knowledge | 1 August 2019 |
New Legislation for Residential Tenancies: Our Top 10 Changes
The promised government legislation to further regulate residential lettings is now substantially in force. With only the annual registration requirements left to be commenced, the Residential Tenancies (Amendment) Act 2019 brings greater transparency to the sector, increased protections for tenants and students and places new obligations and liability on landlords. But what does it actually mean for you? Whether you are a landlord, tenant, student accommodation provider, educational institution, or thinking of investing in residential property, we bring you our top 10 changes.
1. Leases and licences to students of student accommodation in scope
As of 15 August 2019, the residential tenancies legislation is expressly applied to leases and licences granted to students of residential student accommodation during academic term times. The exemption previously enjoyed by educational institutions no longer applies.
2. Annual registration required of landlords
While these specific provisions have not yet been commenced, landlords will be required to register tenancies (and student licences) on commencement and also annually after that. A failure to initially register, re-register or to update the details registered (eg following a rent review) is improper conduct which can be investigated and sanctioned by the Residential Tenancies Board (RTB) under its newly enhanced powers.
3. Planning permission required for short term lettings and licences in Rent Pressure Zones
Intended to free up accommodation for longer term rentals, as of 1 July 2019 allowing use of all or part of a house in an RPZ under a lease or licence for 14 days or less is a material change of use for planning purposes that will require specific planning permission if not already expressly permitted. (For further information, see our specific briefing on this here).
4. Rent restrictions in Rent Pressure Zones enhanced
The time period for all current RPZ designations is extended to 31 December 2021. For new builds (and other properties let for the first time in 2 years) the exemption from the annual 4% restriction on rent increases is now confined to the rent first set for that new rental only. Limiting the scope for wider interpretation of the only other exemption from the rent increase restrictions, the legislation now also sets out the technical criteria required for a “substantial change” to the nature of the accommodation. To rely on either the new rental exemption or the substantial change exemption, a notice must also be served on the RTB. Failure by a landlord to comply with the restriction on rent increases in RPZs and related criteria for exemption is an offence. It is also improper conduct, which can be investigated and sanctioned by the RTB under its newly enhanced powers.
In a separately introduced change, protected structures only now need to be vacant for 1 year (instead of the generally applicable 2 years) for the exemption from the rent increase restrictions to apply. This recognises that protected structures are exempt from meeting the energy efficiency targets that many of the new "substantial change" criteria are based on, resulting in the "substantial change" exemption being unlikely to benefit those properties at all.
5. New RTB powers of investigation for improper conduct
The RTB has new detailed and comprehensive powers to investigate landlords for improper conduct. Improper conduct is a failure by the landlord to comply with its registration obligations, or with the regulation of rents in RPZs or with an obligation under the legislation to offer back a dwelling to a tenant following termination. It is also knowingly terminating a tenancy in a way that is false or misleading in a material respect. Failing to co-operate with an investigation into improper conduct is an offence with the potential for a fine of up to €50,000 or imprisonment for a period of up to 5 years or both. (For further information, see our specific briefing on this here).
6. New RTB powers of sanction for improper conduct
The RTB may levy a sanction of up to €30,000 for improper conduct but if a landlord is sanctioned for improper conduct and the improper conduct is also an offence, the person cannot also be tried for that same offence.
7. Termination of Part 4 tenancies by landlords regulated further
It has already been the case that tenancies that enjoy security of tenure (Part 4 tenancies) can only be terminated on limited grounds during the 6 year protection period, with landlords being obliged to offer the dwelling back to the tenant if that becomes possible within set time periods of the termination. Those time periods have either been increased or removed to prolong the landlord obligation. In one of few relieving measures for landlords however, a landlord who terminates a tenancy on the basis that it intends to sell the dwelling, now has 9 months (extended from 3) to enter into a contract for sale before triggering the offer back obligation. Where a landlord terminates a tenancy on the basis that it intends to substantially refurbish or renovate the dwelling, the termination notice must now be accompanied by a certificate of a registered professional stating that the works would pose a risk for three weeks or more to the health or safety of the occupants and should not proceed while the dwelling is occupied. Any notice of termination of a Part 4 tenancy must also now be sent to the RTB within 28 days of the expiry of the notice period.
8. Notices of termination may be remedied and landlord notice periods are extended
If a termination notice is found to be invalid due to a defect or error in its service that does not materially prejudice the other party, the party who served the notice is now entitled to issue a remedial notice, to expire 28 days after the original notice period. While mutually beneficial, this is the change in the legislation likely to be of most practical benefit to landlords. New longer notice periods also apply to landlords seeking to terminate a tenancy depending on the duration of the tenancy in place. These can be confirmed with the RTB or on www.rtb.ie.
9. RTB must publish its determination orders
Increasing transparency and insight into the resolution of disputes by the RTB, the RTB is now required to publish its determinations and can no longer decide this for itself.
10. RTB to publish report on rental levels
The Minister is required to request the RTB to provide a report on prevailing rent levels between 12 and 15 months after the commencement of the amended registration and re-registration provisions of the legislation and present it before each house of the Oireachtas. This signals the continuing political and social importance of keeping rental levels, and the measures taken to slow growth, under review.
All the indicators are that the role the private rental sector plays in Ireland in accommodating our people is growing. As part of Rebuilding Ireland, the government’s action plan on housing and homelessness, the government has committed to improving the rental sector. But regulating a sector that spans both the commercial and professional and the private and personal is challenging and, as with all things, the devil may be in the detail. This new legislation adds a further layer to what is a very complex and increasingly important legislative area. Our top ten summary gives a sense of the changes only and anyone affected by them or looking to act on any of them will need to consider the changes in more detail.
This briefing is for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.