The past few months have brought about huge change in the regulation of the residential property market. We have focused on two of the key changes that have come into effect this year and which must be considered by current or prospective landlords.
1. Rent Pressure Zones:
Rent Pressure Zones (or “RPZ’s” as people in the know are calling them!) is a controversial and targeted effort to moderate the rise in rents in certain parts of the country. Outside a RPZ a landlord can review the rent every 2 years. Unless the accommodation was substantially changed, it cannot be more often than this.
In a RPZ, annual rent increases of not more than 4% of the rent will be allowed for the next 3 years. It is important to note however that the first of these reviews cannot take place until 24 months after the previous time the rent was set.
Where are the rent pressure zones?
- Dublin and Cork were first and were declared RPZ’s on the 24th of December 2016.
- At the end of January this year a further 12 areas were added as follows:
- Ballincollig – Carrigaline, Co Cork
- Galway City Central
- Galway City East
- Galway City West
- Celbridge-Lexlip, Co Kildare
- Kildare-Newbridge, Co Kildare
- Naas, Co Kildare
- Ashbourne, Co Meath
- Laytown-Bettystown, Co Meath
- Ratoath, Co Meath
- Bray, Co Wicklow
- Wicklow, Co Wicklow
55% of tenancies are now covered by the RPZs and, if your property falls within one of these areas, it is covered by the measure.
Are all rental properties covered?
No, not all rental properties are covered by the 4% annual rental restriction. Properties that are new to the rental market and have not been let in the previous 2 years and properties which have undergone a substantial change can be exempted from the measure.
There appears to be some debate around what constitutes a “substantial change” as it is not defined in the legislation. However, we have it from the Residential Tenancies Boards that a substantial change involves significant alterations to the property which add to the letting value of the property.
I am in an RPZ and I want to raise the rent on my dwelling. How do I do this?
You cannot just raise the rent by 4%! There is, rather confusingly, again a formula to follow in order to calculate the increase in rent allowed in the RPZ areas. This formula is:
R x (1+0.04 x t/m)
Rather than going into this formula in detail we would advise that you take a look at the Residential Tenancies Board website as they rather helpfully have included a RPZ calculator and some examples of how the formula works.
2. Further Part 4 Tenancy:
In an effort to move the market towards longer term tenancies the legislation has created the Further Part 4 tenancy which essentially moves the tenancy cycle from 4 years to 6 years. This will apply to all new tenancies from the 24th of December 2016.
Very basically, a tenancy can now be broken up as follows:
Part 1: Probationary period of 6 months – during this period the tenancy can be terminated for any reason
Part 2: if the tenancy is not terminated in the first 6 months then the tenant is entitled to a further 3.5 years - a Part 4 tenancy. The tenancy can only be terminated on specific grounds as set out in Section 34 (b) of the Act.
Part 3: if the tenancy is not terminated then a Further Part 4 tenancy of 2 years is added on and the first 6 months of this is the same as the probationary period at the beginning of the tenancy.
This sounds confusing, because it is. However the Residential Tenancies Board website does set out sample notices of termination and we are happy to assist in the drafting and serving of these notices as well as advising on the complex measures as detailed above.
The 2016 Act has brought in other measures that are important for landlords and we would be happy to discuss these with you. If you are starting out as a landlord or are an existing landlord and have questions about the new legislation and you responsibilities under it, please contact us. Here at Augustus Cullen Law we have an extensive knowledge of the residential tenancies legislation and experience in helping landlords negotiate the difficulties of taking on a tenancy. We are eager to assist so please call us if you would like advice.
27 February 2017