THE cost of renting a property is expected to fall dramatically after the Government cut the rent subsidy it pays to more than 96,000 low-income households.

Cuts of up to 45pc in rent assistance rates are likely to drive down the cost of renting as landlords will be forced to lower rents for their social welfare tenants, most of whom are unemployed.

This will have a knock-on effect on the entire market, leading housing economist Ronan Lyons of Daft.ie said.

Around 150,000 households rent a house or an apartment.

Minister for Social Protection Joan Burton confirmed yesterday she was chopping €22m from the €516m paid to landlords as rent supplement for social welfare tenants.

Rent supplement is means tested and you only qualify if you are unemployed or on a low income.

The amount you receive varies according to your income, whether you are single or a couple, the number of children you have, and what part of the country you live in. It can be paid either directly to the landlord or the tenant.

The percentage cut to the allowance will vary across the country to reflect the fact that rents have fallen at different rates in different counties. Typically, the cost of renting has dropped more in rural areas than in the cities.

In the case of a couple with two children in Co Roscommon, their rent supplement will fall from €750 a month to €400. In Dublin, the maximum monthly payment of €1,100 will fall to €900. A single person in Leitrim had been getting up to €286, but that now falls to €175. Couples with three children in Leitrim were getting up to €663, but the maximum amount they can now claim will be €400.

For parts of Dublin the amount varied from €399 for a single person, to €1,110 for a couple. The new rates for the capital vary from €300 to €950 -- the highest rent supplement in the State.

A couple with one child in Dublin can now get a maximum of €875, down from €930.

Mr Lyons said: "This is good news from an affordability point of view. It will bring down prices in the rental market."

He said falls in rents were unlikely to discourage anyone thinking of buying a home because the future direction of house prices was the biggest factor for people when deciding whether or not to buy.

Ms Burton revealed recently that the number of people claiming the allowance rose by 60pc from 60,200 in 2005 to 96,100 at the end of last year. The cost of the scheme jumped from €369m to €516m over the same period.

This is despite the fact that rent costs dived by 19pc in 2009, before rising by 4pc last year.

Landlords have complained that the changes will push many of them into bankruptcy.

They argue that it is cheaper for them to provide accommodation to social welfare recipients than for the State to provide homes.

The Department of Social Protection will write to existing recipients of rent allowance informing them of the new limits.

If their landlord refuses to accept the lower rate, the renter will be told to find alternative, cheaper accommodation.

From this month those who get rent supplement have to contribute an extra €6 a week, with a couple having to pay a minimum of €35 a week.

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Irish Independent