NYCI Position Paper-June 2015
Housing in the Private Rented Sector
Background
The housing situation in Ireland has reached crisis proportions. Currently many young people living in Ireland are either unable to afford to move out of home or they struggle to access affordable housing (Eurofound, 2014).
The current demand for housing has placed a significant burden on housing sectors across the board. The impact of economic recession and austerity has exacerbated the situation. It is those on low incomes and unemployed who once again find themselves vulnerable to poor quality housing and often live in extremely precarious living conditions.
NYCI is extremely concerned about the rise in youth homelessness, difficulty accessing affordable and quality housing in the private rental market and access to home ownership for first time buyers.
Whilst we recognise that housing provision in the Private Rented Sector cannot be approached in isolation and needs to be addressed in an integrated manner, this position paper will focus primarily on housing provided in the private rented sector.
The supply and provision of affordable, quality housing is a complex issue with many factors at play. As house prices begin to rise once again, first time buyers struggle to buy their first home and many remain in the private rental sector. The private rental sector is squeezed with limited supply and increasing demand, which in turn has pushed rental prices up significantly in the last year.
The key objective of the Government Social Housing Strategy is to ensure affordability, sustainability and equality and inclusion. As the trends towards home ownership reduces and people move towards the rental market, policy-makers face many challenging questions for future housing policy and provision in Ireland (NESC, 2014).
Introduction
Article 43 of Bunreacht na hEirinn provides the right to property. Furthermore the National Policy Framework for Children and Young People 2014 – 2015, Better Outcomes Brighter Futures, identifies ‘economic security and opportunity’ as a national outcome for children and young people up to the age of 25.
Having economic independence and access to quality, affordable housing is a key component to any individual’s life and is intrinsically linked to this national outcome. In this regard, access to quality, affordable housing for young people in Ireland is an essential and needs to be addressed immediately. The current housing situation in Ireland is not sustainable and is unequal and exclusive. Immediate intervention is required to ensure people have access to affordable, quality housing. In the case of the private sector, NYCI believes that housing provision should afford a tenant with both security of tenure and regulated and control rents.
The following statistics reflect the precarious nature of the housing market at present which often places many young people in vulnerable situations:
· 305,377 households renting in 2011 (NESC Report 2015)· Percentage of households in private rented sector rose from 11% in 2002 to 19% in 2011. (NESC Report 2015)
· Majority of those renting are young (18-34) and single (63% and 61%) respectively. (NESC Report 2015)
· Property rental prices in Dublin have increased by 15% in the year up to June 2014, and in the Dublin commuter counties by 11% (Daft.ie, 2014a).
· The proportion of young people living in non-family households fell from 22 per cent to 18 per cent (CSO, 2012a) in 2011.
· The percentage living at home with their parents increased from 59 per cent in 2006 to 66 per cent in 2011 (CSO, 2012a).
· Purchase prices in Dublin increased by 21% in the year April 2014 and are beginning to increase in the rest of the country for the first time since 2007 (Daft.ie, 2014b), however, purchasing is now less expensive than renting, based on a 30 year mortgage, in most parts of the country.
· There were 10,000 rental properties advertised in Dublin in the first four months of 2014, compared with 18,000 in the same four-month period in 2012 (Daft.ie).
· In 2006, more than 93,000 housing units were completed across the country. The corresponding figure for 2013 was 8,301 - a reduction of 91%.
· The number of households on the social housing list rose to 64,579 compared to 45,417 in May 2013, an average increase of 42% across the country (Irish Times, 19th May 2014).
· More than 1,200 adult in emergency accommodation (excluding hotels) on any given night (Dublin Region Homeless Executive).
· 142 families living in hotel accommodation (Dublin Region Homeless Executive).
· The number of families with children in emergency accommodation is increasing steadily. In November 2013, there were 128 adults with children in emergency accommodation (Dublin Region Homeless Executive).
· Rough sleeping in Dublin city centre has risen by 200% since January, and is up three fold on this time last year (Dublin Simon Community).
Housing Challenges Facing Young People
Two thirds of unemployed young people live with their parents and more young people described as inactive are likely to live with their parents now than before the crisis in 2007.
Why?
An increase in youth unemployment and cuts in social welfare for young people in successive budgets has made it increasingly difficult for young people to afford to leave home and live independently. The prevalence of greater numbers of young people residing with their parents now than before recession is concerning. This finding reflects a lack of economic independence which in turn impacts on their personal independence.
Interestingly for those young people with children who live with their parents, the data suggests that they are even more likely to experience high levels of deprivation, low levels of life satisfaction and perceived social exclusion (Eurofound, 2014).
Having to live with your parents when you are a young adult is not ideal, whether you get on well with them or not. For many young people, for a variety of reasons, living in the parental home is not feasible and can result in what is known as ‘couch surfing’ in friends’ houses or in extreme cases finding themselves homeless. Homelessness amongst young people in Ireland is a significant problem. It is now almost impossible for homeless people to access housing.
Housing supply and affordability remains an issue for many in Ireland. With an increase in the number of people in mortgage arrears and less social housing available in general, rental prices in the private sector, especially in the Dublin area, are rising as a result of demand exceeding supply.[1]
Housing Shortage – Supply v Demand
There is a serious housing shortage and there needs to be more housing to meet demand. The number of new homes being built needs to treble.[2] We also feel Government needs to develop an integrated housing strategy to address housing in a synergized way, as a matter of urgency.
We contend that cuts in social welfare for young people in successive budgets have made it increasingly difficult for young people to afford to leave home and live independently. This proposition is confirmed by the data collected by Red C on our behalf.
The prevalence of significant numbers of young people having to live at home with their parents because of financial necessity is concerning both for them and for their parents. This finding reflects a lack of economic independence which in turn impacts on their personal independence. Furthermore, research conducted with young jobseekers in 2010 found that young people are postponing significant milestones in their lives as a result of their status as unemployment (NYCI, 2011).
A recent NESC report entitled Home ownership and Rental: What Road is Ireland on?, asserted that if Ireland is to meet the housing needs of its population in a sustainable and affordable way then hard choices were required.
The NESC report highlighted the fact that certain groups will struggle to achieve its ownership namely those on low incomes, single people and lone parent households, those in the large urban areas and young people.
Changing trends in housing provision
The composition of home owners has changed substantially in the last 20 years. In 1991, 65% of unskilled 35 – 44 year olds were owner occupiers. This figure dropped to 49% in 2011. During the same period the figure of owner occupiers were professional aged 35 – 44 years of aged fell from 915 to 80%. Ireland has also seen a rise in the proportion of lone parents renting from 10% in 2002 to 23% in 2011.
In Ireland, owner occupation continues to be much higher amongst Irish nationals than among those from other countries. If we wish to move away from a model of home ownership then we need to address the flaws and disincentives to residing in the PRS. We need to introduce measures that make the PRS a more attractive option, such as providing greater security of tenure, and access to quality and affordable rental options.
The NESC report provides examples of countries like Germany and Denmark, where there are large well-managed rental sectors, the availability of affordable housing with secure occupancy which helps to keep houses prices low and ensures a more stable economy. Ireland could learn a lot from such models of housing by introducing measures which address unpredictable rents by providing greater security of tenure.
In the context of the emergence of a lower level of home ownership, the NESC report also highlights the need to safeguard the interest of an older generation of renters who may not be able to afford the Private rental accommodation out of their pension incomes in the future. The report explores how policy responds to changes in trends. It asks whether Government intervention in the market is designed to promote home ownership or improve availability and attractiveness of long-term rental market? These are questions which need serious consideration by policy and decision-makers in the development of a more integrated approach to housing policy.
Housing Challenges Facing Young People
Everyone is entitled to live in good quality housing. Currently this is not the case in Ireland and many people are residing in high cost properties of substandard quality with mouldy, damn conditions and poor ventilation.
Key findings from NYCI Poll conducted by MORI:· 1 in 4 stated that they were unable to move out of the parental home as a result of the cuts made to JA.
· 64% of 18-25 year olds live in a house or apartment, but don’t pay rent, while just over 1 in 4 rent privately.
· Those not paying rent are more likely younger age groups, 18-21, while private renters are of an older age 22-25 and residing in Dublin. Those renting from a local authority are more likely lower social grades and reside in Rest of Leinster.
· Only 2% live in a house or apartment that they own.
· 70% of those aged 18-25 currently live with a family member, and this is more evident among those who ‘do not pay rent’.
· 2 in 5 renting privately live with friends, while those renting from a private authority live with either family or partner.
Cost – a prohibitive factor?
One of the biggest issues for people residing in the private rental sector is that of cost and security of tenure. In 2009 – 2010, those renting from private landlord paid the highest proportion of their incomes on rent – an average of 25% (NESC, 2014).
Many young people are unable to afford to leave home. For those who do, their housing is often unsuitable and unaffordable. Many live in precarious housing situations and are struggling to make ends meet.
Furthermore, the proportion of all young people living in non-family households (flat shares etc.,) has fallen from 22 to 18% (CSO, 2012a) and the percentage living at home with their parents has increased from 51 per cent in 2006 to 66 per cent in 2001” (NESC, 2014: 10).
“Lack of affordability can result in people being homeless, at risk of being unable to sustain their rent or mortgage payments, unable to purchase a dwelling in the open market or devoting a disproportionate share of their income to cover housing costs.” (NESC, 2014: 23).
NYCI Recommendations
So how do we begin to address is extremely complex issue in a practical manner which protects those residing in the rental market.
Security of tenure is a key issue for many young people currently renting. Many renters are vulnerable to eviction or rent increases. Quality of housing supply is another issue of concern which needs to be addressed. Overall an integrated housing strategy is required as a matter of urgency and rolling out of State investment in housing construction is urgently required to address the lack of supply.
NYCI proposes 4 recommendations to improve conditions in the private rental sector and to assist young people who are currently renting:
1. State introduce a system where tenants residing in the Private Rental Sector have better security of tenure
At present private rental agreements between landlords and tenants are governed by the Residential Tenancies Act 2004. This legislation provides some security for the tenant after the initial 6 months period, subject to break periods every four years which allow the landlord to end the tenancy if they so wish. Even during the four years there are a number of circumstances where the landlord can terminate the tenancy, such as sale of property, required for own/family use, refurbishments. While the 2004 Act was an improvement on the law prior to then, it still leaves the tenant in a vulnerable position. In other countries like Germany and Denmark, PRS resident enjoy a high level of security of tenant. Such a model should be adopted in this country and could be phased in as new developments start to be built. NYCI proposes the current legislation is amended and after the initial 6 month period, the tenant is entitled to negotiate a long-term lease, therefore ending the 4 year cycle of tenancy renewal which currently exists.