Jack Wall (Kildare South, Labour)
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Question 128: To ask the Minister for Social and Family Affairs the reason for her decision not to increase the maximum rents allowed under rent supplement following the recent review. [39511/08]

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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Rent supplement is administered on behalf of the Department by the Health Service Executive as part of the supplementary welfare allowance scheme.

Rent supplement is subject to a limit on the amount of rent that a person may incur. Rent limits are set at levels that enable the different eligible household types to secure and retain basic suitable rented accommodation, having regard to the different rental market conditions that prevail in various parts of the State. The objective is to ensure that rent supplement is not paid in respect of overly expensive accommodation having regard to the size of the household.

Setting maximum rent limits higher than are justified by the open market would have a distorting effect on the rental market, leading to a more general rise in rent levels. This in turn would worsen, unnecessarily, the affordability of rental accommodation with particular negative impact for those tenants on lower incomes.

A review of rent limits was undertaken earlier this year. The review was informed by analysis of data sourced from the Private Residential Tenancies Board, the Central Statistics Office (CSO), the Community Welfare Service and by the views of statutory and voluntary agencies working in this area, including the Department of the Environment, Heritage and Local Government.

Data provided by the CSO indicates that the increase in private rent levels began to decelerate at the beginning of 2008 and rent levels declined by almost 5% by August of this year. This deceleration in rent levels is also reflected in the Daft.ie rental reports where a decrease of over 5% was reported in the first half of 2008. It is also reported that the supply of available rental accommodation has more than doubled in the last year.

Given the current downward trend in private rent levels and the fact that the overall housing market is currently in a period of adjustment, increasing rent limits in the rent supplement scheme would send an inappropriate signal to the market where a third or so of private sector tenants receive rent supplement. In these circumstances, it was decided to retain rent limits at their current levels.

There is no hard evidence at this time that the prescribed upper limits on rent levels supported under the rent supplement scheme are having a detrimental impact on the ability of eligible tenants generally to secure suitable rented accommodation to meet their needs. There are currently over 69,500 rent supplements in payment. Almost 50,000 rent supplements have been awarded since January 2008. This suggests that the rent limits are set at reasonable levels at present.

Rent levels will continue to be monitored particularly for households that may find it difficult to secure or retain accommodation within the limits in certain areas. The position will be reviewed in 2009 when the results of the latest Private Rented Index report published by the CSO will be analysed for impact on rent limits.

The Health Service Executive has flexibility to award rent supplement above or below rent limits, having regard to local rent levels or to meet the particular needs of an individual. These discretionary powers ensure that individuals with particular needs can be accommodated within the scheme and specifically protects against homelessness.