Changes to rental legislation introduced by Residential Tenancies (Amendment) Act 2019

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Changes to rental legislation introduced by Residential Tenancies (Amendment) Act 2019

Published 15 October 2019

The Residential Tenancies (Amendment) Act 2019 ("The Act") was signed into law earlier this year and has introduced a number of significant changes to the existing regulation of residential tenancies in Ireland. Introduced with the aim of conferring greater security of tenure on tenants, the Act imposes a number of new obligations with which landlords should familiarise themselves. This article highlights some of the key changes introduced by the Act:

A. Termination of Tenancies

Changes to Grounds on which Landlord may serve Notice of Termination.

Effective from 4 June 2019, the Act has brought about changes to a number of the grounds on which a landlord may to look to rely in order to terminate a tenancy:

(i) Landlord or family member living in the property

Prior to the Act coming into force, if a tenancy was terminated on the grounds that a landlord or family member intended to live in the property, the landlord was obliged to offer the property back to the tenant served with the notice of termination should it become available again for rent within 6 months. This period has now been increased under the Act to 12 months and applies provided that the tenant has given the landlord their contact details.

(ii) Sale of the property

In the case of a landlord intending to sell the rental property, the Act now gives a landlord a period of 9 months in which to complete the sale of the property (previously 3 months), failing which the landlord is obliged to offer the property back to the tenant served with the notice of termination – again subject to the tenant having given the landlord their contact details. This increase to 9 months is one of the few amendments made by the Act which favours landlords.

(iii) Substantial refurbishment of the property

The Act introduces significant changes for any landlord who wishes to rely on this ground in order to terminate a tenancy. Under the Act, the notice of termination either must contain or else be accompanied by a certificate from a registered professional (an architect or surveyor) stating that the proposed refurbishment works would constitute a threat to the health and safety of the occupants of the property and that such a threat is likely to continue for a minimum period of three weeks – with the actual period for which there is a threat to health and safety to be specified in the certificate. In a change from the previous legislation, should the property become available again for reletting, the landlord is now obliged to offer it back to the original tenant on completion of the refurbishment works – irrespective of when the property comes back on the market.

(iv) Change of use of the Property

In circumstances where the landlord intends to change the use of the property from a residential letting, the Act now obliges the landlord to offer the property back to the tenant served with the notice of termination should it become available for rent within 12 months (previously 6 months) – again, provided that the tenant has given the landlord their contact details. As before, the notice of termination should state or else be accompanied by a statement containing details of the new intended use of the property, the planning permission granted (if applicable) as well as details concerning the proposed nature and duration of the works.

Increase in Notice Periods where Landlord terminating Tenancies

Effective from 4 June 2019, increased minimum notice periods are in force in respect of the length of notice which landlords are required to give to tenants when looking to terminate a tenancy and will apply to all notices of termination served after that date. The Act has also varied the lengths of the tenancies to which these new minimum notice periods apply. The new notice periods are as follows:

Duration of Tenancy Old Minimum Notice Period New Minimum Notice Period
Less than 6 months 28 days 28 days
6 months to 1 year 35 days 90 days
1 year to 2 years 42 days 120 days
2 years to 3 years 56 days 120 days
3 years to 4 years 84 days 180 days
4 years to 5 years 112 days 180 days
5 years to 6 years 140 days 180 days
6 years to 7 years 168 days 180 days
7 years to 8 years 196 days 196 days
8 years or more 224 days 224 days

As before, it is still possible for a landlord and tenant to make provision in the tenancy agreement for longer notice periods. Similarly, it remains possible for the parties to agree a notice period which is shorter than the statutory minimum once the notice of termination has been served.

The notice periods for tenants who are serving a notice of termination remain as provided for under the Residential Tenancies (Amendment) Act 2015.

Service of Notice of Termination on RTB

Under the Act, landlords are now required to send a copy of the notice of termination to the RTB using a specified form available on the RTB website. They must do so within 28 days of the expiry of the notice period stated in the notice of termination.

Remedial Notice of Termination

The Act has introduced the concept of the remedial notice of termination which offers a landlord an opportunity to correct a defect on the face of a notice of termination or if an issue arises from the manner of service – provided that the defect in question does not materially prejudice the notice of termination. In such a case, the RTB may decide to allow the landlord to remedy the defect by serving a new notice of termination (the remedial notice) within 28 days of its Determination Order. The remedial notice should provide the tenant with a further 28 days notice together with any period of time which remains unexpired under the original notice of termination.

The opportunity to serve a remedial notice of termination might apply if, for example, the RTB determines that a landlord has provided insufficient notice of the intention to terminate a tenancy. If the original notice served by the landlord was 5 days short in the minimum notice period specified, this defect would be remedied by the service of a remedial notice affording the tenant 33 days (the 28 days specified by the Act plus the 5 day shortfall in the original notice) to vacate the dwelling.

B. Rent

Formula for assessing designation as a Rent Pressure Zone (RPZ)

From 4 June 2019, new rules are in operation for determining whether or not a local electoral area (LEA) should be designated as an RPZ. Under the Act, classification as an RPZ will now be assessed against three different standardised rents according to the location of the rental property. For Dublin, the benchmark used will remain as the national standardised average rent. However, Dublin rents will now be excluded from the calculation used for the Greater Dublin Area (Kildare, Wicklow and Meath) while both Dublin and the Greater Dublin Area will be excluded from the calculation applied to the rest of Ireland.

The introduction of these changes is likely to result in increased numbers of LEAs being designated as RPZs (44 as of 26 September 2019). It is now estimated that approximately 65% of persons living in rental accommodation are situated within an RPZ.

Changes to RPZ Exemptions

The Act has introduced changes for landlords of properties situated in RPZs who are looking to rely on an exemption from rules restricting rent increases to 4% per year. These are as follows:

(i) Properties not rented in previous two years

The Act has modified the application of this exemption so that only the first setting of rent for a property not let in the previous two years is now exempt from the 4% rent increase restriction. The restriction will therefore apply to any subsequent rent reviews.

(ii) Substantial Change in the nature of the Accommodation

In a case where a landlord's reliance on an RPZ exemption arises from a "substantial change" in the nature of the rental accommodation, the Act has introduced a set of criteria which must now be satisfied in order for a landlord to benefit from this exemption. Effective from 4 June 2019, the substantial change exemption will only apply where the works carried out either: (i) consist of a permanent extension to the rental property that increases its overall floor area by at least 25% or (ii) result in the rental property's BER being improved by not less than 7 building energy ratings.

Alternatively, the "substantial change" RPZ exemption will also apply in cases where works to the rental property consist of at least three or more of the following five criteria:

  • Permanent alterations to the internal layout of the dwelling.
  • Adaptions to the dwelling to facilitate access by persons with a disability.
  • A permanent increase in the number of rooms in a dwelling.
  • In the case of a dwelling with a BER of D1 or lower, an improvement in the BER of at least 3 building energy ratings.
  • In the case of a dwelling with a BER of C3 or higher, an improvement in the BER of at least 2 building energy ratings.

Notification to RTB of reliance on RPZ exemption

Effective from 1 July 2019, landlords must notify the RTB if they wish to rely on an exemption from the RPZ rules. Landlords will do so by completing the RPZ exemption form available on the RTB website which must be sent to the RTB within one month of a new rent being set.

Extension of RPZ designation until 31 December 2021

The Act has also extended the designation of all existing RPZs up to 31 December 2021. This extension was widely anticipated as the designations had been due to expire in December 2019, being the fourth anniversary of their introduction.

C. Enforcement of Residential Tenancies Legislation

Under the Act, and effective from July 2019, the RTB is granted new investigative and enforcement functions and is now empowered to impose financial penalties on landlords who are found to have infringed rental laws. Among the issues which can be investigated by the RTB are the following:

  • Alleged non-compliance with rent restrictions within RPZs and any attempts by landlords to falsely rely on the RPZ exemptions in order to impose increases in rent above the 4% limit.
  • Failure to register a tenancy with the RTB or notify the RTB of a change in the rent payable. (A new annual registration requirement is introduced by the Act and is expected to be commenced in Q1 2020).
  • Where false or misleading reasons are given in order to terminate a tenancy. For example, this could include the making of a false declaration by a landlord that the rental property is either due to be placed for sale or is required for a family member.
  • Failure to offer a rental property back to a tenant in circumstances where the reason for the termination of the tenancy no longer applies. This might arise where a tenancy is terminated on the basis that substantial refurbishment works are intended to take place and these works do not proceed.

These functions may be exercised by the RTB either of its own motion or following receipt of a complaint. When investigating a complaint against a landlord in relation to any of the above, the RTB is required to give the landlord an opportunity to acknowledge their breach in the hope that an investigation can be concluded at an early stage. However, should this not prove possible, the RTB is empowered to impose fines of up to €15,000 together with costs to the RTB of €15,000.

D. Restrictions on Short Term Letting

As of 1 July 2019, new rules have come into operation in respect of short-term lettings of residential properties within RPZs. Where a property is located within an RPZ, a person is not permitted to offer that property for short term letting (up to 14 days) unless there is existing planning permission to use the property for short term letting or tourism purposes. If not, short term lettings will be considered a material change of use and will therefore be subject to a requirement to obtain planning permission.

However, an exemption from these restrictions on short term letting is available where persons let out rooms in a property which is their principal private residence (homesharing). There is also an exemption for homesharers who sublet their entire home on a short term basis, provided that this is done for not more than 90 days in one year. Homeowners who wish to avail of these exemptions are obliged to register with their local authority and fulfil specified reporting obligations. Properties which are located outside of RPZs will not be impacted by these new rules.

E. Conclusion

The changes brought in by the Act are significant. It remains to be seen what impact they will have in practice and in particular whether they will serve to fulfil the policy objective of providing tenants with greater security of tenure. It will be incumbent on all landlords to fully familiarise themselves with the new obligations imposed upon them by the Act or otherwise face the possibility of either investigation or enforcement action from the RTB. As always with such amendments and the lack of changes benefitting landlords, the risk remains that private landlords will be less inclined to remain within the rental market, thus exacerbating issues of supply.

Authors

Lisa Broderick

Lisa Broderick

Dublin

+353 (0) 1 231 9683

Rowena McCormack

Rowena McCormack

Dublin

+353 (0)1 231 9628

Julie-Anne Binchy

Julie-Anne Binchy

Dublin

+353 (0) 123 19636

Charlotte Burke

Charlotte Burke

Dublin

+353 (0)1 2319679

Simon Halpin

Simon Halpin

Dublin

+353 (0) 123 19639

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