Spring 2017 dsba.ie Joan Maclean and Killian Morris are partners in the real estate team at AMOSS Solicitors
The Minister for Housing may designate other areas as RPZs based on reports and recommendations from the Housing Agency. By ministerial order of January 26th 2017 the Government has designated an additional 23 towns and all of Galway as RPZ.
Exemptions from New Rent Control Provisions The above rent control provisions (other than the requirement to adhere to local market rents) will not apply where: • No tenancy in two-year period prior to designation as an RPZ • The dwelling has been vacant in the two-year period prior to the designation as an RPZ – i.e. in the period December 24th 2014 to December 24th 2016. • If a new tenancy of a dwelling in an RPZ is entered into at any point after December 24th 2016 but the dwelling was not let during the period December 24th 2014 to December 23rd 2016. • New Units Lettings of newly constructed properties are not subject to the rent control provisions. It seems that international investors and purchasers of multiple units may focus their investments in this sector. • Substantial Refurbishment since rent was last set Rent control provisions do not apply where there has been substantial refurbishment of the dwelling – to an extent that it would result in an increase in the market rent of the dwelling – since the rent was last set. There may be difficulties in establishing an exemption on these grounds. The landlord will have to establish what would be the market rent for a property that has been refurbished and would have to compare to similar properties fitted out to a similar standard in the area. The landlord will have to then demonstrate that the refurbishment works would result in an increase in the market rent (and to identify the amount of the increase in market rent that is due to the refurbishment works themselves – and not just market changes).
Landlord & Tenant
• Rent Review Notice served or process commenced Rent control provisions do not apply where immediately before December 24th 2016 a rent review notice has been served on the tenant or the rent review process has been commenced.
It remains to be seen how the market will be impacted by these restrictions and whether the restrictions will have the desired effect or indeed if it might serve to create a twotier market
Frequency of Permitted Rent Reviews/Rent Certainty Measures Following the commencement of the 2016 Act reviews can be carried out as follows: • For existing tenancies in all areas the first rent review can take place only after expiry of a two-year period • For subsequent rent reviews in RPZs the rent review can take place annually but a two-year period continues to apply for tenancies outside RPZs, for the duration of the rent predictability measures introduced under the 2015 Act, i.e. four years from December 4th 2015 • For tenancies created after December 24th 2016 rent reviews are permitted annually • RTB practice indicates that notices are not to be served until after the two or one year limits have ended (i.e. notices served in advance which are due to expire after the limitation has ended are not properly served).
Conclusion The 2016 Act will certainly be of assistance to struggling tenants, but it does remain to be seen whether there will be a significant negative impact on residential property investors which might result in a reduction in badly needed investment in the sector. Anecdotally, it seems that many investment deals have stalled as a result of the new measures and it may also be that some of the larger players in the residential lettings market are considering a constitutional challenge to the legislation. From a lawyer’s perspective adverse decisions by the RTB are likely to have a significant impact on landlords’ income streams which will, in turn, reduce property values. This will make it more likely that such decisions will be appealed in the courts than ever before; which will necessarily create a demand for expertise in this area.
P
the Parchment 21
020-021_Parchment_Spring_2017.indd 21
29/03/2017 12:44 p.m.