I thank the Chairman and the members of the committee for the opportunity to present to them today on the matter of the housing assistance payment. Threshold has worked with and supported tenants living in the private rented sector since 1978. Threshold advocates for increased security of tenure, affordability, improvement in standards and a sustainable private rented sector. We are working toward a vision whereby private rental is on an equal status of tenure to other tenure options in Ireland, and we believe housing is a right.
The housing assistance payment, or HAP, is a form of social housing support available since 2014 to eligible persons living in the private rented sector. I want to note that HAP is a massive improvement from a policy and a practice point of view compared to rent supplement, not least because tenants can increase earnings and still be eligible for the housing assistance payment. Through Threshold’s work with tenants, we identified that many were struggling to pay rent even with the support of the housing assistance payment. To meet the rent they were paying top-ups to their landlord. This is rent paid directly by the tenant to the landlord in addition to the rent the landlord receives from the housing assistance payment. Many others were struggling to find a landlord to accept HAP. In 2019, Threshold carried out research into this issue and surveyed 116 tenants in receipt of or eligible for HAP. Our colleagues in the Society of St. Vincent de Paul were observing similar trends among the households they work with. We came together to publish the report and recommendations, with which the committee has been provided.
I will give the committee an idea of the scale of the housing assistance payment and then set out our findings from our research. Marcella Stakem will then set out our joint recommendations.
There are approximately 59,000 households currently supported by HAP. The Department plans to support an additional 15,000 households with HAP in 2021. Almost €560 million has been allocated for HAP in budget 2021. The 2019 expenditure was €382 million so it is an ever-increasing bill.
In terms of HAP limits, the maximum monthly rent limits payable for a household under HAP are set out in statutory instrument. These limits have remained largely unchanged since July 2016. As such, they fall far short of market rent in many instances. The national average rent increased 27% between Quarter 2 2016 and Quarter 2 2020. The HAP caps did not. One of the greatest obstacles faced by tenants is finding a place within the cap. Where they cannot, the tenants pay the shortfall in the form of a top-up to the landlord.
There are enormous shortfalls in HAP caps for single people looking to rent a one-bed property. A single person looking to rent a one-bed apartment in Cork city, Dublin 15 and Limerick city could potentially pay a top-up of €760 to make up the shortfall. A single person living in County Limerick or County Carlow may have to pay up to €350 in the form of a top-up to the landlord to secure a home. It is a similar story for families with three children who are looking to rent a three-bed house. Again, a potential top-up of €400 or more for families in these areas may apply.
With regard to the 20% discretionary uplift, local authorities may approve a discretionary 20% uplift in the HAP payment to help meet the rent. However, this is not guaranteed and is not practised consistently across all local authorities. This is often one of the challenges that Threshold advisers assist tenants with. In Quarter 4 2019, 36% of households, excluding homeless HAP, were receiving some degree of uplift in their HAP payment.
Even with the full 20% uplift, the HAP payment can often be insufficient. In a 2019 report from the Irish Government Economic and Evaluation Service, IGEES, it is estimated that the payments, inclusive of discretionary uplifts, fall short for 28% of HAP tenancies, meaning these tenants are paying a top-up to the landlord. A number of recommendations are made in the IGEES report. It is not surprising, then, that almost half of the HAP recipients we interviewed were paying a top-up to the landlord. These top-ups ranged from €100 or less to more than €500, and the average top-up was €177. Tenants of varying incomes paid top-ups across the range.
With regard to affordability, it is generally accepted that we pay up to 30% of our income on housing costs. This is a rough rule of thumb to calculate affordability and anyone who has applied for a mortgage knows the bank will apply a similar affordability test. However, among the tenants we interviewed, 20% were paying more than 30% of their income on rent and 10% were paying more than 40%. What was common across the board was that the Threshold clients we interviewed were struggling with day-to-day expenses as a result of the top-up. This is because tenants will prioritise rent over everything else. Rent arrears can accrue quickly, resulting in a notice of termination, and so are avoided at all costs. Almost half of those who participated in the Threshold survey said they struggled to pay the electricity or heating bill, buy groceries or cover childcare and school costs. To have a home, heat and food are the basics we all require to live and to have a chance to achieve our potential. The tenants paying more than 30% of their income do not necessarily have these.
As a form of social housing, which it is regarded as by some, HAP lacks the security of tenure tenants of local authorities and approved housing bodies, AHBs, have. A HAP tenant can be evicted through no fault of their own. The most common query brought to Threshold is about notices of termination, representing a third of all queries each year. More than three quarters of these were issued where there was no wrongdoing on the tenants’ part. A landlord can issue a notice of termination if they wish to sell the home, need it for their own use or that of a family member, wish to renovate or on grounds of section 34(b), whereby a Part 4 tenancy is coming to an end.
A requirement of HAP is that the property meets the minimum standards for private rented dwellings and all HAP properties are meant to be inspected to ensure this. Unfortunately, some tenants reported the inspections had not happened after a year in the property and, on occasion, when the local authority directed the landlord to undertake repairs, this was never done and the local authority did not follow up. Worryingly, stories of mould, damp, broken heating systems and ill-health were commonplace. This is not surprising as queries about standards and repairs are among the most common issues dealt with by Threshold’s advisers.
The second greatest obstacle for HAP tenants was the difficulty in finding a landlord to accept HAP. Under HAP, tenants must source a property themselves. Despite the fact the Equal Status Act 2015 prohibits discrimination against those in receipt of HAP, tenants reported instances where landlords refused to accept HAP or sign the paperwork. In some cases, landlords never returned the paperwork, resulting in the tenants falling into arrears and they can be evicted for these arrears, notwithstanding the recent Covid-19-related legislation. Some groups in society are vulnerable to further discrimination by certain landlords such as members of the Traveller community, migrants and persons with disabilities. As such, these groups are even further excluded from access to housing. Tenants can take cases to the Workplace Relations Commission to challenge such discrimination, and Threshold supported 11 households in such cases last year. While the WRC generally finds in the tenants’ favour, this does not always guarantee access to housing.
With regard to HAP in practice, as with all systems, there are areas which work well and those where improvements can be made. The payment of rent in arrears from the day the HAP application is processed as opposed to the day the tenancy started is highly problematic. Landlords expect rent to be paid upfront and in advance. Tenants can fall into severe financial distress in an attempt to make these upfront payments. The treatment of arrears has presented issues for HAP tenants. Once arrears accrue, tenants are required to pay the arrears within eight weeks. If they are unable to do so, the HAP payment to the landlord is stopped and the tenancy deemed lost. This is in stark contrast to the treatment of arrears for other social housing tenants – mainstream social housing tenants, in other words - where a more client-centred, homeless prevention approach is taken.
The fact that tenants can still work and benefit from HAP is a hugely positive element. When their income increases, their rent contribution to the local authority increases, as with any social housing tenants. Those tenants who were afforded the 20% discretionary uplift in the HAP payment found it a lifesaver. Many of the tenants spoke highly of the staff in the HAP offices, finding them very helpful.
I thank members for their time. I will hand over to Ms Stakem of the Society of St. Vincent de Paul to talk through the recommendations.