Is there any flexibility regarding RPZ rules?

[fidgetspinner]

My tenant has been living in my property since 2011. As they were good tenants, I always kept the rent below market rate. In 2015, I increased the rent but again, it was still well below market rate. Shortly after that increase, the 2 year rent freeze was introduced so I decided that in order to protect the value of the property, the next time a rent review was due, I would need to raise it to market rate.

Unfortunately, before I got the opportunity to do that, the Rent Pressure Zone rules were introduced last December. That meant I could only raise the rent by 4% from the 2015 amount. By that time I was only getting 60% of the market rate for the property. My mortgage repayments had increased and were not being met by the rental income. After much consideration, I reluctantly decided that I would have to sell the property.

Therefore, I served notice on my tenants giving them the correct notice period. They are due to vacate at the end of the month at which time I had planned to sell the property. However, they have contacted me today saying they are finding it impossible to secure accommodation in the area and would I reconsider selling and keeping them on as tenants.

They said they are willing to pay the market rate and enter into a new lease for the property. I am not willing to break the law by charging more than the rate allowed under the current rules. However, if I could legally achieve a fair market rate for my property, I would consider withdrawing the it from sale and allowing them to stay on.

Any advice appreciated. Thanks.

 

[Thirsty]

No disrespect to your tenants; but you need to remember they can challenge the rent increase once the lease is signed, and have it reduced down again.

 

[Sarenco]

The short answer to your question is no, there is no flexibility regarding the RPZ rules.

Neither you nor your tenants can contract out of the statutory cap.

It's a truly stupid law that ultimately harms tenants, particularly low income tenants. But there it is.

 

[fidgetspinner]

Thank you for your replies which are spot on. I spoke to someone in the RTB about this today. They told me the only option open to me is to 'substantially refurbish' the property (tenant would not have to move out during refurbishments) and then re-let it at current market rate. He wouldn't give me a figure when I pressed him for one on what would constitute 'substantial refurbishment' but when I suggested €3K-€5K he said that should be enough. Obviously I'd keep all receipts etc. in case of a dispute down the line. My tenants are high-earning professionals so they have no problem paying market rate but I still want to cover myself in case they dispute the increase in the future.

 

[Sarenco]

It's odd that the RTB told you that you could increase the rent to the market rate if you "substantially refurbish" the property - because that's not quite correct.

The legislation actually provides that where there has been a "substantial change" in the nature of the accommodation provided under a tenancy since the last rent review, resulting in an increase in the market value of that tenancy, then the RPZ cap does not apply.

There may or may not be any difference between these concepts in practice but organisations like Threshold certainly think it implies a higher standard.

 

[fidgetspinner]

Yes Sarenco, I was a bit surprised too so I emailed my query to the RTB in the hope that they will give me something in writing that I can use to fall back on if necessary. From this and past experiences with them, it seems like everyone I speak to in the RTB gives different (albeit slightly) advice.