Friday 30 September 2016

When being beholden to a bank is better than being debt-free, we have a problem

Published 21/07/2016 | 02:30

Former Environment Minister Alan Kelly Photo: Gerry Mooney
Former Environment Minister Alan Kelly Photo: Gerry Mooney

There are thousands of people who got out of bed in Ireland this morning knowing they could be on a sitting on beach in Spain if they had a mortgage.

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It's a strange reality that we now live in a society where it's better to be beholden to a banker than living without any ties.

Such is the mess in the rental market that most people are afraid to move home even if their landlords jack up the rent because finding a new home is an almost military exercise.

On the flip side it is estimated that over 41,000 property owners left the private rental sector between 2012 and 2015.

Many of those landlords argue that the taxes are too high and the protection from nightmare tenants is too minimal. It doesn't make sense. Landlords looking to get out of the market at a time when people are queueing up to find houses, apartments, flats and bedsits.

The problems in the sector are clear: everybody feels hard done by. And the balance of supply and demand will not correct itself without State intervention.

Everybody is looking for solutions but nobody has the answers.

Housing Minister Simon Coveney's new 'Rebuilding Ireland' strategy certainty doesn't. He acknowledged in the Seanad yesterday that the market is "really squeezed" and there are simply not enough housing units.

This, he said, is driving prices up and ultimately forcing families out of rental accommodation.

"It is also causing a steady increase in homelessness each week, be it individual rough sleepers or families who are homeless," he said.

Everyone, except a lucky few, will find themselves renting at some stage in their lives.

As a student it was once the first taste of freedom and real independence. Today, instead of being liberated by moving out of home, young people are smothered by the need to keep the bank balance floating on 'rent day'.

Young professionals hope to graduate into a nicer apartment but at what cost?

And if we really want to consider ourselves a modern European nation, families should be in a position to live in a rented property.

However, all those people will have been disappointed by what the new action plan on housing offered.

Essentially it has paved the way for a series of reviews.

It is worth remembering that there was a massive row at Cabinet level before last year's Budget over rent.

At that stage Finance Minister Michael Noonan blocked plans by Labour's Alan Kelly to link rent increases to inflation.

Mr Kelly succeeded in securing some rent certainty by limiting hikes to every two years.

But that row showed that those in government are out of touch with the students, young people and new families who are trapped in a rented property.

And while Mr Coveney's plan is highly commendable and ambitious in areas such as homelessness and social housing, it's offers little to the 'Generation Rent'.

It seems that in the year after the row between Kelly and Noonan was settled last November, everybody in the civil service parked the rent issue.

But it hasn't gone away and it won't go away.

Mr Coveney said yesterday that the State "requires a more co-ordinated and determined response" and he intends to inject "a sense of urgency" into fixing the market.

The plan acknowledges all the problems and notes that the rental sector now caters for what it describes as "a diverse range of households".

It says that rented properties are more commonly becoming "permanent homes".

That is true. In some cases this is by choice, in others it's because people can't get a mortgage.

And that's the real irony. In most urban locations it is now cheaper to get a mortgage than pay rent.

However, the Central Bank rules on mortgages mean that even if you have faithfully paid your rent on time for a decade it counts for nothing unless you have savings.

This has to be factored into the bank's review of its lending rules which is due to be complete later this year.

Mr Coveney cannot tell them what to do but it would be the first step of "a more co-ordinated response".

Because for average garda or teacher it is impossible to rent, have a life and save.

All of which means that the old adage 'rent is dead money' has never been most apt.

Irish Independent

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