James Bannon (Longford-Westmeath, Fine Gael)
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Question 366: To ask the Minister for Social and Family Affairs the savings she has made from the reduction in rent supplement to the most needy people in society; and if she will make a statement on the matter. [28131/09]

Mary Hanafin (Dún Laoghaire, Fianna Fail)
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There are currently almost 90,000 people in receipt of rent supplement, an increase of 51% since the end of December 2007. Rent supplements are subject to a limit on the amount of rent that a recipient may incur. Setting or retaining maximum rent limits at higher levels than are justified by the open market can have a distorting effect on the rental market, leading to a more general rise in rent levels and in landlord income. This in turn may worsen the affordability of rental accommodation unnecessarily, with a particularly negative impact for those tenants on lower incomes. Prior to the Supplementary Budget, the Department of Social and Family Affairs analysed data from the Private Residential Tenancies Board, the CSO and a leading property rental website, all of which showed significant drops in rental prices over the past year.

In order to ensure that taxpayers money is not being used to pay inflated rents to private landlords, the Budget provided for decreases in both the maximum rent payable in respect of new tenancies and in rent supplement payments to existing tenants. As of 1 June 2009, the maximum rent supplement limits payable by the State in respect of new tenancies and renewals of existing ones were reduced by 6% to 7% on average, ranging up to 10%, depending on the geographical area and household size. Rent supplements for all existing tenancies were similarly reduced with effect from 1 June 2009. It is expected that landlords will reduce rents in recognition of the fact that rents have fallen generally and that there are now a large number of vacant rental properties nationally. If a landlord refuses to reduce a tenant's rent, they should be able to find alternative accommodation within the rent limits. Community Welfare Officers have discretion to provide assistance where exceptional circumstances exist in any individual case. Officers have also been advised that support, appropriate to the circumstances of the particular case, may be provided to rent supplement tenants for up to two months, where alternative accommodation is being sourced within the existing rent limits. The minimum contribution that individuals and families make towards their rent or mortgage interest payments was also increased in the Supplementary Budget by €6 to €24 per week, with effect from 1 June 2009. This increased contribution aligns the Rent Supplement scheme more closely with the rents that local authority tenants have to pay, which in Dublin city is a minimum of €25.80 a week and averages around €58.95 a week.

It is estimated that a saving of €48m will be achieved in 2009 as a result of these measures. It should be noted that even with these changes, the overall provision in the Supplementary Budget for the rent supplement scheme is €490.4 million - which is €50.7 million more than the 2008 outturn on this scheme.