Thursday, 30 April 2009
Social Welfare Benefits.
Question 3: To ask the Minister for Social and Family Affairs the support, in the context of the 8% reduction in the payment of rent supplement, she will offer claimants in negotiating rent reductions; and if she will make a statement on the matter. [17301/09]
The recent supplementary budget provided that payments currently being made to existing rent supplement tenants be reduced by 8% with effect from 1 June 2009 in the expectation that landlords will reduce their rents, given the reductions in rent levels in the private rental market as a whole. While tenants may be contractually obliged to pay the rent agreed to in their lease, it is expected that landlords will decrease the rent in recognition of the fact that rents have fallen generally and that there are now a large number of vacant rental properties nationally.
Data published by the CSO show that rents fell by almost 7% between November 2008 and February 2009. A leading property website reports that rents have fallen by around 12% in the past year. A similar trend is apparent in tenancies registered with the Private Residential Tenancies Board. There are currently almost 85,000 people in receipt of rent supplement, an increase of 42% since the end of December 2007. It is essential that State support for tenants does not give rise to inflated rental prices and overcharging by landlords.
Other changes in the supplementary budget provide for new maximum rent limits to be prescribed in regulations to take effect from 1 June 2009 to reflect the general reductions in private sector rent levels as well as an increase of €6 in the minimum contribution towards rent and mortgage interest supplement to €24 a week.
Existing recipients of rent supplement will be advised by letter in advance of the change being made to their rent payment and this communication can be shown to landlords as evidence of the revised rent supplement in payment in individual cases. Landlords will be advised through advertising in the print media of the general reduction in rent supplement payments.
Community welfare officers have discretion to provide assistance where exceptional circumstances exist in any individual case, for example, where homelessness might result due to the inability of a person to meet his or her rent payment.
I agree that significant savings can be made in the area of rent supplement and that there should be a reduction in what landlords receive. However, I have a difficulty with the manner in which the Minister is approaching this. She is, in effect, asking 85,000 households to negotiate directly with their landlords. Some will have the ability to do this, but others will not. The Minister referred twice in her statement to expectations as regards landlords' remuneration decreasing. She is operating from a position of hope, in believing this is something that will happen. Will the Minister or her Department take any action directly? Since the Department has the names and addresses of the landlords through the forms people fill out for rent supplement, will it make contact with them? As regards advertising in the media, a landlord can open a local paper and close it again, without concurring that he should decrease his rent charges by 8%.
The Minister has chosen a blanket figure of 8%, while the figures for rent up and down the country are very different. She admitted last week, for example, that there is a real problem with tenants in bed-sits, particularly in Dublin inner city and perhaps in other highly populated areas. It is an unfair way to do it. In some places, it has gone down by as much as 13% while in others, it has only gone down by 5%. It is a totally inequitable way to do it. The Minister could have made greater savings in some areas which she could have offset against areas in which she will make fewer savings.
In addition to the print media, I hope the Minister has another plan to get in touch with landlords to try to achieve this. I did not expect the Minister to double in the past six months what the tenant must pay which, coupled with this reduction, will leave some people homeless.
There is no reason anybody should be homeless as a result of this. Landlords throughout the country are reducing rent where the tenant seeks a renegotiation because people have taken a drop in their income. I have yet to meet anybody whose rent has not been reduced because of a change in their personal circumstances. Landlords are the first to know that the market is such that they cannot command the type of rent levels they were getting.
The letter each tenant will get from the Department will be the official way of him or her telling the landlord he or she is not getting as much as he or she was. It will more than just the advertising by the Department in newspapers. That information will come from both sides.
The increase demanded of each tenant, bringing the weekly contribution a tenant must make to €24, is still less than one would pay on RAS or if offered social housing. We have evidence that people turned down the opportunity to move off rent supplement because they were in a better location or in better accommodation on rent supplement and paying less. It was a disincentive. That is the reason we felt it was reasonable, although difficult, to increase it.
The difference is that people in receipt of RAS and people in local authority accommodation can work as much as they want. People on rent supplement cannot do that. The Minister is not making a fair argument because people do not have that opportunity if on rent supplement. In the majority of cases, she is taking that money directly out of the social welfare payment.
Why did the Minister not examine the idea of insisting that the Revenue Commissioners, through her Department and the Private Residential Tenancies Board, ensure they get all taxation due on these properties rather than only penalise the tenant? If we ensured all landlords paid tax, it would be a definite way for the Minister to get greater funding into the Exchequer, although I appreciate not specifically into her Department. She could have gone down that road instead of penalising the tenant by increasing the amount he or she must pay.
I did not answer the Deputy's first question on rent limits throughout the country. Accepting that rents in some areas have come down by a lot more, it is our intention when setting the new rent limits to ensure we take that into account. Some will come down further, in particular where there is much availability of accommodation. Where there is limited availability, we will probably reduce it by 6% or 7%. That will come up when rents are up for review.
The question of income is important. The PRTB and the registration of landlords are one way to ensure Revenue has that information, which it uses. We want to ensure that happens.