Maximum Rent Limit Analysis and Findings Report June 2013

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Introduction and Purpose

The purpose of Rent Supplement is to provide short-term support to eligible people living in private rented accommodation, whose means are insufficient to meet their accommodation costs and who do not have accommodation available to them from any other source. There are currently approximately 86,000 customers in receipt of Rent Supplement at an annual cost of over €403 million.

Rent Supplement is subject to a limit on the amount of rent that an applicant may incur. Rent limits are set at levels that enable eligible households to secure and retain basic suitable rented accommodation having regard to the different rental market conditions that prevail in various parts of the State. The Department currently funds approximately 30% of the private sector rented accommodation. Accordingly, it is essential that State support for rents are kept under review and reflect current market conditions. The aim of this review is to assess the current maximum rent limits and to re-establish new limits based on availability at approximately the 35th percentile in each particular market and to ensure that maximum rent limits are placed at appropriate price points.

Maximum rent limits are generally established on a county basis, by way of Regulation, and offer benchmarks to Departmental staff administering the Rent Supplement scheme in respect of their respective areas. Department officials use the maximum limits set by the Department to establish local limits for the different towns, streets, areas etc. The maximum rent limits for their county, allied with their understanding of the local rental market allows for the establishment of appropriate local limits.

One of the key findings of previous rent limit reviews was that landlords typically use the maximum limits established by the Department as pricing floors for negotiations with the tenant. In this respect, if rent limits do not reflect current market rates and are higher than what natural supply and demand conditions suggest this will have distorting effect on the market and has obvious value for money concerns.

Last modified:09/10/2015