MINISTER FOR Social Protection Joan Burton will attempt to save €22 million from her department’s annual €500 million social welfare rent bill after claiming rental rates in some areas were above market levels.
Ms Burton said she had asked her officials to undertake a detailed study of the level of rents the department was paying to landlords in rent supplement for tenants living in private rental accommodations.
Rents would now have to be renegotiated, she said.
“Currently we’re spending around half billion a year, which is a very large amount of money in terms of the social welfare budget. We had a study conducted to show what rent levels were like in counties right throughout the country,” she said.
“It showed very clearly that in a number of cases and a number of regions, we’re actually paying somewhat above the market rent. That’s not sustainable in a situation where as a Minister I have to find significant savings.”
Ms Burton told RTÉ Radio One's Morning Irelandprogramme she was aware of the difficulties that landlords faced, but said she was also sure landlords could understand that the Government had to look for savings. Property values had fallen "enormously", she added.
“We’d like to see the department and the taxpayer getting good value for money from landlords, from providers of accommodation, in relation to those 97,000 people who are supported on rent allowance.”
The Irish Property Owners Association disputed Ms Burton’s comments and warned the move could make landlords reluctant to rent their properties. Group chairman Stephen Faughnan complained that landlords already faced a number of charges.
“Landlords will in future be very cautious when renting property. We have to pay the €200 non-principal property tax, €100 household charge, €90 PRTB [Private Residential Tenancies Board] Registration, absorb 25 per cent reduction in mortgage interest relief and now take up to a 25 per cent reduction in rental income,” Mr Faughnan said.
“Vulnerable tenants who depend on the State to house them are being forced to negotiate these unfair reductions, it is a mean way of developing rent control.”
Mr Faughnan said Ms Burton should publish the report on the rental sector compiled by her officials. “It is unacceptable to undermine the private rental sector by using the very people they are meant to be supporting to force rent reductions, effectively rent control,” he said.
Bríd O’Brien, spokeswoman for the Irish National Organisation for the Unemployed, warned that tenants could struggle financially as a result of the changes. She said the minimum contribution tenants must make had increased from €24 to €30, while the level of support was being reduced.
