Vulnerabilities in a Recovering Market: Experiences of Low Income Tenants in the PRS

ENHR Private Rented Markets Seminar20th March 2015

Vulnerabilities in a Recovering Market:

The Experiences of Low Income Tenants in the PRS

Caroline Kelleher, DKM Economic Consultants

Trends in Private Renting Low Income Tenants in Ireland This Research Paper Primary Data Results Issues to Consider

Contents of Presentation

Trends in Private Renting Financial downturn

Risks of homeownership

Cost of house purchase

Demographics

Lifestyle choice

Trends in Private Renting Inability to sell - increase in properties for rent

Postponement of house purchase

Shift in social housing policy

Demographic and social changes

Lack of rented accommodation - rent burden Focus Ireland - 40 families a month become homeless Landlords do not wish to rent to social assistance

tenants◦ Housing Assistance Payment (HAP) ◦ Employment Equality (Amendment) (No 2) Bill

Low Income Tenants In Ireland

Views of low income tenants renting in Ireland Comparisons other tenant groups Key Issues include:

◦ Reasons for Renting◦ Sourcing Rented Accommodation ◦ Satisfaction with Renting◦ Rent Burden◦ Views on issues in the sector

This Paper

Tenant survey -major review of the PRS in Ireland

Online interviews

Fieldwork - May 2014

Sample of 500 tenants

Primary Data

Low Income Tenants – 260 respondents◦ Rent Supplement or Rental Accommodation Scheme

(54%)◦ Unemployed◦ Social class comprised category (C2, D, E )

Other tenants -201 respondents Students were excluded

Tenant Groups

Tenant ProfileLow

IncomeOther

s

Male** 50.4% 59.7%

Female** 49.6% 40.3%

Republic of Ireland ** 66.9% 75.6%

UK (incl Northern Ireland) 8.5% 6.0%

Other Europe** 19.4% 10.9%

Rest of World 5.2% 7.5%

Negligible differences between the groups across the Marital Statuses and Age Profile

Females and Other Europeans were statistically more likely to fall into the low income tenant group

Reasons for Renting

More freedom of choice among other renters

Low income tenants may have few options outside of the PRS

Low Income

Others

Suits my requirements best * 29.4% 36.8%

Can't get a mortgage - don't have the deposit saved/ savings to purchase

29.8% 36.3%

Can't get a mortgage - not earning enough or job is unstable/ on contract**

33.1% 23.9%

Not sure where I want to settle down/ live long term ***

16.9% 27.4%

Convenient to things I need to be close to (e.g. work, school, family)*

15.7% 21.9%

Feel I am too young to buy a property** 8.1% 14.9%

Can't find a suitable property to buy 10.1% 10.4%

Waiting to be offered social housing (local authority or voluntary body)***

14.9% 1.0%

Only in the area for a limited time i.e. college, job contract etc **

3.2% 8.0%

Notes: Significance: ***, 0.01; **, 0.05. *, 0.1

Sourcing Accommodation Low

IncomeOther

s

Did you sign a lease when moving in?* 82.7% 76.1%

Do you have a copy of the lease? *** 90.7% 99.3%

Were you required to provide references from previous tenancies or employers? ** 48.4% 57.7%

Do you have a rent book or do you receive a quarterly rent receipt from the landlord? **

27.4% 19.4%

Were you required to provide a security deposit to your landlord?

89.1% 91.0%

Did the landlord/agent carry out an inventory on the property prior to you moving in?

41.9% 41.8%

‘Very difficult to source accommodation at present’.

Unprecedented lack of rental stock in Ireland

More onerous requirements for Low Income tenants?

  Notes: Significance: ***, 0.01; **, 0.05. *, 0.1

Satisfaction with Rented PropertyOverall satisfaction levels were highLower levels of satisfaction evident among low income tenants Low

IncomeOthers

The condition of the property ** 43.5% 53.7%

How safe your property is *** 47.2% 60.2%

Your landlord*** 47.6% 64.7%

The security of your rental situation * 39.5% 47.8%

The location of the property*** 58.5% 75.6%

The rent that you pay relative to the property 35.1% 38.8%

Could suggest poorer standard of accommodation

May link back to:obtaining copies of the leasetenancy inspectionsrepairs and maintenance

Notes: Significance: ***, 0.01; **, 0.05. *, 0.1

Rent Affordability

Rent Supplement ◦ 47% Rent Burden 30%+◦ 15% - Rent Burden 50%+

Other Low Income Tenants (ex RS)◦ 60% - Rent Burden 30%+◦ 20% - Rent Burden 50%+

Low Income

Others

30% or less *** 45.2% 62.7%

31-50% 35.9% 31.3%

50+% *** 17.7% 4.5%

Notes: Significance: ***, 0.01; **, 0.05. *, 0.1

Other Key Findings

Low Income Others

Lack of supply was driving rent increases** 52.6% 62.9%

More likely to rent long term if there was a possibility of a long term lease** 35.1% 23.9%

Happy to rent long term* 18.1% 12.4%

Not fully aware of their rights*** 38.3% 26.4%

Majority of all tenants agreed that:◦ the lack of supply was driving rent increases, ◦ the government should incentivise the supply of

accommodation◦ that rent increases should be regulated

Lessons

Findings

Options

Sourcing Accom.

Requirements

Satisfaction

Trade Off

Rent Burden

Issues to Consider Rent affordability and supply of accommodation Housing market pressure is increasing

◦ Buy to Let (BTL) investors exiting the sector; ◦ New Central Bank of Ireland rules on mortgage lending

Further rent increases◦ Significant for rent supplement tenants ◦ Need for greater supports for the intermediate tenant

market Potential for long term renting, PRS needs to become more of a policy focus

Thank Youcaroline.kelleher@dkm.ie