New residential rent rules
If you are a landlord or tenant of a private residential property, it is important that you are aware of legislation governing the setting of rent and rent reviews.
Rent is normally set by the landlord and agreed between the landlord and tenant at the start of a tenancy.
The rules in respect of setting and potentially raising rent are set out in Part 3 of the Residential Tenancies Act 2004, and have been amended by the Residential Tenancies (Amendment) Act 2015 and the Planning and Development (Housing) and Residential Tenancies Act 2016.
The Residential Tenancies Board (RTB) is a statutory body that deals with disputes between landlords and tenants, including disputes about rent reviews.
It also provides information about rent reviews and increases.
Under Section 19 of the Residential Tenancies Act 2004, landlords are not entitled to charge more than the open market rate of rent.
Market rent (for properties outside Rent Pressure Zones) is defined in Section 24 as ‘the rent which a willing tenant not already in occupation would give and a willing landlord would take for the dwelling’ and takes into consideration “(a) the other terms of the tenancy, and (b) the letting values of dwellings of a similar size, type and character to the dwelling and situated in a comparable area to that in which it is situated”.
The RTB publishes a quarterly index of what current market rents are.
Landlords are entitled to review rents, under a tenancy.
A rent review can result in an increase or reduction of the rent.
With the exception of Rent Pressure Zones, there is a right to review the rent once every two years. Unless the accommodation has changed substantially, the rent should not be reviewed more often than this.
Under the Rent Predictability Measure, a number of Rent Pressure Zones were created.
Rent increases in these zones are capped, and there are limits on how often the rent can be reviewed.
There is a full list of Rent Pressure Zones on rtb.ie, they are mainly in Dublin and urban areas.
For a new tenancy (starting on or after December 24 , 2016) in a Rent Pressure Zone, the landlord may review the rent once every 12 months.
The maximum rent increase will be 4% per year.
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 under a tenancy for the dwelling.
- The date the rent was last set under a tenancy for the dwelling.
- A statement as to how rent set under the tenancy of the dwelling has been calculated, having regard to the Rent Pressure Zone formula
In any tenancy that started before December 24, 2016, the first rent review in a Rent Pressure Zone may take place a minimum of 24 months from either the start of the tenancy, or from the date when you were notified in writing of your last review.
The maximum rent increase is 2% per year since the previous rent was set, and 4% after 24 months.
Certain properties are exempt from the cap applicable to rent pressure zones.
Properties that have not been let at any time in the previous two years, or that have been substantially changed, can be exempted from these caps. However, the rent set for a property must be in line with market rent for similar properties in the area.
The RTB has published guidelines as to what would be classified as a “substantial change” to a rented property.
The RTB has a calculator on their website to check whether a dwelling is in a Rent Pressure Zone, and to work out whether the rent can be raised and by how much.
The information required to do this is an address, the current rent, and the date when the rent was last set.
A landlord is required to give notice of the amount of the proposed new rent and the date from which it is to take effect.
The notice must be in writing and must contain the information prescribed by the legislation, and there must be at least 90 days’ notice of a rent review.
This means that the new rent cannot then apply until 90 days after the notice has been issued.
The landlord is also obliged to notify the RTB of the revised rent, so that it can update the registration details of the tenancy.
If there is any dispute about the amount of rent being proposed, either side can refer the dispute to the RTB.
If you are claiming that the proposed rent is higher than the market rate, you should provide evidence of rental rates for similar properties in the same area.
In certain circumstances, it may be advisable to obtain legal advice before entering the dispute process.
