Residential tenancies bill 2016 proposals and discussion

GGTrek · 04-12-2016 3:12pm #1

Since no one in this board on property is discussing in depth the massive changes to tenancy law the proposed bill wants to introduce. I shall start.

The current state of the discussion can be found here:
http://www.oireachtas.ie/viewdoc.asp?DocID=33811&&CatID=59
PART 3 of the proposal deals with the changes of the RTA 2004 (again just under one year from the last ones!).

The main worrying points which are a massive restriction of property rights (probably uncostitutional in my opinion):

- Amendment of section 35 that prohibits eviction in case of sale (they are discussing lowering the numer of units on sale from 20 to 5 and to avoid this exception the owner has to prove that is loosing more than 20% from a phantomatic market value decided by none other then the biased RTB.

- Probably the worst: repeal of section 42, basically means indefinite leases to current tenants. 4 years of part 4 goes through the window and even if you started a tenancy on the assumption that it would not last more than 4 years + notice period, now the goverment changes the cards and says not anymore

- Amendment of section 103, the RTB appeal tribunal ceases to be a 3 members panel for most of the disputes and one single adjudicator decides on his own exactly as in the previous dispute, again no real enforcement of orders is given to RTB, they should have repealed the entire RTB tribunal process which adds several months delay to any dispute and cannot enforce anything and given the right to appeal to either Circuit or District court, so that a proper judge and proper legal standards on facts and law would be applied.

No changes about rent control have been put in the main proposal from government, but the proposed amendments from legislators are simply horrific on this point, basically introducing full rent control at the government pleasure.

What I foresee as consequences of this ill thought legislation:

- As a landlord you plan your business with a certain regulation and the continuous meddling by the legislator just destroys any kind of planning: so even less capital will flow to property investment with the goal of residential renting

- From the discussions reports, it seems that the legislators think that this law will not have the effect of another massive spike in rents to cover the additional costs created by the legislation

- All sorts of excuses will be put forward to use section 34 to evict a problematic tenant since the RTB is so pro-tenant (look at the RTB very lax attitude to anti-social behaviour in the tribunal reports a tenant needs to be real hell and repeating many times the anti-social behaviour), section 42 is the escape valve to kick out after more than 4 years tenants who behave badly but not enough to grant anti-social eviction by RTB, in addition it was a clear definition of the property rights: after 4 years the landlord gets back his full property rights and can do what he wants with the property. 4 years is not exactly a short time!

- A lot of property owners will just keep their houses empty to avoid the massive losses that the legislators are imposing on them if they take on a tenant. Why would anyone want to be effectively expropriated from his property rights and right of sale of his own asset if they rent.

- A lot of landlords will not entertain tenancies longer than 6 months (the exact opposite of what the legislators have in mind) no matter how good the tenants are (I know I will).

- People who got a tenancy before the law goes into effect will have a a very good undeserved deal, while people who need a tenancy afterwards will have a very bad deal not for their own fault

04-12-2016 3:24pm

If true these proposals are insane. No tenant should have this control over another persons property. The current laws are arguably too in favour of the tenant with a LL only able to end a tenancy for very limited reasons except every 4 years.

I honestly can't see how indefinite leases or not being allowed give notice for sale or moving in could be considered constitutional.

murphaph · 04-12-2016 11:37pm

Ah yeah. Keep hammering the landlord and then wonder why landlords are selling up. Nothing at all in this to address the issue of over holding etc. 5 month 25 day leases coming soon to a rental near you.

If the repeal of section 42 includes current tenancies someone will challenge the legality of it soon enough.

GGTrek · 05-12-2016 9:45am

murphaph wrote: »

If the repeal of section 42 includes current tenancies someone will challenge the legality of it soon enough.

Of course it does. Full security of tenure will be applied to current tenancies. That was the main goal.
I am surprised that in this forum there are so few people interested in this issue. Maybe it is too technical but it is very real.

pilly · 05-12-2016 3:41pm

I for one will getting out of the accidental LL game as a result of these changes. Far too biased towards tenants and no provision whatsoever to deal with tenants who stay over without paying rent for sometimes up to a year.

Michael D Not Higgins · 05-12-2016 4:14pm

GGTrek wrote: »

Of course it does. Full security of tenure will be applied to current tenancies. That was the main goal.
I am surprised that in this forum there are so few people interested in this issue. Maybe it is too technical but it is very real.

I'm not a landlord myself, but as a mod of this forum I take great interest in these legislative changes and the feedback from the public.

Frankly, some of the proposals are bizarre. It strives to drive more landlords out of the business, opening the way for more REIT type letting, which I believe is something the government are working towards. It certainly doesn't help the Irish renter as if the costs of doing business go up due to overreaching tenancy security, it will be passed wholly onto the renter.

handlemaster · 05-12-2016 8:34pm

If they made a law that un social tenants , non paying tenants could be got out in a short period of time e.g. 2 months. Landlords could take more chances with social tenants. This is what the government wants as its not providing housing to social tenants an'y more

newacc2015 · 05-12-2016 11:33pm

- Amendment of section 35 that prohibits eviction in case of sale (they are discussing lowering the numer of units on sale from 20 to 5 and to avoid this exception the owner has to prove that is loosing more than 20% from a phantomatic market value decided by none other then the biased RTB.

This was allegedly according to Lynn Ruane to prevent another mass eviction like the estate in Tyrellstown again. Let I cant seem to understand how a landlord owning five properties is on par with a massive estate being sold by a vulture fund.

I wonder what the implications for this is for banks repossessing properties with sitting tenants.

These no knowledge TDs and Senators are slowing creating a housing crisis while at the same time thinking they are solving it. All these feel good laws to protect a very small minority of tenants are completely undermining the rental industry and will only cause landlords to lose further confidence in the industry. These laws are making landlords leave the industry and not benefiting tenants in the slightest.

The Government needs to decide where these laws are going for the next five years and finalise them. This ad hoc changing of laws is destroying the rental industry

Silverbling · 06-12-2016 12:15am

GGTrek wrote: »

Of course it does. Full security of tenure will be applied to current tenancies. That was the main goal.
I am surprised that in this forum there are so few people interested in this issue. Maybe it is too technical but it is very real.

I am one of the tennents who was "replaced" by a family member, I do think there should be a balance in the middle, the government are acting like a bull in a china shop and are only going to make my chance of finding somewhere bigger even more of a long shot than it is now

In my case I was there 6 years and thought I had 2 years left on my tenancy (never arrears or any issues) I agree that people in my situation should be looked after by the law and not just given 56 days notice because the landlord had a change in circumstances, so did mine change over the years but I still kept up my commitment by paying the rent, when I could have taken the easy option and stopped paying or walked away.

The biggest problem is not being able to evict people after 2 months, if everyone including the council could evict the bad payers a lot of houses would become free plus lessons learned, don't pay...you go live in the emergency accommodation.

I know the landlords do not like this pointed out but market rents are not affordable at the moment in South Dublin, and everybody has a part to play to fix this mess, the idiots in government need to think about what they are doing, landlords need to realise there are decent tenants out there who can not pay the max rent but will look after their property as if it was their own,and tenants need to stick to their obligations, pay the rent, keep it clean and tidy and inform the landlord if you hear any dripping or something breaks

This mess is so much worse than the 80's and at the moment looks completely unfixable, such aggressive moves from the government will remove even more landlords from the market at a time they should be bringing back section 23 or even better

GGTrek · 06-12-2016 12:19am

Just think about all the pre-63 properties. With 20 units threshold they are 99.99% excluded from the amended clause. With 5 probably 80% are included. Look at the TDs discussion reports they have no clue of what they are doing and the massive side effects on the rental market.
In any case I believe that the amendment of section 35 combined with the repeal of section 42 will be considered unconstitutional since it is a major infringement on property rights. The government and the TDs are now threading a very thin line. It would be very interesting to get the opinion of a constitutional scholar on this.

garhjw · 06-12-2016 12:28am

GGTrek wrote: »

- Amendment of section 35 that prohibits eviction in case of sale (they are discussing lowering the numer of units on sale from 20 to 5 and to avoid this exception the owner has to prove that is loosing more than 20% from a phantomatic market value decided by none other then the biased RTB

Surely, it will be quite easy to prove the 20% element? Banks will only provide investors with a loan if the property comes with vacant possession. If you have 5 units you want to sell together there would be very few cash buyers. The fewer the buyers the lower the price compared to if the units were vacant.

Also, if I was going to buy somewhere with tenants in place I would build the potential risk into my offer considering all the other stupid regs they are bringing in

size5 · 06-12-2016 5:15am

When is the above likely to come into effect?

athtrasna · 06-12-2016 8:09am

size5 wrote: »

When is the above likely to come into effect?

It's only a proposal. Unlikely to be passed by the oireachtas in its current state

GGTrek · 06-12-2016 1:37pm

I am one of the tennents who was "replaced" by a family member, I do think there should be a balance in the middle, the government are acting like a bull in a china shop and are only going to make my chance of finding somewhere bigger even more of a long shot than it is now

In my case I was there 6 years and thought I had 2 years left on my tenancy (never arrears or any issues) I agree that people in my situation should be looked after by the law and not just given 56 days notice because the landlord had a change in circumstances, so did mine change over the years but I still kept up my commitment by paying the rent, when I could have taken the easy option and stopped paying or walked away.

I am sorry about what happened to you, this is again one of the bad provisions of the RTA 2004 and its "socialist/paternalistic" framing. I do not know when your tenancy was terminated but if it was in 2016 you should have been given 168 days notice (24 weeks is a very substantial notice) the 56 days is for just 2+ years, not 6+ years.

In my opinion they should get rid of section 34 completely and set a minimum term for residential tenancies (without changing the law afterwards however!) which can only be broken either by mutual agreement or by breach of lease and rent cannot be increased except for inflation during the term of the lease, in this way it would be clear for the tenant and the landlord what to expect.

Clearly when the tenancy term ends, it ends, the landlord is not supposed to subsidize the tenant, if the landlord does not like to renew the tenancy term for whatever reason (the state should not decide which reasons are socially acceptable to terminate a tenancy after its term ends in the paternalistic way it does now in section 34 and 35!). If the landlord agreed to a tenancy for a minimum of 2 years, tough on him, the tenant stays unless there are health and safety issues decided by council. The only real issue to decide for the state is the minimum length of the term, it could create two tiers like they do in Italy for example: a short term tier with no tax breaks and full income tax paid or a longer tier (for example four years as it is now in Ireland until this amendment goes into force) with an income tax cap. Given the low quality of Irish legislators and government I seriously doubt they will enact one: they prefer to meddle and shout something out that looks good on the media.

GGTrek · 06-12-2016 1:49pm

athtrasna wrote: »

size5 wrote: »

When is the above likely to come into effect?

It's only a proposal. Unlikely to be passed by the oireachtas in its current state

Unfortunaly I am not sure that it is unlikely to be passed, since it is an initiative presented and supported by the executive (it is not an initiative coming from a group of Senators or TDs). In addition the amendments to the RTA 2004 are a just a part (Part 3) of a much bigger bill called the "Planning and Development (Housing) and Residential Tenancies Bill 2016" which is part of a high priority main government initiative to restart housing construction in Ireland (taking away a lot of planning powers from councils and centralizing them). In my own opinion unless some strong lobby intervenes (for example the REITs) they will approve in a few months.

Gatling · 06-12-2016 1:55pm

From a tenants opinion id personally love to have a long term lease 10+ years at a time ,
5 years in our current apartment and have had a new 12 month lease and rent review every year,this will be the first year in 5 I won't have a rent review,
Haven't read through all the suggestions yet though

Villa05 · 06-12-2016 1:58pm

What is the purpose of housing?

Not a hard question,

GGTrek · 06-12-2016 2:04pm

Gatling wrote: »

From a tenants opinion id personally love to have a long term lease 10+ years at a time ,
5 years in our current apartment and have had a new 12 month lease and rent review every year,this will be the first year in 5 I won't have a rent review,
Haven't read through all the suggestions yet though

I would not be so sure about very long terms, since if the tenant decides to leave the tenancy before the tenancy term ends the landlord is entitled to one month of rent penalty for each year missing to the tenancy term. Usually tenants settle for 3 to 4 years terms or 4+4 terms (with an option to continue the tenancy for a further 4 years but with a full rent review at four year point) to avoid very big penalties in case of break, as I said there are no socially acceptable ways to break the lease like in Ireland without paying a penalty, the only accepted reason not to pay this penalty is the death of the tenant!

Graham · 06-12-2016 2:05pm

Villa05 wrote: »

What is the purpose of housing?

Not a hard question,

I didn't realise there would be a test. Is this one of the parts of the proposed Residential Tenancies Bill?

GGTrek · 06-12-2016 2:06pm

Villa05 wrote: »

What is the purpose of housing?

Not a hard question,

I disagree, from a government political and social point of view it is a very hard question, that is why Irish housing is in such big mess. Social views of the government on housing at the moment are not dealing too well with the market reality.

seamus · 06-12-2016 2:08pm

GGTrek wrote: »

- Amendment of section 35 that prohibits eviction in case of sale (they are discussing lowering the numer of units on sale from 20 to 5 and to avoid this exception the owner has to prove that is loosing more than 20% from a phantomatic market value decided by none other then the biased RTB.

- Probably the worst: repeal of section 42, basically means indefinite leases to current tenants. 4 years of part 4 goes through the window and even if you started a tenancy on the assumption that it would not last more than 4 years + notice period, now the goverment changes the cards and says not anymore

While the specifics perhaps are a bit messy, these two items are key parts of fixing the broken rental system in Ireland.

Security of tenure is a massive problem, and it's the primary reason why we have a system which is functionally tiered - renting is seen as the first step on the ladder before you buy, rather than a viable long-term way to live.

Our current system encourages people to get into the rental market to make a few quid if they happen to have a property lying idle for any period of time. For the long-term functioning of a property market this is not good; it leaves you with a rental stock that can contract rapidly depending on market conditions. Which is exactly what has happened now to cause rents to skyrocket.

The above two items means that people can't suddenly flip and sell properties out from under tenants. And importantly it means that the entire property market gets segregated - falling rents don't result in a sudden flood of rental properties for sale, and increasing house prices don't result in a sudden contraction of the rental stock.

I understand the ire and pain of landlords; I know plenty of them. And especially those who've made a bad investment and are now sitting with a rental property they never really wanted.

But the long-term stability of the rental market has to come first. We need to break the attitudes that have allowed, even encouraged our awful rental market to develop. In the long term it will work out better for renters and landlords.

GGTrek · 06-12-2016 2:25pm

seamus wrote: »

GGTrek wrote: »

- Amendment of section 35 that prohibits eviction in case of sale (they are discussing lowering the numer of units on sale from 20 to 5 and to avoid this exception the owner has to prove that is loosing more than 20% from a phantomatic market value decided by none other then the biased RTB.

- Probably the worst: repeal of section 42, basically means indefinite leases to current tenants. 4 years of part 4 goes through the window and even if you started a tenancy on the assumption that it would not last more than 4 years + notice period, now the goverment changes the cards and says not anymore

While the specifics perhaps are a bit messy, these two items are key parts of fixing the broken rental system in Ireland.

Security of tenure is a massive problem, and it's the primary reason why we have a system which is functionally tiered - renting is seen as the first step on the ladder before you buy, rather than a viable long-term way to live.

Our current system encourages people to get into the rental market to make a few quid if they happen to have a property lying idle for any period of time. For the long-term functioning of a property market this is not good; it leaves you with a rental stock that can contract rapidly depending on market conditions. Which is exactly what has happened now to cause rents to skyrocket.

The above two items means that people can't suddenly flip and sell properties out from under tenants. And importantly it means that the entire property market gets segregated - falling rents don't result in a sudden flood of rental properties for sale, and increasing house prices don't result in a sudden contraction of the rental stock.

I understand the ire and pain of landlords; I know plenty of them. And especially those who've made a bad investment and are now sitting with a rental property they never really wanted.

But the long-term stability of the rental market has to come first. We need to break the attitudes that have allowed, even encouraged our awful rental market to develop. In the long term it will work out better for renters and landlords.

From a landlord point of view I beg to disagree expecially on repeal of section 42, not being able to terminate a tenancy for whatever reason after a relatively long term of 4 years will cause a massive contraction of the housing stock available long term. I for one will only issue 6 months fixed term tenancies, and look I am an investor, I bought most of my properties with tenants in situ, but the repeal of this section will stop me from providing long term leases. I give you an example: I have a tenant who has broken lease by keeping a pet in the flat and behaved anti-socially (not massively so, but it has occasionally harassed 3 other tenants in the same building for the past two years and I have received several complaints), RTB thresholds for antisocial behaviour termination are very high (even for 28 days notice of breach of the peace, look at the Tribunal reports) and I have not found a single case where tenants keeps the pet for months and then says he got rid of it and he just gets a slap in the wrist. Tenant has received several warnings but he just lies and says it is the other tenants causing problems and about the pet he just gave it to a friend (I have been told that from time to time he gets it back, but it is extremely difficult for me to prove this). So my only escape valve to get rid of this honestly bad tenant is section 42 and the Irish government just wants to take it away.

the_pen_turner · 06-12-2016 2:29pm

What happens when a son or daughter genuinely wants to live in the house.

seamus · 06-12-2016 2:37pm

GGTrek wrote: »

From a landlord point of view I beg to disagree expecially on repeal of section 42, not being able to terminate a tenancy for whatever reason after a relatively long term of 4 years will cause a massive contraction of the housing stock available long term.

Perhaps. But that will be a short-term effect. Investors who want to buy property to rent for decades, not just until they're ready to sell, will arrive into the market.

I for one will only issue 6 months fixed term tenancies, and look I am an investor, I bought most of my properties with tenants in situ, but the repeal of this section will stop me from providing long term leases.

And when the market returns to normal you'll have difficulty finding any tenants except the most desperate and dodgy willing to accept your short-term lease. The kind of people who want a long-term lease are the kind of tenants you want to have. They're more likely to be settling and to treat the place properly. Compared to a short-term let who'll use it and abuse it and move on.

I give you an example: I have a tenant who has broken lease by keeping a pet in the flat and behaved anti-socially

I don't disagree that the bar for evicting anti-social tenants is far too high. Or more importantly the ability for landlords to claw back losses from overholding is insufficient. But that's a slightly different issue.

A change in attitude to long-term rentals actually means good things for landlords. It means you can get rid of nonsense rules like "no pets", "no hanging things on the wall" and so forth. These rules are in place because you're worried about the cost of having to refurbish the place in six months time.
If the tenant is planning on being there for ten years, then this concern goes away - the property will need a refurb at that point anyway, and you'll have the factored into the rental price. In many ways it frees you - you only have to worry about whether or not a tenant is breaking the law. If they're punching holes in the walls or letting their dog piss all over the place then so be it. They're the ones who have to live in it.

The issues you describe are in fact a symptom of having such short tenancy agreements, they're not solved by it.

DubCount · 06-12-2016 5:39pm

Perhaps in a market where there is already a shortage of supply of rental accommodation, introducing measures to drive out any existing landlords will result in further price inflation.

From a tenants perspective, longer leases are very attractive. From a landlords perspective......
1) it encourages landlords who were only interested in letting a property for a short term, to leave the property vacant because they dont want to get caught with a long term lease
2) it is already hard enough to end a tenancy for non-payment of rent or antisocial behaviour etc. This may make it more difficult
3) The commitment is all on the landlords side. If a landlord terminates early, the RTB will be quick to issue fines etc.. If a tenant terminates early, will there be any financial implications?
4) When it comes to selling a property, the landlord cant sell to an owner occupier and this will devalue the property
5) When it comes buying a property with a long-term tenant, will the bank provide a mortgage (they normally want vacant possession at closing). This will further devalue a landlords property.

Perhaps introduce the optional long term letting with tax incentives for landlords to avail of that option. Otherwise, expect some rent inflation...

Graham · 06-12-2016 5:58pm

DubCount wrote: »

Perhaps introduce the optional long term letting with tax incentives for landlords to avail of that option.

+1

This balanced with a short-term, guaranteed possession at the end alternative without the same level of tax incentives.

GGTrek · 06-12-2016 6:06pm

Graham wrote: »

DubCount wrote: »

Perhaps introduce the optional long term letting with tax incentives for landlords to avail of that option.

+1

This balanced with a short-term, guaranteed possession at the end alternative without the same level of tax incentives.

Government will not provide tax incentives to landlords for longer leases. Their public consultation phase was a joke. Tax incentives for landlords do not look good on the media. This proposal is the same old landlord bashing of the past 6-7 years that has taken the rental market to this point.

I did not understand your previous question about the test.

newacc2015 · 06-12-2016 8:38pm

Gatling wrote: »

From a tenants opinion id personally love to have a long term lease 10+ years at a time ,
5 years in our current apartment and have had a new 12 month lease and rent review every year,this will be the first year in 5 I won't have a rent review,
Haven't read through all the suggestions yet though

The fact is most Irish tenancies generally dont last longer than a year never mind reaching four years. There is no demand for long term leasing. Even if there was, Irish tenants would want all the benefits of renting without the burdens of long term renting like Germans have to face ie having to install your own kitchen, furniture, painting etc. I think you will find very few tenants would be interested in long term leasing if they actually had to basically look after the place

I cant understand what rational landlord would let long term. In the last 10 years the laws for landlords have changed so much. They were taxed extremely heavily and have had their rights so eroded. I dont know how a sane landlord could commit to a 10 year lease when their taxation can increase 13-25% within a few years and they have minimal rights regarding selling their property

Would you have delighted with a 10 year lease if you were locked into your contract in 2007 at peak rents and by 2011 you were paying 50% more than the current market rent ?

Mrs OBumble · 06-12-2016 10:45pm

newacc2015 wrote: »

The fact is most Irish tenancies generally dont last longer than a year never mind reaching four years. ....

Would you have delighted with a 10 year lease if you were locked into your contract in 2007 at peak rents and by 2011 you were paying 50% more than the current market rent ?

Do you have any source for that claim? We regularly see posts here from people who've been 4 years + in a place. I've been in my current one for nine years: originally took it for six months, but it's worked for me so I've stayed. And I'm sure the LL is delighted to have had rent on time every time for that period, rather than the vacancies and non-payments that I know have happened in his other apartment.

fyi, commercial leases last for long periods, and have regular rent-reviews built into them. A LL offering a long-term lease would not have to be locked into the same rent for the whole period.

Villa05 · 06-12-2016 11:34pm

GGTrek wrote:

I disagree, from a government political and social point of view it is a very hard question, that is why Irish housing is in such big mess. Social views of the government on housing at the moment are not dealing too well with the market reality.

No its not
Government picked up huge amounts of property not so long ago an sold it for a pittance to vulture funds, yet apparently building social housing is cost prohibitive. If they kept what they purchased, the state could have with good management, achieved social and affordable housing and turn a small profit out of it.

Every issue outlined in this thread has a simple solution.

Penalties that deter problematic tenants and landlords

Fixed tax rate on rental income to create a level playing field

Build where accommodation where it is required. Stop pushing people further and further away from where they work clogging up our transportation network

Too much talking shop no action

seamus · 07-12-2016 9:31am

newacc2015 wrote: »

There is no demand for long term leasing.

You have no evidence for this claim.

Irish law as it stands doesn't support long-term leasing, so how can you measure the level of demand for something which doesn't exist?

Back in the day, in fact eircom used to use this same argument as the reason why they didn't need to invest in broadband infrastructure; there was no demand for it.

And like that, long-term leases are a "build it and they will come" type of arrangement. When it becomes something that's possible, people will avail of it. And they will realise how much better it is.

And if there is no demand, then ultimately this law will make no difference, so what's the problem?

Residential tenancies bill 2016 proposals and discussion

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