990s.

These are among the main findings of a new report published today by the Economic and Social Research Institute (ESRI) examining housing supports for low-income renters.

Other key findings of the report include:

  • Both direct and indirect supports do a huge amount to improve affordability for the households receiving them: Despite their lower levels of income, we estimate the median rent-to-income ratio – a key metric of housing affordability – is 0.147 for supported renters compared to 0.230 for unsupported renters. The greater affordability of housing for supported renters remains after controlling for dwelling type, location and quality.
  • There are questions about how well targeted these housing supports are: many low-income renters receive no support for their housing costs and face high rent-to-income ratios, while almost one-in-five (16.7 per cent) of supported renters are in the top half of the income distribution.
  • The qualification criteria for housing supports have become more restrictive in recent years: we estimate that the share of households eligible to apply to their local authority for support with housing costs fell from 46.8 per cent to 33.9 per cent between 2011 and 2019, largely because of a freeze to most income limits.
  • The rent limits for HAP cover a very small share of properties, particularly in cities for single adults: across Dublin, only 6 per cent of one-bedroom tenancies registered in 2020 came under the maximum rent allowed for single adults claiming HAP, while only 7 out of 31 local authorities had at least a quarter of one-bedroom tenancies below these limits (see infographic). This is in part because rents for new tenancies increased by 24 per cent between 2017 – when these rent limits were last revised – and 2020, but it also reflects differences in coverage across counties when introduced.
  • There is substantial variation across local authorities in the level of support provided to otherwise identical households: more than 9-in-10 supported renters have their rent contributions– and so their level of support –determined by their local authority’s differential rent scheme. These vary hugely in their design across local authorities, leading otherwise identical households to receive different levels of support. For example, a lone parent with two children earning €25,000 per year would pay a contribution of just €226 per month in South Dublin County Council, €313 per month in Donegal but €450 per month in Meath (see infographic).
 
And yet, if you are in the top half of earners, can you afford to rent property in Dublin without support? In a lot of cases, I doubt it.
 
The average household income in Ireland is around €44k. That's plenty if you don't have to pay rent or a mortgage but it's not a lot if you do. A take-home income of around €3000 a month won't rent a house in most urban areas in this country.
The main driver of rent price increases is the State subsidies on rent. In this scenario I've no problem with working people getting the same handouts as people who don't work or are grossly under employed. It does kind of blow up the myth of the squeezed middle getting nothing back for the taxes they pay. They might be squeezed but it isn't by the State.
 
Brendan Burgess said:
I will study the report later.

I wonder does it point out that if the state supports 50% of renters, it's bound to push up rents?
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I think that's the implication I only read through it very quickly. Approximately 300,000 renters 54% getting help , in the appendix I thought I saw Cork Co. Councils max annual amount for HAP almost 24k or €2k a month. Even half that amount would be over 50% of average rents in Cork county.......

Landlords must be delighted with HAP
 
Paul O Mahoney said:
I think that's the implication I only read through it very quickly. Approximately 300,000 renters 54% getting help , in the appendix I thought I saw Cork Co. Councils max annual amount for HAP almost 24k or €2k a month. Even half that amount would be over 50% of average rents in Cork county.......

Landlords must be delighted with HAP
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€2k a month is the same as a €50k pay rise if it was earned income taxed at the marginal rate. .
Social Housing tenants can avail of the Rent a Room scheme so that's another €12k net, or €24k gross if it was earned income taxed at the marginal rate.
That means that someone on €36k a year on HAPS who is renting a room or two for a total of €1k a month has the same net income as someone fending for themselves on €100k a year.

'tis a great little country...
 
Purple said:
€2k a month is the same as a €50k pay rise if it was earned income taxed at the marginal rate. .
Social Housing tenants can avail of the Rent a Room scheme so that's another €12k net, or €24k gross if it was earned income taxed at the marginal rate.
That means that someone on €36k a year on HAPS who is renting a room or two for a total of €1k a month has the same net income as someone fending for themselves on €100k a year.

'tis a great little country...
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I don't know whether to be angry or jealous!
 
T McGibney said:
Do that though and you worsen the housing accommodation crisis. Total catch-22.
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If someone in a social housing unit has the space to rent a room then their social housing unit exceeds their needs and they should be moved to a smaller social housing unit.
Public assets should be used for the greatest public good. Assigning excess public capital to an individual for their personal use which they can then monetise is not a good use of that capital.
 
Purple said:
If someone in a social housing unit has the space to rent a room then their social housing unit exceeds their needs and they should be moved to a smaller social housing unit.
Public assets should be used for the greatest public good. Assigning excess public capital to an individual for their personal use which they can then monetise is not a good use of that capital.
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I agree but the fact remains that if you disincentivise people from using the rent a room scheme, you ultimately add to homelessness.

It's one of a myriad of examples where housing policy failure has led to led to further policy failures and anomalies throughout the system.
 
T McGibney said:
I agree but the fact remains that if you disincentivise people from using the rent a room scheme, you ultimately add to homelessness.

It's one of a myriad of examples where housing policy failure has led to led to further policy failures and anomalies throughout the system.
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Yep, HAPS is the main reason for rent inflation and the State buying up private housing for use as social housing is one of the main reasons houses are so expensive and we need to provide social housing.
 
Purple said:
€2k a month is the same as a €50k pay rise if it was earned income taxed at the marginal rate. .
Social Housing tenants can avail of the Rent a Room scheme so that's another €12k net, or €24k gross if it was earned income taxed at the marginal rate.
That means that someone on €36k a year on HAPS who is renting a room or two for a total of €1k a month has the same net income as someone fending for themselves on €100k a year.

'tis a great little country...
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Hap costs the taxpayer 460m , another scheme, can't remember its name €133m other schemes , have a cost but I'd look in detail, and some local authorities schemes didn't give or have cost of the service .

But you can be assured that the total is huge somewhere between €800- €1bn would be my guess.( that's annually)

I don't know if "charities " that also provide accommodation including newly built houses are included, I suspect not but I haven't read the report in detail.

Edit the figures are from 2020, so I'd imagine 2021 might be higher given the pandemic and people not earning full wages
 
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Paul O Mahoney said:
Hap costs the taxpayer 460m , another scheme, can't remember its name €133m other schemes , have a cost but I'd look in detail, and some local authorities schemes didn't give or have cost of the service .

But you can be assured that the total is huge somewhere between €800- €1bn would be my guess.( that's annually)

I don't know if "charities " that also provide accommodation including newly built houses are included, I suspect not but I haven't read the report in detail.

Edit the figures are from 2020, so I'd imagine 2021 might be higher given the pandemic and people not earning full wages
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HAP doesn't cost the tax payer €460m it costs significantly less than that as every €1 of rent half of it (for small landlords in the higher tax bracket goes back to the State and by extension the Taxpayer).

It never ceases to amaze me how the true costs are not quoted rather the higher figs as people accept these higher figs as actual figs.
 
T McGibney said:
I agree but the fact remains that if you disincentivise people from using the rent a room scheme, you ultimately add to homelessness.

It's one of a myriad of examples where housing policy failure has led to led to further policy failures and anomalies throughout the system.
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Everyone is quick enough to go after the private owner and tax them, put vacant property tax on them etc.

Why not introduce the bedroom tax on social housing and actually do away with the differential rent scheme and actually charge rent akin to the market rate or some association to it rather than to some calculation based on household income which the max rent contribution is capped even if the household is considered wealthy.

The recent newspaper article highlights that (I think a % of people in receipt of State handouts for housing are actually in the higher income bracket). I will stand corrected on this as I am quoting this from memory.
 
The Horseman said:
HAP doesn't cost the tax payer €460m it costs significantly less than that as every €1 of rent half of it (for small landlords in the higher tax bracket goes back to the State and by extension the Taxpayer).

It never ceases to amaze me how the true costs are not quoted rather the higher figs as people accept these higher figs as actual figs.
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The report from the ERSI quotes that figure as does the HAP report from 2020.

This is the cost, if you want to calculate the net by deducting tax paid by landlords off you go.

Either way the taxpayer pays for it.
 
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