New Legislation to Strengthen Tenant Rights and Protections, Building, Architecture
David Grin Reviews New Legislation to Strengthen Tenant Rights and Protections
Residential Tenancies Bill: Increased Regulation of Rent Pressure Zones Article
post updated 8 Apr 2020 ; 30 May 2019
David Grin Reviews New Legislation Designed to Strengthen Tenant Rights and Protections
New legislation recently passed by the Oireachtas, Ireland’s National Parliament,seeks to regulate rising rental costs and strengthen tenant protections, which have eroded during the recent nationwide housing crisis.
The upper house of the Irish Parliament, the Seanad, recently passed a Residential Tenancies Bill designed to tackle the expanding rental crisis that appears to be sweeping across the nation. Over the last year, politicians from all political parties, as well as, independents have drafted several proposals suggesting a range of solutions to rising rental costs and ways tooffer security to tenants. The new bill, which is a compilation of many of these proposals, has already been pass by the Dáil and will now be referred to President Michael D Higgins to be signed into law.
Increased Regulation of Rent Pressure Zones
According to David Grin, chairman of Lotus Investment Group – a property and construction finance firm, “There has been a lot of speculation about how the government would decide to regulate Rent Pressure Zones and attempt to curb the persistent nationwide rental crisis. It has left the market with much uncertainty, but now with concrete action being taken, we hope that this measure will offer relief to tenants and help to mitigate rising costs.”
As Grin mentioned, the new bill targets regulation of Rent Pressure Zones, which have been highly criticized for their lack of effectiveness in addressing the rising rental costs. Housing Minister Eoghan Murphy announced several of the proposed measures which appear in the new bill in the Spring of 2018, but it has taken the government time to make significant progress on the issue.
New Measures to Protect Tenants
In an attempt to curb rising costs, the new bill makes it an actionable offence for landlords with properties in designated Rent Pressure Zones (RPZs) to raise rental prices in excess of 4% per year.
The legislation has also extended the required notice period given to tenants to vacate a property and increased the number of areas designated as RPZs. The notice period for tenants in a property for more than six months will increase from 35 to 90 days, while those who have been in a residence between one to two years will now be granted 120 days notice compared with the current requirement of 42 days. The notice period for those tenants who have resided in a property between two and three years will rise from 56 to 120 days. For those tenants in a property less than six months,the notice period for will remain unchanged at 28 days.
The notice period allowances will now also be extended to student accommodations located within Rent Pressure Zones. For these tenants who have been in a property between three to seven years, the notice-to-quit period will now be set at 180 days.
The new legislation also addresses a ‘loophole’ in the current regulation of RPZs that landlords have notoriously been using across the country as a way to raise rental prices. Under the current laws, landlords have been able to terminate tenancies for the purpose of carrying out ‘significant’ renovations and upgrades on the property, which then allows them to put the property back on the market at a considerably higher rental price.
New regulations contained in the bill will also require landlords to obtain planning permission before short-term letting a property for any period up to a maximum of 14 days in designation RPZs, unless specifically exempt. Violators of this new code could incur up to a €5000 fine.
The Bill Introduces New Enforcement Powers
The new law also substantially increases the power of the Residential Tenancies Board (RTB) to investigate and enforce violations of rental caps by landlords, with some violations carrying fines as high as €15,000. As the current legislation stands, any action of the RTB must be initiated by a tenant or public complaint.
The new legislation allows the Board to further investigate any residential tenancy in the country, whether the property is properly registered with the board or not. To help the Board maintain proper oversight, it will now be a criminal offence for landlords who fail to register tenancies, neglect to update tenancy details orare uncooperative with Board investigators.
At this time, it is not known when the new legislation will go into effect. The government appears to be determined to take action soon, as the Minister for Housing has requested that the legislature exercise its power to expedite the signing of the bill by President Higgins. If this push by the government to accelerate the early enactment of the legislation is successful, the market could see the new regulations come into effect as early as the beginning of July 2019.
Potential Impact of the Legislation
According to David Grin, “The rental market has been in dire need of relief. Currently, property investors, developers and residents have been wrangling with rising demand and sluggish supply, contributing to the current housing situation. Government policies have the potential to go far in providing affordable housing solutions for the Irish people.”
Large-scale institutional investors who maintain several rental tenancies across the country have already made changes to their policies and tenant arrangements in preparation for the new legislation. Those that will be most impacted by the changes brought by the new legislation will likely be private landlords who maintain small-scale operations of two or more rental properties.
Grin emphasized that “this robust regulation is sure to create a more professional approach to property investing, which will have a positive impact in the long-term. However, in the short-term, these new regulations may inevitably drive some landlords, especially those who lease properties, out of the market. This may not necessarily be a bad thing, as it could free up additional properties for purchase by second-hand buyers.”
While many applaud the new legislation for its strengthening of tenant protections, there have been some who have criticized the government for not going far enough in securing tenant rights. It is at issue that will likely receive increased awareness with the growing trend in long-term renting observed in Ireland.
The government will hold a four-week public information campaign on the new rental regulations during the next month to raise awareness before they come into effect.
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