Renters will have the right to tenancies of “unlimited” duration under new draft laws from Minister for Housing Darragh O’Brien. The move aims to strengthen long-term security of tenure but landlords will continue to have wide discretion to end such leases.
The laws are part of a package of measures that includes a 2 per cent cap on annual rent increases in designated pressure zones when inflation exceeds that rate of increase. The cap, signalled a fortnight ago, comes with inflation rising fast to an annual rate of 5.1 per cent in October.
The 2 per cent limit will come into force once legislation unveiled on Tuesday is becomes law. The effect of the cap will be to “significantly” reduce rent increases, Mr O’Brien said.
However, indefinite tenancies won’t be introduced immediately. They will come into force six months after enactment and on new tenancies settled after that point.
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The new regime will change rules known as “Part 4” provisions which take effect six months into a tenancy to give renters the right to a lease with a total duration of six years. Such provisions run alongside private fixed-term leases, in effect prolonging them, albeit with specific grounds for termination by landlords.
New laws to enhance “Part 4” protections for renters will also kick in six months into a lease. But the tenancy will be established “for an unlimited duration and not subject to expiry at the end of a six-year term”, according to the Minister’s explanatory memorandum on the draft law.
Still, the grounds for landlords to terminate “Part 4” leases will remain the same. Such provisions have long come in for criticism from housing campaigners who have argued that they weaken the renter’s position.
Grounds for termination
The grounds for termination include landlords having the right to end tenancies if they need the property for their own use or for a family member. They can also end tenancies if they plan to change the business use of a property, or refurbish it substantially, or if they intend to sell it within nine months.
In addition to all new tenancies operating under the rules of indefinite duration, Mr O’Brien said all existing “Part 4” tenancies will change to the new regime over time as they terminate, expire or are renewed.
“Within six years and six months of the passing of this bill, all residential tenancies will have converted to being of unlimited duration,” the memorandum said.
“In the interim, this bill provides that a landlord may grant his or her consent to any existing tenancy being treated as a tenancy of unlimited duration.”
The 2 per cent cap changes rules in force only since mid-July, under which rent increases above the inflation rate were banned. Before mid-July, a 4 per cent cap applied on annual rent increases in pressure zones.
Mr O’Brien said inflation was now rising at an “unexpectedly fast” rate. The harmonised index of consumer prices (HICP) rose by an average of 0.73 per cent in the three years to July but rose 1.6 per cent in the 12 months to June and has risen every month since then.
“When introducing the legislation to link any rent increases to HICP inflation in July, I was very clear on the need to carefully monitor inflation,” Mr O’Brien said.
“Given the unexpectedly fast rise in HICP inflation, I quickly moved to engage with the office of the Attorney General and secured Government approval to introduce a 2 per cent cap on rent increases in rent pressure zones. This bill respects the constitutionally protected property rights of landlords and aims to safeguard continued investment in the sector by existing and new landlords to deliver the requisite supply of high-quality rental accommodation.”
