Proactive tenancy regulation - new powers of inspection proposed for the residential tenancies board

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Proactive tenancy regulation - new powers of inspection proposed for the residential tenancies board

Published 26 April 2018

Heads of Bill brought before cabinet on 17 April 2018 propose new powers allowing the RTB to inspect rental properties to detect suspected breaches in rent increase limitations.

The Residential Tenancies Board ("RTB") was established by the Residential Tenancies Act 2004 which has been amended on a number of occasions, particularly in the last 3 years as part of the efforts to address the difficulties in the housing and rental markets. However, the latest proposed amendment would see a substantial change for the RTB, meaning it would gain its own powers of inspection.

These inspection powers are to address the enforcement of the 4% rent limit on rent increases in a Rent Pressure Zone ("RPZ"). Currently, the RTB's powers to enforce the rights and obligations of landlords and tenants can only be exercised in response to matters referred to it – i.e., dealing with complaints about landlords or tenants, making determinations in resolution of those disputes and enforcing the determinations accordingly.  If a breach of obligations is not referred to the RTB, then it cannot take any steps to address it.

If enacted, the latest amendments would allow the RTB to investigate breaches of the RPZ rent increase limits either on the basis of a referred complaint or where the RTB itself suspects a breach through tracking rent changes on applications to amend the register of tenancies. Anecdotal evidence suggests that many tenants are accepting rent increases in excess of 4% simply to secure a property given the current lack of availability in the market or else for fear of receiving a notice of termination if they make a complaint. However, the new amendments would mean that, in the absence of a complaint, the RTB would be able to require the landlord to provide evidence to justify an increase in excess of the permitted 4% limit. Permitted exemptions such as a substantial change in the condition of the property, if claimed, could be investigated by the RTB.

Substantial Change and "Renovictions"

The precise meaning of what amounts to a "substantial change" recently attracted much media coverage with a reported increase in so-called "renovictions" – evictions for renovation.  There are two aspects of residential tenancy law where this term has a significant impact:

  • Notice of Termination – one of the 6 permitted grounds for the termination of a part 4 tenancy is where the landlords intends to carry out a substantial refurbishment or renovation of a rental property.  As may be expected, it will only be a valid termination where the proposed changes are substantial.
  • Rent Reviews – as set out above, a landlord can increase rent beyond the 4% limit if there has been a substantial change in the nature of the property. This is also a ground for conducting a rent review more frequently than what is generally permitted (currently a 2 year limit outside of RPZs).

As "substantial change" does not have a definition in the legislation, the RTB published detailed guidelines in November 2017 at the direction of the Minister for Housing, Planning and Local Government which sought to address this.  This guidance proposed that the works undertaken must be "out of the ordinary and not usual works which would be carried out to maintain the accommodation" and suggests that certification from an architect or structural engineer "may be useful" to determined if the works are "substantial". It is not clear at this point if the opportunity will be taken to include a statutory definition in the legislation, when published.

The amendments being considered

Under the proposed new powers of investigation, where a landlord relies on the substantial change ground to increase the rent beyond the 4% limit, the RTB would require the landlord to provide the evidence to justify the increase. If the RTB are not satisfied with the evidence provided to support the contention, an inspection of the property to investigate that increase could be carried out and the guidelines will no doubt play a role in this investigation.

It will also reportedly require a landlord to inform the RTB that renovations are being undertaken which would permit an increase in rent beyond the 4% limit. Fines in the region of €15,000 and criminal convictions are being considered for breaches.  These measures will quite possibly be reserved for persistent offenders.

As part of these revisions, a public register of rents being paid in an area has been proposed which will allow tenants know what they should be paying and will also make it easier to determine what the "market rent" should be when setting the rent for a particular tenancy.

Conclusion

Unfortunately, there was no application made to publish the Heads of Bill and so, as of the time of writing, we must rely on statements to the media and related commentary for detail on the proposals for the time being. The timetable being spoken about by the Minister currently envisages the final enactment of the amending legislation before the summer recess so the exact statutory scheme should become known in the coming weeks.

Threshold, the housing rights charity, has welcomed the proposals for strengthening the rights of tenants and highlighted the need to ensure proper resourcing of the RTB to allow it perform the new powers of inspection. It was reported on the day of the announcement that the RTB were said to be working with the Department of Housing with respect to the additional resources which would be required for implementation.

As ever, any measure to amend the regulation of the residential tenancies sector is a delicate balancing act between improving the rights of vulnerable tenants while not driving existing landlords to exit the rental market which will only increase the availability issues that many blame for contributing to the current housing difficulties. It is therefore likely that the amendments, when published, will reflect a compromise position to meet these potentially competing aims.

Authors

Gary Rice

Gary Rice

Dublin

+353 (0)1 231 9654

Aideen Ryan

Aideen Ryan

Dublin

+353 (0)86 042 4405

Brian Ormond

Brian Ormond

Dublin

+353 (0) 12319691

Aidan Healy

Aidan Healy

Dublin

+353 (0)123 19669

Niall Sexton

Niall Sexton

Dublin

+353 (0)1 231 9675

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