For many, renting in Ireland in 2021 is characterized by insecurity of tenure, poor standards within the property, and high rental prices.
However, according to Independent.ie more than 50% of tenants are forced to rent because they cannot afford to buy their own home. Similarly, just 25% of tenants are renting by choice, with the vast majority being forced into rental accommodations.
Renting as a Stepping Stone
Originally, renting was used as a stepping stone for individuals to achieve home ownership. However, Threshold chief executive John-Mark McCafferty believes that this stepping stone scheme between renting and purchasing a home is no longer applicable. Therefore, it comes as no surprise that 61% of renters hope to purchase a home within the next five years, but just 30% of those respondents believe that they will be able to do so.
Today, renting in Ireland no longer effectively acts as that stepping stone to home ownership that it once did. High housing prices have made it very challenging for individuals to afford to buy a home and make the monthly mortgage repayments.
Housing prices are expected to increase even further in 2021, and in the following two years, which will make home buying an even steeper challenge for many. These increases in housing prices will likely be due to the slowdown of new home constructions in addition to the housing shortage many are already aware of.
The restrictions and lockdowns that took place during the COVID-19 pandemic led to a decrease in housing capacity and construction output. These decreases in capacity and output have caused continued uncertainty within the Irish Housing Market and a shortage of available housing.
Another challenge preventing renters from being able to transition from renting to home ownership is the effectiveness of mortgage loans. The mortgage measures imposed by the Central Bank of Ireland have locked many people out of the Irish Housing Market. The Loan-to-Income limit restricts borrowers to a maximum mortgage loan of 3.5 times their gross annual income. However, this amount is not enough in many situations to cover the cost of a home in Ireland.
Renting Situation Explained
In its current form, the Irish Housing Market is not organized to support lifetime renting. McCafferty believes that for renting to transition to be an effective long-term living situation for many, changes need to be made.
These changes need to address the lack of security, poor standards, and high rental prices that tenants experience when renting. Caps on rental prices and restrictions on evictions could help make renting a more viable living option for individuals in Ireland.