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Landlords can impose rent increases of up to 8% under newly-discovered loophole as Covid-19 rent freeze ends

Measures that provided for a rent freeze for those in financial trouble were implemented during the pandemic.
May 28th 2021, 11:18 AM 81,469 115

Updated May 28th 2021, 2:07 PM

CONCERNS HAVE BEEN raised as its been confirmed that landlords will be able to impose rent increases of up to 8% on some tenants as the Covid-19 rent freeze comes to an end.

Measures that provided for a temporary ban on evictions and a rent freeze for those in financial trouble were implemented during the pandemic in Ireland. Current measures are set to end in July.

It has been confirmed that where a landlord carries out a rent review for the first time in two years in a Rent Pressure Zone, a total increase of 8% can apply.

Paul Murphy raised the issue in the Dáil yesterday and questioned why landlords are “being allowed to apply a rent increase from last year and effectively get around the 4% rule”.  

In Rent Pressure Zones (RPZ), the maximum rent increase permitted is 4% per annum.

“Tenants are being told that rather than a 4% increase in the Rent Pressure Zones, they can in fact put it up to an 8% increase as landlords are allowed to impose last year’s 4% as well,” Murphy said. 

He said a woman contacted him who is “facing almost a 7% increase, which she simply can’t afford to pay”. 

Emergency legislation

The Emergency Measures in Public Interest (Covid-19) Act 2020 provided that a rent increase was not permitted to take effect during the relevant period from 27 March 2020 to 1 August 2020.

Following this, the Residential Tenancies and Valuation Act 2020 provided that a rent increase was not permitted to take effect during an emergency period, from 1 August 2020 until 10 January 2021 but only for tenants with rent arrears due to Covid-19 and at risk of losing their tenancy who make the necessary declaration of same.

Currently in place is the the Planning and Development, and Residential Tenancies, Act 2020, which provides that a rent increase is not permitted to take effect during a new ‘emergency period’, from 11 January 2021 until 12 July 2021, for tenants with rent arrears due to Covid-19 and at risk of losing their tenancy who make that necessary declaration.

How exactly can an 8% increase happen?

Despite these measures, rent reviews could be carried out at all times during the pandemic and rent decreases could take effect.

A rent increase arising from those reviews was and is not payable by relevant tenants in respect of the emergency periods identified above. It is only payable from the end of the given emergency period – currently, the 12 July this year. 

As noted above, in Rent Pressure Zones (RPZ), the maximum rent increase is 4% per annum, irrespective of the emergency legislation.

However, where a landlord carries out a rent review for the first time in two years in an RPZ, a total increase of 8% increase can apply.

Where a rent increase could not be given effect for certain tenants during the various emergency periods, a total increase of greater than 4% can apply where the necessary rent review notice has been served.

In all cases, a tenant must be given 90 days’ notice before a rent increase takes effect.

Example

Let’s take a look at a scenario whereby a tenancy commenced after 24 December 2016 and is located in an RPZ. 

A rent review for a tenancy of a dwelling in an RPZ that commenced after 24 December 2016 can be carried out every 12 months. 

The landlord served a valid rent review notice in February 2020. The new rent was due to take effect in May 2020. 

However, this didn’t happen as the emergency legislation prevented rent increases from taking “effect” during the emergency period. 

The initial emergency period (relevant for rent increases) ran from 27 March 2020 until 30 June 2020. 

The tenant did not self-declare after that date to avail of the further protections against increases from taking effect.

Accordingly, the new rent came into effect and was payable from 1 August 2020.

Notwithstanding, the new rent only came into effect on 1 August 2020, the next rent review notice could in fact have been served in February 2021. The subsequent rent increase would be due in May 2021. 

So, in the above scenario, the tenant could have been faced with a total 8% rent increase within the space of a 12-month period. 

While the emergency legislation prevents a rent increase taking “effect” during the emergency period, it does not pause or prevent a rent review notice being served. 

Speaking to The Journal, Paul Murphy said he is aware of a tenant whose current rent is €1,383.46. Their last rent increase was in August 2019 and they have not had their rent increased since. 

Murphy said the tenant has received notice that their rent is being increased to €1,489.53 and will take effect in August 2021. This is an increase of just over 7%. 

Reaction

Responding to Murphy in the Dáil yesterday, Tánaiste Leo Varadkar said he “didn’t envisage” that people would be able to apply rent increases retrospectively. 

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“An 8% increase, for anyone, is a very big increase in any one year. I admit to not being aware of that, so I will certainly talk to the Minister [for Housing] about that,” Varadkar said. 

A spokesperson for Housing Minister Darragh O’Brien: “The Minister has been clear that the current RPZ system, which expires at the end of 2021, will be replaced with broader protections.

“Minister O’Brien will bring a comprehensive bill for renters before the Oireachtas in the Autumn to include provisions such as long-term security of tenure and rent levels.” 

Sinn Féin’s housing spokesperson Eoin Ó Broin has today called on O’Brien to prioritise the publication of legislation that will replace the RPZ legislation.

“It was always the case that this legislation allowed for an 8% increase if the rent review took place after two years. It was one of the many issues we had with the legislation,” Ó Broin said. 

“Given how this legislation has failed and that rents have continued to increase since, we now believe a three-year ban on rent increases is the only way to halt rising rental costs,” he said. 

Ó Broin said O’Brien needs to publish the new legislation “as soon as possible”. 

“Renters cannot wait,” he said. 

With reporting by Christina Finn

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