Q&A: Restriction may prompt landlords to club together to circumvent rules on rent certainty

Fiachra Ó Cionnaith answers the main questions around rent certainty

What has the Government announced?

After a year of controversy over the rent certainty proposals that threatened to split the Coalition, Finance Minister Michael Noonan and Environment Minister Alan Kelly have agreed plans to address Ireland’s growing rental bubble crisis.

Under the measures, which will be signed off by cabinet next Tuesday, landlords will only be able to increase rents once every two years instead of the current one-year period.

They will also have to justify rent increases by pointing to physical changes to the property, and will not be able to raise costs above the “market rate”.

Is this rent certainty?

No. Rent certainty, as confirmed by a senior Labour spokesperson at a post-cabinet briefing on Tuesday, is now dead.

The agreed plan will not see rents linked to the consumer price index — a plan repeatedly emphasised by Mr Kelly since he raised the prospect at Labour’s annual conference in February as it will ensure rents do not rise out of control — will not be included in the package.

When will it begin?

After being signed off on by cabinet, a stage that is effectively a rubber-stamping exercise, the plan will be added to the Residential Tenancies Bill currently before the Seanad. Both Mr Noonan and Mr Kelly confirmed yesterday the law will be in place by the end of this month.

How long will it last?

Four years. The plan will run out in November 2019, at which point the ministers have claimed — overly optimistically, according to the opposition and some experts — that housing supply problems will have been addressed.

If necessary, the plan may be extended at that point, although this will be a decision for whatever government is in place in 2019.

Can landlords increase rents before the new rules are put in place?

For some people, yes. If you have not had a rent review in the past 12 months, landlords can increase rents between now and the implementation of the new policy.

A spokesperson for Mr Kelly stressed yesterday the “majority” of reviews will have already taken place earlier in the year, meaning most people will not be at risk of sudden increases due to the imminent plan.

However, housing charities have insisted the measures need to be fast-tracked to stop landlords from hiking costs before the plan is implemented.

Landlords will not be able to raise prices beyond the “market rate”. What does that mean?

It depends on who you ask. For Government, the market rate position means costs are unlikely to rise during the two-year rent increase periods by more than 7%-10%.

However, housing charities have suggested that landlords could come together to raise prices at the same time, artificially increasing the market rate — a move the Coalition says would be against competition rules but would be difficult to prevent.

What else is there for tenants?

The Coalition says tenants will have more rights to prevent them from being unfairly evicted. This includes an increase in notice periods from 28 days to 90 days, beefed-up rules for landlords to prove a relative is moving into the property — such as evidence of utility bills in the person’s name — if this is given as a reason for changing tenants, and other matters.

And for properties?

Bed-sits may be back on the agenda. Mr Noonan referenced the issue when asked about loosening regulations for developments, saying “over-regulation has been the problem”.

While separate from building regulations which involve fire safety and other issues, the planned loosening will see smaller apartments, bed-sits, and other issues back on the agenda — hardly a happy solution for tenants still likely to pay high rents.