Nearly a year after the legislation was introduced new guidelines were issued by the RTB three weeks ago which they say will help give clarity to landlords and tenants in relation to rent caps exemptions titled: The Substantial Change Exemption in Rent Pressure Zone Areas. The guidelines aim to provide clarity on the substantial change element of the rent predictability legislation [Planning and Development (Housing) and Residential Tenancies Act 2016] that was introduced at the end of 2016. This is not surprising given the RTB were previously very vague and provided no detail whatsoever. Previous post on the 2016 legislative amendments here – https://owenreilly.ie/media/blog-rent-predictability-in-practice/.
The main query raised by our clients, and to the RTB judging from their press release on the guidelines, has been the difference between ‘substantial change’ and ‘substantial refurbishment’.
For the purpose of increasing the rent above the 4% rule introduced, the landlord must demonstrate that they have substantially changed the nature of the accommodation and that he works carried out have increased the value of the property.
The substantial refurbishment element relates to the grounds under which a Part 4 tenancy can be terminated. When a landlord is relying on this provision to end a tenancy, there are a number of aspects to consider; the proposed works must be substantial and the works must require the property to be vacated.
The notice of termination must include:
• Details of the works that are being carried out;
• Copy of the planning permission or where planning permission is not required, provide name/contact details for the building/contractor hired to do the work;
• Provide the tenant with the dates on which the works will be undertaken;
• Provide the tenant with the estimated timeline for completion of the work.
It is important to note that substantial refurbishment will not always equal a substantial change in the nature of the accommodation, and therefore the RPZ exemption criteria may not automatically apply. They are different requirements, and therefore it is important that a landlord considers the termination of a tenancy and any subsequent claim of an RPZ exemption separately.While the addition of these guidelines to the legislation introduced last year will assist landlords in understanding their obligations, it demonstrates the level of intervention the government are willing to impose on the private rental market. This is rent control, in all things but name, and many landlords are planning to exit the market due to the increasing political intervention.
Further information and a copy of the full guidelines can be found here.