Just over a year ago, the Government introduced “rent pressure zones” in response to rising costs for tenants. Initially concentrated on areas in Dublin and Cork, they now cover 21 local electoral areas. But what difference have they made?
Landlords in such zones can impose a maximum rent increase on existing tenants of 4 per cent a year. But campaigners say they’re not properly enforced.
While acknowledging implementation has been “far from perfect”, Taoiseach Leo Varadkar said last month: “The rent pressure zones were designed to cap rent increases to protect people who had tenancies on their homes, and they are working in that regard.”
Others are less sanguine. Michelle Connolly from the Dublin Central Housing Action campaign says the introduction of rent pressure zones (RPZs) failed to control or limit rent increases and failed to create a stable rental system.
“It has been positive in that some rent increases have been restrained by the new measures, meaning some people have been able to remain living in their rented homes for the time being.”
But, she says, it has also created a situation where landlords want to get rid of their current tenants and bring in new ones on higher rents. The situation for tenants in Dublin, specifically the north inner city, is “often very dire, and at best extremely precarious. We have seen a massive rise in the number of rent increases and illegal terminations of tenancy, particularly the use of the refurbishment clause to evict tenants”.
Landlords don’t see things quite that way. Fintan McNamara, director of the Residential Landlords Association, says most landlords are happy to accept slightly less money from reliable, long-term renters. Although he agrees that “anecdotal evidence” does suggest that some landlords have attempted to secure new tenants.
One of the main issues for him, though, is that landlords who, for whatever reason, had been charging their tenants abnormally low rent before the introduction of RPZs now find themselves stuck collecting rent well below the market rate.
“We weren’t expecting that it would be as restrictive here as it has been,” he says, adding that “we would rather RPZs weren’t there at all to be quite honest with you… An increase in supply is the answer to the problem”.
Whatever about supply, it appears the Government will provide an escape route for low-rent landlords. In September, Minister for Housing Eoghan Murphy said he wanted “to legislate to allow landlords in these circumstances an increase that is greater than the 4 per cent . . . and that takes into account the level of rent they are currently charging.”
More canny landlords have already found ways around the new rules. “Last year saw a very substantial increase in notices to quit and terminations,” says John-Mark McCafferty, chief executive of the housing charity Threshold. “Part of that will be due to the fact that there are certain ways in which a landlord can circumvent legislation.”
Evictions for renovation
The 4 per cent cap only applies to existing tenancies, not new ones, and McCafferty says Threshold saw an increase in “renovictions” over the past year where property owners attempted to evict tenants so they could carry out renovations on their properties. This is permissible in an RPZ as long as the renovations are substantial, although what qualifies as substantial no one seems to be quite sure.
Either way, Threshold believes many landlords simply use the clause to ditch their current tenants and bring in new ones at a much higher rent.
As well as this, McCafferty says some landlords have started seeking “service charges” to get around the 4 per cent cap.
“The fear is that other charges will emerge in terms of parking and other issues,” he says, adding that “sometimes existing tenants feel they have to choose between paying what would be an illegal rent hike in the RPZ area and possible eviction and homelessness.”
Figures from the Residential Tenancies Board (RTB), the State authority that handles landlord-tenant disputes, showed a 30 per cent increase in applications to resolve disputes in the first half of 2017 on the same period in 2016. Disputes over the RPZ scheme may have contributed to this rise.
McCafferty agrees the State needs to address the lack of supply in the rental market but he adds that RPZs also require proper enforcement and that the localised RPZ system should be replaced with one that covers the entire State. In addition, he wants the RTB to have the power to take a more hands-on approach when it comes to enforcement.
According to an RTB spokesman, the body will soon become “a regulator for the rental sector with the powers to proactively investigate and enforce where rent increases are being implemented outside of the rent restrictions in rent pressure zones”.
In the meantime, the RTB says it is “really important” that tenants and landlords know their obligations and, to that end, launched a further awareness campaign in December 2017.
So if existing tenants have enjoyed some benefit this year (as well as a certain amount of unintended anxiety) from rent pressure zones, what about new tenants? The most recent RTB rent index report (July-September) showed a continuing increase in the cost of rent for new tenancies.
The tenancies board says this highlights the mix of strong population growth and economic growth with low supply. “This is continuing to put significant pressure on the private rental market and those trying to find a place to live.”
CASE STUDY: ‘The landlord wanted to kick us out and get new tenants in at a higher rent’
James moved into his Dublin 4 accommodation in April 2012, which he shared with three other people. He works in the legal department of a bank in the city.
“We were initially paying €2,280 a month, which increased to €2,500 a month and then to €2,700 a month, which I would say was the average for the area at the time,” James says.
In early 2017, however, the tenants were advised they would have to move out while renovation works were carried out but that they would be offered first refusal following the completion of the works.
They were advised the revised rent would be €3,600 a month “in line with market rents”.
“We were left with no other option so we moved out to stay with friends and family on February 11th. The revised rent of €3,600 a month was steep but it was affordable,” he continues.
Things did not go to plan. When the issue of what constitutes “substantial renovation” came up, James says “suddenly there were additional works added to the list,” meaning they could not move back in until October and the revised rent went up again to €4,450 a month.
James believes the landlord “suddenly came to the realisation that their list of works as outlined in the ‘notice of termination’ did not meet the definition of substantial renovation as advised by the Residential Tenancies Board and so they would not have been permitted to seek a rent increase over the 4 per cent imposed by the RPZ legislation”.
Therefore, he believes the landlord “added to the list several months later in order to meet the definition”.
The upshot of this is that James and his flatmates are now left to find alternative accommodation while they have also lodged a formal complaint to the Residential Tenancies Board.
“We are now forced to find somewhere else to live as we can’t stay with friends and family indefinitely and we cannot afford €4,450 a month.
“Given the length of time we have been delayed in the hope of moving back into the house, rents have rocketed elsewhere,” James says.
He does not believe the house needed such substantial renovation.
“The house did not need renovation. There were, like most places, some maintenance issues that needed tending like wallpaper coming off and the carpet being worn as is to be expected with long-term rentals.
“One of the tenants had been in the house seven years and the landlord never sought to update the décor.
“In our view, the landlord wanted to kick us out and get new tenants in at a higher rent.”
* James' name has been changed to protect his identity.
One Year On is an Irish Times digital series which revisits some of the biggest stories from last year to see what has happened since.
