There have been a lot of changes in the rental market in recent months with the new rental strategy rolled out just before Christmas.
On Tuesday morning a large crowd of rental agents turned out at the Louis Fitzgerald Hotel on the Naas Road in Dublin to be brought up to speed on the new rules around rent increases.
The event, hosted by the Property Training Academy, saw representatives from the Residential Tenancies Board (RTB) give a presentation on the new rules and an explanation of what exactly they meant for an agent, a landlord and the renter.
John Leahy of the Property Training Academy kicked off proceedings by giving a brief overview of the recent changes in the form of a video presentation.
After welcoming the large crowd, John then handed over to RTB Director Rosalind Carroll and Assistant Director Janette Fogarty.
In her address, Ms Carroll outlined how the rental market had changed over the course of the last 10-15 years with many renters now looking for long-term lets.
She gave a brief overview of the recent changes including the introduction of Rent Pressure Zones and the restriction of bulk sales of properties to 10.
She also spoke about the desire to improve enforcement orders, not just increasing the security of tenancy on one side but the security of income on another.
While not part of the RTB’s remit, she said measures were in place to make tax improvements for landlords with a working group on tax treatment meeting recently in the hope of returning a report of recommendations by August.
While recent figures showed that 20% of the country was now renting, Ms Carroll noted that supply remained a problem within the sector.
She said there were measures being drawn up to correct this including trying to release more local authority land, the weighing up of build to rent schemes and a focus on increasing the amount of student housing.
The RTB also outlined new standard regulations on safety, which will involve more inspections and a shared service agreement so that regional organisations can oversee matters across multiple counties rather than the 31 local authorities having to deal with them individually.
Giving a further glimpse as to what was coming down the line, Ms Carroll said the RTB hoped to accelerate the dispute resolution timeframe by introducing one person tribunals for smaller disputes by Q4 this year.
She said the RTB was now receiving an average of 900 calls per day but were working hard to improve the rental sector with a review of the deposit protection scheme promised as well as the introduction of a voluntary landlord accreditation scheme.
Janette Fogarty then explained in detail the new Rent Pressure Zones that were introduced recently and the criteria that an area needs to be included. Under this new system rents will only be able to rise according to a prescribed formula by a maximum of 4% annually.
She pointed out that of the 15 recommended areas for Rent Pressure Zones, only 12 met the appropriate criteria.
She said that the RTB had no discretion on this but pointed out that 55% of tenancies now fell within Rent Pressure Zones. Of this total just 6% came in the last trench of additions with the other 49% coming from the areas in Dublin and Cork which were approved late last year.
She said the Rent Pressure Zones were in effect for up to three years but added that an area could also be de-designated – a process which the RTB has no role in.
Ms Fogarty explained to the crowd that in order to qualify to be in a Rent Pressure Zone the annual rate of rent inflation had to be 7% or more in four of the last six quarters and the average rent had to be above the average, which currently stands at €973.
Exemptions to this rule are if a property is new to the rental property (not let in the previous two years) and if a “substantial change” increased the letting value of the property such as a major refurbishment. Ms Fogarty said something as simple as a paint job would not be sufficient to stray from the rules.
She then explained the rent predictability formula: R x (1+(0.04 x t/m). While examples were given the RTB said a calculator would be implemented on their website shortly making it a simple process.
Regardless of the outcome of this formula, it still cannot be more than the market rate.
There then followed a Q&A with representatives from the RTB.
One of the most interesting questions asked was whether it was acceptable or not for a tenant to offer a landlord more than the rent asked for.
The agents in attendance were told that this can become a problem if a dispute arises whereby the tenant fails to pay rent.
Even if the tenant put in writing their offer of the higher rent, they cannot contract their way out of their rights.
In this case there would be no way of indemnifying the landlord who would be found to have breached their obligations by not using the rent predictability formula.
The RTB further pointed out that landlords can be issued a discretionary fine of up to €20,000 in damages for breach of obligations.