Tenants Rights Re Rent Increases
I read two different articles last week in one of the national papers regarding the issue of rent increases. Each article highlighted cases where tenants were finding it difficult to manage huge rent increases. However both involved situations that should no longer occur under the current legislation. So here’s a really quick run-through of your rights regarding rent increases as a tenant in Ireland.
I use the term landlords generically – includes landladies also.
There are two sets of rules for rent increases in Ireland:
- The rules for those living in designated Rent Pressure Zones
- The rules for those living in rest of the country
Rent Pressure Zones Rules
The general rule for these zones is that rents can only be increased by a maximum of 4% annually.
If the property is being let for the first time, or has not been let at any time in the last two years, or has undergone substantial changes or refurbishment so that it is of greater rental value then the property can be exempted from this rule – when it first appears (or reappears) on the market.
Is anyone checking that substantial changes or refurbishments are in fact occurring? I haven’t heard of this happening. As this exemption seems to be about encouraging better standards in housing I hope it’s being monitored and properly enforced.
Where are the RPZs?
The Housing Agency decides which areas get designated and it does this by looking at the rates of rent increases (inflation) over the last year and a half. At the moment all of Dublin, Cork City, Galway city, many commuters areas to Dublin, and some other areas are designated as RPZ. For a full list of the zones and for more information on RPZ visit the RTB’s page.
What about new tenants?
The new rules will also apply if you are moving in to a new tenancy which is located within a rent pressure zone. In this case, upon commencement of the tenancy, the landlord is required to give you written information outlining the amount of rent and date it was last set under a tenancy for the dwelling and a statement as to how the rent set under the tenancy of the dwelling has been calculated having regard to the rent pressure zone formula. If you don’t get this the landlord is in breach and you can take further action through the RTB.How to deal with rent increases
Threshold
Rules for the Rest
Your landlord can raise the rent only once in a 24 month period and he cannot charge more than market rate for the type of property you are renting. If he proposes raising the rent it must be at least 24 months from the date of your last rent review notification, and he must give at least 90 days written notice of the amount of the new rent and state the date it is to take effect from.
The notice –
- it must be in writing – in the form of a letter – text or email will not suffice
- it must give at least 90 days notice
- it cannot be given before 24 months have passed since the last rent review notification
- it must list three comparable properties with similar rents in your area that were recently advertised
- it must state that you have 28 days within which to dispute the review
Appealing the notice
If you feel the rent increase is too much, you have 28 days to appeal this notice.
Before the RPZ legislation came into effect in Dublin some landlords – mostly through estate agents – were firing off rent review notices that hiked up the rent by 50% or more. They would usually agree to a much more modest increase when challenged. So if you receive notice of a review that is hiking up your rent by hundreds of euro, just breathe and realise this is a business person’s idea of the opening round of negotiations. Regardless of what the notice contains, check out the rental price of properties in your area that are similar to your accommodation that are priced more reasonably. Reply in writing, in the form of letter, date it, list three more reasonably priced properties, state what you feel would be a fair rent for your place and ask that they respond within 10 working days.
If they haven’t responded favourably or at all, and the rent increase isn’t reasonable, then make sure you lodge a dispute with RTB within the 28 days. Continue to pay your rent at the current rate until the RTB issues its determination. It is possible that the RTB will determine that the rent increase is fair in which case you will have to start paying the new rent rate and they may even backdate the increase to when the notice proposed it to be implemented. So it’s very important to make sure the rent increase isn’t reasonable before lodging a dispute.
For more information on all the above:
- RTB – Rent Reviews
- Threshold – How to deal with rent increases
- Irish Times – Rule changes on renting (Jan 2017)
What if the rent is lawful but still unaffordable?
If you’re having trouble paying your rent go to your local Citizen’s Information and see if you might be eligible for Rent Supplement or HAP. Also check if there might be any benefits or tax reliefs you’re missing out on.
Landlords aren’t to blame for the situation of overpriced housing. We need more housing to be built. We need schemes like the Affordable Housing Scheme to be reopened and we need more units allocated to local authority housing.
I think that the RPZ legislation has had a positive effect. Yes, there are ways around it. And yes, it came a little too late – but better late than never. The introduction of HAP to take over from Rent Supplement is also a good idea. There is a crazy rule with Rent Supplement that you can’t get it if you are working 30 hours or more per week – even if you satisfy the means test. Crazy. Also it makes sense that help with paying rent should be linked to those identified by the local authorities as having a housing need. The councils should be dealing with this and not the Department of Social Protection.
That said there is a problem with many of the incentives the government has introduced to get more units of housing on the market and to help tenants afford the rents – the measures introduced have themselves caused increases in rents and they have not been very effective in creating a greater supply of housing.
A simple example of this was the decision to increase the amount of tax exempt income from the rent-a-room scheme from €12,000 to €14,000 in hopes that it would encourage home owners to rent out an extra room. Where was evidence that this was a likely outcome? The likelihood that this would become a further inflationary pressure on rents seems hard not to foresee.
HAP does appear to be working well – I think it’s a good scheme. But it should be seen as an emergency measure. People on local authority housing lists should be housed by the council. Having the councils pay private rent rates to private landlords – while very welcome in this housing crisis situation – is not a good long term solution. It doesn’t make good economic sense to rely on this as a long-term solution.
I realise it’s very easy to sit here and criticise policies. In light of current events in the world I know I feel a lot more appreciative of our politicians and I know they’re doing a good job really – I’m just really angry about the housing crisis and about the widening gap between rich and poor in our country.
We Need Public Housing Development
How much are we currently spending on HAP and Rent Supplement? The truth is I don’t know the figures. I would imagine it’s somewhere in or around a half billion euro. We need to at least match that spend for the next couple of years on building high quality local authority housing and in funding a new affordable homes scheme. This will result in a much lower spend on housing assistance in the future – and if done right will improve the standard of housing within the country.
We have a housing crisis. Markets do not resolve crises. Intervention, either in the form of bank/business bailouts or massive government spending or both, is required when markets crash. In 2008/9 our housing market crashed. As we all well remember. The banks were bailed out. Serious, and quite questionable, market intervention took place to save our banks – and developers – part of the work of NAMA did that. Now we need serious government spending in order to correct the actual problem that we have – and that we’ve had for years before the crash – a lack of affordable high quality housing. We need massive government spending to correct the imbalance in the market. We cannot rely on private investment and private developers.
How will we fund it? Through a very careful and measured taxation policy. The problem people have with backing increases in taxes – or keeping taxes in place like the USC – is that in general we don’t trust our politicians to use the increase in revenue wisely or for the good of the majority. We need to have a more considered debate about taxes. As opposed to the way talk of taxation is usually handled. A month or so ago there were some articles floating the possibility Capital Gains Tax being applied to sales of your primary residence – they had all the hallmarks of the typical budget-scaremongering-so-as-you-wont-feel-too-bad-about-what-really-is-in-the-budget articles. This genuinely appears to be a tactic of Irish government over the last two decades. Stop it. Let’s really talk about what needs to be done.
And what needs to be done is good quality affordable housing needs to be built. The private sector cannot fix this issue. It is unreasonable to expect them to. It requires massive government spending.