Do you get confused when you see a letter with lots of acronyms and no idea what they mean? You’ve most likely seen the headlines about mortgage sustainability and affordability but don’t quite know where the numbers come from? We’re here to help break down the myths and common terms you may come across. This time, we’re talking about Reasonable Living Expenses or their acronym – RLEs.
What are Reasonable Living Expenses?
Reasonable Living Expenses (RLEs) are guidelines to help ensure that a borrower in mortgage arrears maintains a reasonable standard of living while they try to resolve their debt problems.
RLEs cover the borrower’s day-to-day expenses, which are necessary to have a reasonable standard of living. The Insolvency Service of Ireland (ISI) monitor and update the RLE guidelines on an annual basis (required by the Personal Insolvency Act 2012). The ISI considers that, for the purposes of the Act, “a reasonable standard of living is one which meets a person’s physical, psychological and social needs.”
These guidelines cover expenses such as food, clothing, health, household goods and services, communications, socialising, education, transport, household energy, childcare, insurance and allowances for savings and contingencies.
Why are Reasonable Living Expenses used?
RLEs are designed to help protect borrowers by ensuring that a borrower has enough money each month to cover expenses, without overstretching themselves. This commitment to having essential expenses covered can have a huge impact on borrower’s physical and mental well-being. RLEs can help a Personal Insolvency Practitioner (PIP) determine what the best possible arrangement is for a borrower in home mortgage arrears.
It lets the PIP know what spare income is left over at the end of each month to pay back the borrower’s creditors. This benefits the borrower as they are paying into an arrangement at a rate that matches their means. Borrowers in mortgage arrears can access the services of a PIP for free through the Abhaile scheme, by way of a voucher.
You can find the list of Abhaile PIPs
How are Reasonable Living Expenses determined?
- Household Composition– number of adults and children (if any) living in the house.
- Need for a Car - does the household require a car and is the quality and accessibility of public transport good.
- Other Costs – mortgage costs and if applicable, childcare costs.
- Special Circumstances – medicine/health costs associated with a physical or mental condition and college-going children, if applicable.
What are considered Reasonable Living Expenses?
The table below is taken from the ISI and displays the monthly set costs considered to be Reasonable Living Expenses. Note in relation to children’s costs – some additions are applied if your family has more than two children. Approximately €10 extra each for the third and fourth child.
You can read the RLE guidelines in full.
It is important to note that these are guidelines. A borrower is not required to spend their money as listed in the breakdowns; they have total control over their spending.
Let’s take a look at some RLE real-life examples…
Mary and Stephen live in Co Cork in a three-bedroom house which they rent for €800
per month. Mary requires a car to get to work and drop the kids to school as public transport
is inadequate for their needs. Mary and Stephen’s motor vehicle insurance is €400 and home
contents insurance is €150.
They have three children; twins, Marley and Bonnie who are six years old and in primary school
and a 13-year-old daughter, Martina, who is in secondary school. Martina has learning
difficulties and requires additional tuition. This costs €200 per month.
Mary pays all (100%) of the household’s costs as Stephen is in full-time education.
- Their monthly rent is €800.
- Set Costs are €2,470.50*.
- Motor Vehicle and Home Insurances €45.83.
- They have a monthly special circumstances cost of €200.
This household’s RLE would be €3,516.33*.
* includes adjustment for the third child.
Jason lives in Dublin in a two-bedroom apartment which he rents for €1,200 per month. He
does not require a car as public transport is adequate for his needs. Jason’s home contents
insurance is €200.
He has one child, Mark, who is five years old and in primary school. Jason shares joint custody
of Mark and can claim 50% of the cost of a primary school child.
As Jason works full time he requires childcare for Mark after school for two hours per day on
the days he has access which is ten school days per month. This costs Jason €400 per month.
- His monthly mortgage repayments are €1,200.
- He does not require a car, meaning he can use public transport.
- His home contents insurance cost is €16.67 per month.
- His childcare costs are €400.
- His set costs are €1,146.63.
This household’s RLE would be €2,763.30.
Lorna lives in Dublin in a three-bedroom house that she shares with flatmates. The rent for
the entire house is €1,400 per month and Lorna pays €500 per month for her room. She
requires a car as her job is in an industrial estate with no transport links. She has no children.
Lorna’s motor vehicle insurance is €500 and home contents insurance is €50
As Lorna is in a house share situation she is seen as a single adult and allowed her portion of
the rent, rather than the full rent for the entire house.
- Her monthly rent is €500..
- She has a car and requires it, the insurance costs €500 per year or €45/83.
- She does not have any childcare or special circumstances costs.
- Her set costs are €1,165.91 per month.
This household’s RLE would be €1,711.74.
These figures have been calculated using the RLE Calculator on the ISI website. They act as an approximate guide. A PIP will go through your information in more detail to figure out your specific RLEs and help you determine your best course of action. It is important to note that some flexibility is allowed to recognise and provide for the differing needs of persons, in relation to mental and physical health.
If you would like more information on RLEs and mortgage arrears supports available through Abhaile, call the MABS Helpline on 0818 07 2000 to speak with a Dedicated Adviser or message us on WhatsApp 086 035 3141.
Originally posted: July 2020.
Updated: 9th May 2022