Earlier this week, Housing Minister Eoghan Murphy secured Cabinet approval for the new Residential Tenancies Bill. Once this passes successfully through the Oireachtas, the Residential Tenancies Act will give statutory effect to a host of new measures designed to dampen price hikes and to increase protections for tenants in the private rental market.
Rent transparency is one of the biggest issues to be tackled and it is proposed that the RTB will compile a list of rents in individual apartment blocks or streets and then publish the average price. Under the new rules, landlords who disregard the RPZ restrictions and illegally increase rents in excess of 4% per annum will stand to be criminalised. Based on 2017 Q4 figures, the national average rent for new tenancies is €1,054 per month (up from €990 in 2016) and €1,511 in Dublin.
Significantly, the RTB is to be given powers to initiate an investigation without the need for a complaint to be made, meaning that the burden will no longer be on the tenant to report breaches. Other key changes include increasing the notice periods that must be given to tenants (this is a one-way change).
These proposed new powers for the RTB have received mixed reviews. At the moment, the RTB is charged with resolving disputes between landlords, tenants and third parties and is often criticised for its pro-tenant approach to carrying out this function. It is unsurprising that giving this body proactive powers to investigate suspected breaches in rental laws - rather than simply taking action on tenant or third party complaints - will raise a few eyebrows within the industry. In our experience, credible professional landlords want to see rogue operators taken out of the market. But is the RTB the right body to do this and will it be able to make the transition to enforcer?
Surprisingly, there is no mention of any deposit protection scheme despite this being one of the top three disputes between landlords and their tenants. The number one category of dispute involves the non-payment of rent, rent arrears and over-holding. This regulatory move is likely to feel like another blow to individual landlords who are already shouldering an onerous tax burden when compared with institutional investors.
Compliance is a necessary function of any professional landlord, however, this is particularly tough given the lack of certainty and almost-constant flux in the regulations governing this sector. This might, in part, explain statistics from the team at Sherry Fitzgerald (who are involved in 15% of all residential transactions in the Irish market) revealing that for every one landlord entering the Irish marketplace, two are leaving. There does not appear to be any initiative to encourage new landlords into the market, despite the fact that meeting short-term housing targets under Rebuilding Ireland actually depend on this.
Of course, ignorance of the law is not an excuse; landlords will need to pay attention to new regulations and seek the necessary legal and property advice to avoid unwittingly falling foul of the system. The fines being considered are upwards of €15,000 and the Minister is apparently “exploring” options of jail time for non-compliant landlords. It is expected that this Bill will be prioritised, which means it could become law before the summer. Finally, it must be noted that there was no mention of the touted plan to prevent landlords who benefited from tax breaks from seeking vacant possession when they are looking to sell, however, this is likely to be sought by opposition parties.