How can we have 20% deposits without a proper rental market? – Hayes

Brian Hayes MEP today questioned the logic of the proposed 20% deposit rule considering the rental market in Ireland does not offer a proper alternative to home ownership for many people.

“Our housing market is in serious trouble at the moment. Standard variable rates are a rip-off. We don’t have a market for reasonably priced long-term fixed interest mortgages like they do in many other European countries. And importantly, people have no alternative. There are huge financial advantages to owning a home but for those who feel they cannot afford to buy a home, we don’t have a rental system that offers any long-term security,” said Mr. Hayes.

“The Central Bank’s proposed 20% deposit requirements and a Loan to Income ratio of 3.5 would put home ownership beyond many people, especially first-time buyers in Dublin where the average cost of a home is now €350,000. Under the new rules first time buyers in Dublin will need a €70,000 deposit and income levels of €100,000.”

“In Dublin rents have spiralled out of control. The average rent is now €1,372 a month – this is a 30% increase from 2012 and only slightly lower than prices in 2007. Overall Dublin property prices rose by 24% since last year, while general inflation was only 0.2%,” added Mr. Hayes.

“An Irish housing tenant faces huge uncertainties. The balance between landlord and tenant needs to be adjusted in favour of the tenant if we are to develop a mature housing rental market in Ireland.”

“Supply of housing is a major issue in this debate, especially in Dublin. This is driving prices up. The government’s social housing strategy which aims to bring 35,000 additional social housing units into the market by 2020 will make a difference. But we have been to slow to react to the increase in demand in Dublin and we are now left with a housing market which has flawed structures and is vastly undersupplied,” concluded Mr. Hayes.

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