ANDY JALIL -
andyjalil@aol.com -
With property prices escalating and affordability a major problem, the number of tenants in every age group is surging each year. There are stories of hardships in renting in Ireland across the generations this year, where home ownership is fast becoming a quaint fantasy for all but the wealthy.
As the country heads towards the end of the second decade of the 21st century, it is finally being seen that the system of housing in now a broken model, and it is affecting the people’s way of life.
Chief executive of the charity Alone, Sean Moynihan says: “Unless a solution is found, there will be pushback in the next few years because it is going to affect a lot of people who never thought they would end up in these situations.
The number of renters in the private sector has trebled in Ireland since the year 2000 to 900,000. Dr Michael Byrne, lecturer in Social Policy at University College Dublin, says the Government has not adapted to this change. “So far, the approach has been one of reacting and firefighting, but there is no clear vision of where we want to go.”
Traditionally in previous decades, renting was considered a transitional option on the way to home-owning. People on average incomes — from office workers, carpenters and plumbers to teachers, nurses and police — could aspire to have a place of their own.
Chief executive of housing charity, Threshold, John-Mark McCafferty says: “In Ireland we had an asset-based welfare system based on the idea of being a homeowner and paying off your mortgage before you retire. Because you owned your home, you could live on your pension and leverage your asset to access care.”
That model has been blown away. The rise of the renting generation might be bearable if it was affordable. Even two-bedroom apartments in Dublin commonly cost up to 2,000 euros per month and rents have spiralled upwards in towns and cities across the country. It is hard enough for middle-income earners to find affordable options, and compete for properties, even when they are earning reasonable salaries.
But what will this growing cohort of families and single people do when they reach retirement age, and they still face enormous rents — without any capital built up in a home?
The rapid ageing of the population will be one of the most significant social developments of the next two decades. The number of people over the age of 65 is expected to reach 1.4 million by 2040, or close to a quarter of the total population.
At the moment, up to 85 per cent of people over 65 own their own homes, but that number is likely to plummet in the coming years.
McCafferty of Threshold highlights how people have moved away from the home-ownership model and this trend was already apparent in the last census. The census of 2016 showed a 38 per cent increase in the number of 35-44-year-old who are renting. The trend is also evident in the older age groups with a 22 per cent increase in those renting between, the ages of 55 to 64 and a 24 per cent increase among over 65s.
A significant number of renters previously owned their homes, but lost them in the global financial crash as they could not afford the mortgage.
Another contributory factor is the rise in the number of divorced and separated people. The emergence of corporate investors who are snapping up whole apartment blocks across the country, has helped to push families into the rental sector, according to Byrne.
Earlier in the decade, the government encouraged investment trusts with generous tax terms. Since 2012, almost 10,000 housing units have been bought by corporate investors and 3,000 homes were bought by them last year.
Many new housing schemes are now built for rent only, because developers find that they are more profitable. It could be argued that corporate investors have boosted supply in the rental sector.
However, Threshold’s McCafferty says they tend to focus on the upper end of the market, and are not providing accommodation for lower to middle-income groups.
A government survey earlier this year showed that the majority of renters still cling to the home-owning ideal. Up to 86 per cent said they would prefer to buy if they had the choice. But people in Ireland will have to adapt to the reality that a significant section of the population will rent in the future.
(The author is our foreign correspondent based in the UK. He can be reached at andyjalil@aol.com)
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