ESRI warns of poverty risk for private tenants

People living in the private rented sector are increasingly at greater risk of poverty than any other group, a report from the…

People living in the private rented sector are increasingly at greater risk of poverty than any other group, a report from the Economic and Social Research Institute (ESRI) finds.

The report, Housing, Poverty and Wealth in Ireland, carried out for the Combat Poverty Agency, calls for a change in emphasis in current policy away from "home ownership" and that the Government should "place greater emphasis on the promotion of rental housing".

At the publication of the report Ms Helen Johnston, the director of Combat Poverty, said: "Contrary to popular opinion, the study finds that, in general, home purchase has become less affordable, although house prices have increased because of the effects of low interest rates and higher incomes."

The report says that while the number of owner-occupied dwellings has doubled over the past 30 years, the social rented sector has declined. New social housing construction levels have fallen from between 20 and 35 per cent of total new housing in the 1970s and 1980s to less than 10 per cent today.

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Although mortgage payments increased by 42 per cent between 1987 and 2000, private sector rents have grown by 300 per cent. Mortgage repayments absorb an average of 10 per cent of a household income while private-sector rents now absorb 21 per cent of tenants' incomes. "Consequently the most serious affordability problems found in the Irish housing system at present have arisen in the private rented sector and are most severe in Dublin," says the ESRI.

There is "a substantially higher risk of poverty among private tenants". Lone parents and the unemployed feature prominently among this group.

Acknowledging that private-sector rents have been in decline, the authors say "the extent of the decline is unlikely to have been great enough to cancel out prior increases or reduce . . . housing affordability problems" .

The report says the supply of social rental stock must be increased. The total rental sector must become "more diverse".

"The goal of restraining price increases and promoting the affordability of housing destined for owner occupation is laudable in itself, but should not be pursued at the expense of either the private or social rented sectors."

Kitty Holland

Kitty Holland

Kitty Holland is Social Affairs Correspondent of The Irish Times