Pensioners cashing in on student flat crisis
Cash poor older homeowners avail of €10,000 tax break on 'digs'
Published 24/08/2014 | 02:30
Pension-pinched older Dublin residents are cashing in on the student accommodation crisis and are renting out rooms in their homes to desperate college-goers.
The acute shortage of flats and apartments for students has alerted those who are cash poor but property rich that they can avail of a tax break that allows homeowners to rent out a room or rooms and earn up to €10,000 a year tax-free.
The return of 'digs' to the student accommodation landscape began last year, but has rapidly risen this year.
Union of Students in Ireland (USI) deputy president Kevin Donoghue said the recently launched website home.usi.ie now had about 170 listings with more being added every day, many of them advertising old-fashioned digs.
And many of those homes are located in the key northside and southside locations where house prices have risen the highest in the last 18 months.
There are 30 offers of rooms for rent in the area centred on Drumcondra and Glasnevin not far from DCU on the northside and 34 in the general area south of Ballsbridge as far as Terenure.
But there is also some accommodation as far as Greystones, taking advantage of the proximity to DART services.
Typical of the range of accommodation on offer is a bedroom available in a family home in Dundrum which offers: "Double bed, wardrobe, chest of drawers, bedside locker. Beside bathroom with electric shower. Washing machine available. Breakfast on a help yourself basis. Cost €100 per week."
But the USI officer admitted the offers of spare rooms in residential properties was nowhere near enough to satisfy demand.
He said that a 13pc increase in the cost of campus accommodation and a dire shortage of rental properties means many students will be unable to find accommodation as the college year looms.
Mr Donoghue told the Sunday Independent: "Students are caught in the same crisis as everyone else in terms of the property market in Dublin - no new houses and a shortage of good quality rental accommodation.
"Rents have increased by about €90 a month compared with this time last year and a Daft.ie survey says that the number of places that can actually be rented has fallen by about 40pc in 12 months. It's a real crisis in Dublin, though Galway and Cork also have problems," he added.
Rooms for rent in Dublin locations close to good public transport are also being snapped up by students.
The minister at the Office of Public Works, Simon Harris, this weekend called on third level institutions to work in partnership with Nama, which has a large number of properties at its disposal, to resolve the crisis.
The minister told the Sunday Independent: "Nama might also consider that a resolution of the student accommodation crisis in partnership with colleges would fulfil its obligations to provide a social dividend as part of its remit," he said.
Mr Harris admitted the Government was concerned that if costs continue to rise, access to third-level and post-graduate education will become seriously prohibitive for working and middle class families, who do not qualify for grants.
Fianna Fail finance spokesman Michael McGrath warned it was now a reality that third- level education is already moving out of reach for families with depleted savings who do not have the capacity to borrow.
He declared that the Government will have to resolve the supply side problems.
"One new reality that must be faced is that eight-month student leases are not attractive to landlords in a market where demand outstrips supply," he added.
Dublin rents are up 17pc to an average of €1,345, the Daft.ie survey revealed.
Education Minister Jan O'Sullivan said she was very conscious of the demands in the private rented sector and the pressure this is putting on students and their families.
"In the short-term I am very supportive of initiatives that will see spare capacity brought on stream.
"The USI 'Homes for Study' website and other similar initiatives are the quickest way to increase supply in the short-term. A homeowner can rent a spare bedroom in their home and earn up to €10,000 per annum before having to pay tax. It's a win-win for students and homeowners," she added.
Fianna Fail education spokesperson Charlie McConalogue also warned that colleges are going to have to promote and develop campus accommodation
"There is a serious deficit here by international standards in terms of campus accommodation," he said.
Mr McConalogue also warned that the combination of fees and rents meant third-level education was now moving beyond the remit of the working poor.
He told the Sunday Independent: "A clear class divide is returning by stealth where all the gains provided by free fees is being reversed. It is now becoming exceptionally difficult for working families to finance third-level education."