The long awaited reforms for the private residential sector were announced on 10 November 2015 by the Minister for the Environment, Community and Local Government. In addition to proposals to increase housing supply through tax incentives for landlords and stimulating the construction of properties, there are a number of key amendments proposed for the Residential Tenancies Act 2004 (the “Act”) with additional powers for the Private Residential Tenancies Board (the “PRTB”).
Currently the rent can be reviewed once every 12 months and the Act requires that any new amount being set should be in line with ‘market rent’. The notification of a rent change must issue in writing at least 28 days before the new rent is to take effect.
- Review Periods | To address the much publicised issue of rent increases, rents will be fixed for 2 years. This is intended as a temporary measure to allow the measures to improve housing supply (which are intended to help stabilise rents) to take effect - a “sunset clause” will reintroduce annual rent reviews after a period of 4 years.
- Notification Provisions | The requirements for notifying of a change in rent are also being overhauled:
- the notification period will increase from 28 days to 90 days to help tenants secure alternative accommodation if required;
- the notice will also have to include references to at least 3 other comparable properties to show how the landlord arrived at the ‘market rent’ to justify the change along with information for the tenant on how the new rent can be challenged before the PRTB; and
- when notifying the PRTB of the new rent, the landlord will also have to declare that the tenant has been made aware of his / her rights as well as supplying the supporting documentation to vouch for the new rent being in line with the market.
- Notice Periods | Currently, 112 days is the longest notification period to which a tenant is entitled where he / she has been in occupation for 4 years or more. That is to change under the amendment with 4 additional bands of notice periods ranging from 140 days (for 5-6 years’ occupation) up to 224 days (for occupation of 8 years or longer).
- Reasons for Termination | A part 4 tenancy can be terminated by the landlord only for stated reasons as set out in section 34 of the Act. These reasons include that the property is required for occupation by the landlord or a family member, the tenancy is no longer suitable for the tenant (for example, where a tenant’s family size has increased beyond the available bed spaces) or where the property is to be sold.
Under the Act, a former tenant may make a complaint to the PRTB against their former landlord for improper use of these reasons to have gained vacant possession (for example, where the landlord simply puts the premises back on the rental market for higher rent). However, additional provisions are to be introduced to include having a landlord make a statutory declaration to justify the grounds being used to terminate the tenancy which will make improper use of these grounds more difficult and result in the imposition of fines by the PRTB.
Deposit Protection Scheme:
The introduction of a deposit protection scheme has long been anticipated so its inclusion in the reform package is of little surprise. All deposits will be lodged by the landlord with the PRTB who will only release the deposit (in whole or in part) to the tenant at the end of the tenancy with the consent of the landlord. If there is no agreement as to the return of the deposit, then a dispute will be referred to the PRTB in the normal way. Deposit Protection schemes along similar lines are in operation in other jurisdictions such as Australia, New Zealand and in the UK – adequate resourcing of the PRTB to manage the scheme will be key to ensuring its effectiveness.
Enforcement of Determination Orders:
The decisions of the PRTB are issued in the form of binding determination orders. Currently, if either party fails to comply with the determination, an application to the Circuit Court is required to enforce it. The party seeking to enforce the order, or the PRTB, can make the enforcement application in the Circuit Court.
This will be changed in the amended Act with enforcement proceedings being brought in the District Court to assist the parties in making the applications themselves and speed up the process. The enforcement of determination orders often requires an order for possession from the Circuit Court where a tenant is over-holding so it is likely that an amendment of the District Court Rules will also be required to enable such orders to be made.
- Confirmation of Registration | The PRTB will issue confirmation of tenancy registration to tenants as well as landlords and include information on rights and obligations of the parties to the tenancy. This will complement the extensive awareness campaign undertaken by the PRTB in the media in the course of this year.
- Notices of Termination | Currently, the requirements of the Act are very prescriptive and result in many notices being declared invalid on relatively minor, technical issues when a landlord seeks to secure possession. These provisions are to be relaxed while, presumably, ensuring that the rights of tenants to proper notification of tenancy termination are maintained.
We will post further details once the text of the Residential Tenancies Amendment Bill becomes available. Based on comments made by the Minister, these amendments are expected to be in place before the end of 2015. In the meantime, for further information, the press release from Department of the Environment, Community and Local Government can be seen here while the full detail of the package announced by the Minister can be seen here.