Overview of Ireland's Residential Tenancies Acts: Legislation & Changes (2004-2019), Summaries of Law

Download Overview of Ireland's Residential Tenancies Acts: Legislation & Changes (2004-2019) and more Summaries Law in PDF only on Docsity! Relate The journal of developments in social services, policy and legislation in Ireland July/August 2019 Volume 47: Issues 7-8 ISSN 0790-4290 Contents Page No. Residential tenancies legislation The Residential Tenancies Acts 2004 to 2019 are the primary pieces of legislation which govern the relationship between residential landlords and tenants in Ireland. Many of the terms and conditions of any tenancy are set out in these pieces of legislation, as well as in the lease agreement between a landlord and a residential tenant. Where a lease and the legislation come into conflict, it is generally the case that the legislative provision prevails. On 24 May 2019, the Residential Tenancies (Amendment) Act 2019 was enacted. It contains some significant reforms of the existing law in this area and builds on the changes introduced by the Residential Tenancies (Amendment) Act 2015 and the Planning and Development (Housing) and Residential Tenancies Act 2016. The 2016 Act included the introduction of rent pressure zones (RPZs), restrictions on rent increases in these RPZs, and the extension of Part 4 tenancies from four years to six years. Although many of the new provisions in the 2019 Act have been commenced, some have not yet come into effect. Consolidated versions of the 2004, 2015 and 2016 Acts are available on the Law Reform Commission’s website, lawreform.ie. Related changes have also been introduced to planning legislation in the 2019 Act and supplemented by the Planning and Development Act 2000 (Exempted Development) (No. 2) Regulations 2019 to deal with the phenomenon of short- term lettings (where properties are let for periods of no longer than 14 days). These changes apply only to properties in RPZs and came into force on 1 July 2019. INSIDE: Residential Tenancies Act 2004 p2, Residential Tenancies (Amendment) Act 2015 p2, Planning and Development (Housing) and Residential Tenancies Act 2016 p2, Residential Tenancies (Amendment) Act 2019 p2, Security of tenure p3, What is a Part 4 tenancy? p3, Remedial notices of termination of a tenancy p4, Rent pressure zones (RPZs) p4, Rent reviews of private properties outside RPZs p4, Rent reviews of private properties in RPZs p5, Exceptions to the RPZ regulations p5, Investigations, sanctions and new criminal offences p5, Student accommodation p7, Annual registration of tenancies p7, Changes to the planning permission requirements of short- term lettings in RPZs p7 3. Provisions of the Residential Tenancies Acts 2004 to 2019 8. Land and Conveyancing Law Reform (Amendment) Act 2019 page 2 Relate – July/August 2019 Citizens Information Board Residential Tenancies Act 2004 The Residential Tenancies Act 2004 reformed the rules governing private tenancies. It codified many of the rights and obligations of landlords and tenants. It included provisions for setting rents and carrying out rent reviews. It also introduced the concept of Part 4 tenancy, which provides automatic security of tenure protection to tenants who have occupied certain dwellings under a tenancy for more than six months. Many significant changes have been made to the rules surrounding Part 4 tenancies in recent years, which are outlined below. The 2004 Act also established the Private Residential Tenancies Board (PRTB) whose responsibilities include hearing and resolving disputes between landlords and tenants in the private rented sector and also operating a system of tenancy registration. In April 2016, the remit of the PRTB was extended to include approved housing bodies and it was renamed the Residential Tenancies Board (RTB). In addition, the 2004 Act prohibited the practices of having rent reviews more than once every 12 months and setting rents above the market rate. Residential Tenancies (Amendment) Act 2015 The Residential Tenancies (Amendment) Act 2015 introduced a number of changes, aimed generally at protecting tenants. These included: • Limits on the frequency of rent reviews − Until December 2019, rent reviews could be conducted only once every 24 months unless there was a substantial change in the nature of the accommodation which affected market rent (such as a significant renovation) − On 4 June 2019, this 24-month limit was extended to the end of 2021 for properties outside RPZs (properties within RPZs can generally have rent reviews once every 12 months) • Changes to notice periods for terminating Part 4 tenancies and a requirement that a landlord provide additional proof in certain circumstances when terminating a Part 4 tenancy • Bringing approved housing bodies within the remit of the RTB for the first time • Making available many, although not all, of the rights under the 2004 Act to tenants of approved housing bodies, including those related to Part 4 tenancies • Allowing enforcement of RTB orders to take place in the District Court rather than the Circuit Court, thus reducing costs The 2015 Act also sought to introduce a security deposit retention scheme which would oblige landlords to transfer tenants’ security deposits to the RTB. This aspect of the 2015 Act has never come into force. Planning and Development (Housing) and Residential Tenancies Act 2016 The Planning and Development (Housing) and Residential Tenancies Act 2016 provided for a number of additional changes. The provisions that were brought into force included: • Measures to prevent landlords simultaneously serving termination notices on large numbers of residents in a single development, known as the ‘Tyrrelstown’ amendment • Extending the tenancy cycle for Part 4 tenancies from four years to six years • Creating rent pressure zones (RPZs). In these areas rent increases were capped until the end of 2019. RPZs are areas where rents are highest and rising quickly. • Changes to the frequency of rent reviews in RPZs • Simplified procedures for dispute resolution • Requirement for a landlord to give a reason when terminating a Further Part 4 tenancy in the first six months (see page 3) Residential Tenancies (Amendment) Act 2019 The Residential Tenancies (Amendment) Act 2019 makes further important changes affecting tenants’ rights, including: • New notice periods for landlords for the termination of tenancies • Changes to notice procedures and obligations • The extension of existing RPZs from the end of 2019 to the end of 2021 • Updated criteria for the designation of RPZs • Providing a legal definition of ‘substantial change’ for the purpose of allowing a rent increase above the percentage allowed in an RPZ • Enhanced investigation and sanctioning powers for the RTB • Treating certain student accommodation in a similar way to tenancies that are covered by the Residential Tenancies Acts It also made a proposal requiring landlords to register annually with the RTB and pay an annual registration fee. page 5Relate – July/August 2019Citizens Information Board Rent reviews of private properties in RPZs New tenancies in an RPZ For a new tenancy in an RPZ (starting on or after 24 December 2016), the landlord can review the rent once every 12 months. The maximum rent increase is 4% per year. This means that if more than one year has passed since the last rent review, a total rent increase of more than 4% is permitted. For example, if a new tenancy began on 1 January 2018 with rent fixed at €1,000 and a rent review proposed increasing it from 1 July 2019 (18 months after the rent was fixed), the rent could increase by a maximum of 6%. The new rent rate could be a maximum of €1,060 (provided the landlord had served a valid notice of a rent review). The RTB provides a rent increase calculator on its website, rtb.ie/calculator/rpz. The landlord must give the tenant the following information, in writing, at the start of the tenancy: • The amount of rent that was last set for the property under a tenancy • The date the rent was last set for the property • A statement as to how the rent set for the property has been calculated, having regard to the RPZ formula The rent being set should not be more than market rents for similar properties in the area. To demonstrate this, the landlord must provide three comparable examples for similar properties in the locality or in similar areas. Existing tenancies in an RPZ In existing tenancies (starting before 24 December 2016) in an RPZ, the first rent review can take place after 24 months from the start of the tenancy or 24 months from the date you were notified in writing of your last review. The maximum rent increase is 2% per year since the previous rent was set. For example, if the rent is reviewed after the minimum 24-month period, the maximum rent increase is 4%. If more time has passed since the previous rent was set, the maximum rent increase is higher (2% per additional year up until 2016). Subsequent rent reviews can take place after 12 months and must adhere to the RPZ rules set out above for new tenancies. Exemptions to the RPZ regulations Rent can only be increased above the maximum annual percentages for: • Tenancies in protected structures or proposed protected structures that have not been let in the previous year • Other properties that have not been let at any time in the previous two years • Properties that have been substantially changed The 2019 Act introduces a definition of what amounts to a substantial change. A substantial change is any of the following: • A permanent extension which increases the floor area of the dwelling by at least 25% • An improvement which increases the energy rating of the dwelling by at least seven building energy ratings • An improvement which is not required by existing legislation and consists of at least three of the following: − The internal layout of the dwelling is permanently altered. − The dwelling is adapted to provide for access and use by a person with a disability. − The number of rooms is permanently increased. − The BER rating is improved by at least three levels on the BER (building energy ratings) scale, in a dwelling that has a BER of D1 or lower. − The BER rating is improved by at least two levels on the BER scale, in a dwelling that has a BER of C3 or higher. Need to notify the RTB of exemption Since 1 July 2019, landlords must inform the RTB if they are relying on an exemption which means that they do not have to adhere to the RPZ formula. Landlords must complete an RPZ Exemption Form available on the RTB website, rtb.ie and send it to the RTB within one month of the new rent amount being set. Under the Residential Tenancies (Amendment) Act 2019, there are sanctions for landlords who do not follow rent increase limits in RPZs, provide false information about an exemption in an RPZ area or fail to notify the RTB about availing of an exemption. Investigations, sanctions and new criminal offences The 2019 Act significantly enhances the investigation and sanctioning powers of the RTB and introduces new criminal offences for failure to comply with residential tenancies legislation. Investigations The 2019 Act introduces new powers of investigation and sanctions. These powers give the RTB a more active and direct regulatory role in the rental sector and will allow the RTB to support landlords in complying with the legislation. The RTB can conduct investigations into potential breaches of law by landlords, with or without a formal complaint. The landlord will be afforded the opportunity to acknowledge page 6 Relate – July/August 2019 Citizens Information Board their breach and bring the investigation to an end at an early stage. The RTB has established a new investigations and sanctions unit with a dedicated information helpline on 0818 776297 or 01 6753724. Where the RTB receives a complaint alleging improper conduct by a landlord, it will have the power to commence an investigation into that complaint. Improper conduct includes: • Breaching the RPZ rent restrictions • Failing to notify the RTB that they are relying on an exemption from the RPZ rent restrictions • Failing to register a tenancy • Failing to notify the RTB of an alteration in the rent set under a tenancy • Attempting to rely on an exemption from the RPZ rent restrictions where an exemption does not apply • Citing a reason for termination that the landlord knows to be materially false or misleading • Failing to re-offer a dwelling for letting to a former tenant, where required under legislation A landlord will be notified of the investigation and provided with the relevant documents. In relation to investigations, the Act allows the RTB to appoint two categories of people: • Authorised officers • Decision-makers Many of these will be staff members of the RTB. Authorised officers are given wide-ranging powers in relation to investigations of possible breaches of residential tenancies legislation. These powers include to: • Enter, inspect, examine and search any premises connected with a residential tenancy at a reasonable time (although a warrant may be necessary if the premises is a private dwelling and the occupier withholds consent, as explained below) • Remove or take copies of relevant records held at the premises • Request the owner of the property or any person there to assist them and, if necessary, to produce copies of records that are held digitally • Require anyone who has relevant information or records to provide the necessary information or records • Require an explanation from a landlord in relation to any decision or practice The authorised officer may be accompanied by a member of An Garda Síochána. If a person fails to comply with any of the requirements, the authorised officer can apply to the District Court for an order requiring compliance. Alternatively, the District Court may grant a warrant to allow the authorised officer to enter a premises (including a private dwelling where the occupier withholds consent). An authorised officer may also conduct an oral hearing in relation to any aspect of the investigation. Failure to comply with any of the above requirements and destroying or concealing relevant records are criminal offences. The maximum penalties are: • Class A fine and/or imprisonment for up to 12 months, if prosecuted in the District Court • Fine of €50,000 and/or imprisonment for up to five years, if prosecuted in the Circuit Court When an investigation is concluded, a draft of the investigation report must be provided to the landlord, who has 21 days to make submissions in respect of the draft report. A final report will then be prepared and provided to a decision-maker. The decision-maker will then consider the report and any attached submissions, and may conduct an oral hearing. If they decide that improper conduct has occurred, they can impose a sanction on the landlord. A person cannot be an authorised officer and a decision- maker at the same time. Sanctions RTB sanctions for improper conduct by a landlord may include any one or all of the following: • Payment of a financial penalty of up to €15,000 to the RTB • Payment of the costs of the RTB of up to €15,000 • A written caution to the landlord Sanctions must be confirmed by the Circuit Court. However, sanctions will be confirmed as a matter of course unless the landlord appeals, or if the Circuit Court considers there is good reason not to confirm them. New criminal offences The 2019 Act also introduces a range of new criminal offences. These include: • Failing to comply with the RPZ rent restrictions • Knowingly or recklessly providing materially false or misleading information to the RTB in connection with a notice relating to an exemption from the RPZ rent restrictions • Failing to comply with a notice from the RTB to update rent information on the RTB register after a rent alteration page 7Relate – July/August 2019Citizens Information Board Prohibition against double punishment for the same wrongful act If a landlord has been sanctioned by the RTB for something which is also a criminal offence, they cannot be prosecuted for that criminal offence. So, if a landlord is sanctioned by the RTB for failing to comply with RPZ rent restrictions, they cannot also be the subject of a criminal prosecution for the same failure to comply with RPZ rent restrictions. Similarly, if a landlord has been criminally prosecuted for something which is also sanctionable by the RTB, a sanction cannot then be imposed by the RTB. Student accommodation Traditionally, student-specific accommodation has fallen outside the remit of residential tenancies legislation, particularly where the accommodation was subject to a licence rather than a lease. However, a student whose residential licence in student accommodation is created on or after 15 August 2019 (such as on-campus accommodation or purpose-built student accommodation) will have many, but not all, of the same rights as tenants in privately rented accommodation. Certain properties will remain outside the scope of the relevant provisions. Most notably, properties where the landlord also lives, such as digs, will continue to be exempted. The 2019 Act also takes into account the fact that student accommodation generally involves some form of communal living, where only the bedroom is let. However, even in these situations, the following protections still apply: • The inability to set rent above the market rate • The benefit of RPZ rent increase restrictions • The requirement to register the tenancy with the RTB • Access to the RTB’s dispute resolution procedures However, students will not gain Part 4 tenancies and their entitlements despite living in the accommodation for a continuous period of six months. These enhanced protections only apply to student accommodation arrangements entered into after 15 August 2019. Tenants in student accommodation which already came under the Residential Tenancies Acts are not affected by the changes. Annual registration of tenancies The 2019 Act also seeks to introduce a new requirement that landlords register tenancies annually with the RTB. Annual registration is expected to cost €40 for private rented tenancies and €20 for approved housing body tenancies. It is expected that the new registration regime will begin in early 2020. Until this new regime comes into effect, a landlord has to register a tenancy at the start of a tenancy or when a Further Part 4 tenancy comes into operation. Changes to the planning permission requirements of short-term lettings in RPZs Since 1 July 2019, the 2019 Act imposes additional obligations on people who rent out their property on a short-term basis in an RPZ (with some exceptions, see below). A short-term letting is defined as the letting of a dwelling or part of a dwelling for any period not exceeding 14 days. Use of a property for short-term lettings in an RPZ can amount to a material change of use. This means that you must make a formal application for planning permission if the property is not your principal private residence, or if you rent your property for more than 90 days in a calendar year. Whether permission is granted is at the discretion of the local planning authority. It has been indicated that planning applications may be refused in areas of high housing demand. Failure to have the correct planning permission is a criminal offence. Properties located outside RPZs are not affected by the new rules. Exemptions to the requirement for planning permission The Planning and Development Act 2000 (Exempted Development) (No. 2) Regulations 2019 provide two exemptions to the above requirement to apply for planning permission for properties in an RPZ if the notification requirements below are met: 1. Home-sharing (where a person lets one or more bedrooms in their own home for less than 14 days at a time) will continue to be exempted in an RPZ, provided: − No more than four bedrooms are let − Each bedroom is let to no more than four people − There is no prohibition on such letting in the property’s current planning permission 2. Letting your whole home will also continue to be exempted in an RPZ, provided: − It is rented for no more than 14 days at a time − It is rented for no more than 90 days in a calendar year − There is no prohibition on such letting in the property’s planning permission If the 90-day cap is exceeded, formal planning permission will be required.