Key Post Summarising the rules for small landlords with existing tenancies

[Brendan Burgess]

I am not a landlord so I have no practical experience of these rules. I am happy to be corrected on the existing rules or the proposed rules.

Caveat: The legislation has not been published yet, so this summary is based on the press statement and comments from government.

The proposed changes for existing tenancies are even more uncertain than for new tenancies.

I have summarised the rules for new tenancies created after 1 March in this thread:

Summarising the rules for new tenancies for small landlords after 1 March

I am going to try to summarise the rules for the various options is a series of threads. I am not a landlord so I have no practical experience of these rules. I am happy to be corrected on the existing rules or the proposed rules. Caveat: The legislation has not been published yet, so this...

www.askaboutmoney.com

A small landlord is someone with one, two or three properties.

• It is not clear whether a husband and wife own two properties each are small landlords or big landlords.
• If you own three properties in Ireland and one in the UK, are you a small landlord?
• If you own one property with 5 flats in it, are you a small landlord? The press release says "Tenants entering into a lease with larger landlords (with four or more tenancies)," which would suggest that the owner of a house in 5 flats is a large landlord.

Caveat: One reading of the proposals is that nothing at all changes for tenants and landlords with existing leases.

From the tenant's point of view:

• Their rent can be increased by only 2% a year. It can never be reset to market rent during this tenancy.

From the landlord's point of view

• The landlord will still be able to terminate the tenancy for the following reasons
  • They want to sell the property
  • They want to use it for a family member
  • They want to refurbish it.
• The landlord will be able to do this after the new rules come into effect, as the new restrictions apply to new tenancies after 1 March.

If the tenant voluntarily leaves and the landlord issues a new tenancy agreement after 1 March 2026, they will be able to set the rent for that tenancy at market rates and the new rules will apply from then on.

Existing rules	New rules
Some parts of the country are not in RPZs	The whole country will be an RPZ
You can terminate a lease if you want the property for a family member If you are returning from abroad and want it for yourself If you are separating and want it for yourself	This will not change
You can terminate a lease if You want to sell You want to refurbish	See note above. Some believe that there will be no change. Tenants will have a “6 year period” where you cannot terminate a lease for these reasons. At the end of the 6 years, you can terminate for these reasons If you don't terminate a lease after 6 years, a new 6 year period begins. It's not clear when the 6 years begins for existing tenancies. Was it the date, the lease began? Or will it be the 1 March next?
If you want to sell your property, you can terminate the lease	If you want to sell your property within the 6 year period, you can only do so with the tenant in-situ. Again, we don't know if this is true.
You cannot increase the rent on an existing lease beyond 2% a year	This will not change for existing tenancies. According to the Taoiseach, this won't change. You will not be able to reset the rent after 6 years. See caveat above.
If your tenant leaves , you cannot increase the rent for the new tenant beyond 2% a year	If your tenant leaves voluntarily, and you issue a new lease after 1 March, you can reset the rent to market rate. You cannot reset the rent beyond market rate. If you relet the property, before the 1 March, the old rules apply. If you terminate the lease, you cannot increase the rent beyond inflation

 

[Brendan Burgess]

I am not clear on the following.

1) Will an existing tenancy continue to be covered by the 2% rule indefinitely, or will the reset be allowed every 6 years?

Sarenco reports the Taoiseach as having said that the 6 year reset will not apply to existing tenancies.

 

[TRS30]

At the end of 6 years, you can reset the rent to market rate, even if the tenant has not moved on.

I assume this is tied to the query below.

If you have a long term tenant pre June 2022, then is the 6 year period up June 2028?

It's not clear when the 6 years begins for existing tenancies. Was it the date, the lease began? Or will it be the 1 March next?

 

[Brendan Burgess]

And I am still not clear. Will a landlord with an existing tenancy be able to give notice of eviction for sale after 1 March 2026 or will they have to wait for some 6 year period to be up?

 

[Greenbook]

And I am still not clear. Will a landlord with an existing tenancy be able to give notice of eviction for sale after 1 March 2026 or will they have to wait for some 6 year period to be up?

I think that an existing tenancy or one entered into before the new Residential Tenancies Act is signed into law by the President will have to continue with the existing rules. There is a strong legal rule against retrospective changes ie. if you enter into something now based on the current rules, the current rules have to continue to apply for as long as the lease or whatever continues.

That said, I am open to correction. It would be great if we had a solicitor or a barrister who could clarify this because it is a very important question.

 

[TomEdison]

You absolutely can change the rules and regulations applying to an existing tenancy — that's exactly what happened when the RPZ rules were first introduced, after all.

And this is generally true. When new employment protections are introduced, for example, we don't expect them to apply only to new hires.

So there are limited legal constraints here. It's more a policy question — how should the government treat existing tenancies as regards teh application of the new rules? The answer to that question is partly political (what will people put up with?) and partly policy (what treatment will best tend to produce the outcome we want, and to avoid outcomes that we don't want?)

 

[Sarenco]

My understanding is that the status quo will continue for existing tenancies.

So, the rules that apply to an existing tenancy today will continue to apply post 1 March 2026.

The ability to reset to market rates, the 6-year cycle and enhanced security of tenure provisions only apply to new tenancies created after 1 March 2026.

All subject to seeing the legislation.

 

[TomEdison]

My understanding is that the status quo will continue for existing tenancies.

So, the rules that apply to an existing tenancy today will continue to apply post 1 March 2026.

The ability to reset to market rates, the 6-year cycle and enhanced security of tenure provisions only apply to new tenancies created after 1 March 2026.

If so, is this going to produce a curious result.

All tenancies commenced since 11 June 2022 become tenancies of unlimited duration after 6 months. Which means, they never expire through lapse of time (though they can be terminated by the tenant by giving notice, or by the landlord by giving notice in certain circumstances).

So, if those tenancies are not terminated by notice on one side or the other, they will never be superseded by one of the new 6-year tenancies.

But what about tenancies commenced before 11 June 2022? The rule there was that those tenancies could expire by lapse of time. If they did, and if the tenant stayed on and the landlord didn't terminate, they were automatically converted to 4-year tenancies (if the tenancy commnenced before 24 December 2016) or 6-year tenancies (if the tenancy commenced between 24 December 2016 and 11 June 2022). And they would carry on renewing in that fashion for 4/6 years indefinitely.

Any of those 4-year/6-year term tenancy that expired after 11 June 2022 were renewed as tenancies of unlimted duration, so they will not transition to the new 6-year tenancy model. But any of them that last expired before 11 June 2022 were renewed as 4-year/6-year tenancies. If they expire between now and 1 March 2026, they'll become tenancies of indefinite duration, and so won't transition to the new 6-year model. But if they don't expire until after 1 March 2026, they'll transition to the new 6-year model.

It all looks a bit random, and I think is going to give rise to a lot of confusion.

 

[TRS30]

My understanding is that the status quo will continue for existing tenancies.

So, the rules that apply to an existing tenancy today will continue to apply post 1 March 2026.

The ability to reset to market rates, the 6-year cycle and enhanced security of tenure provisions only apply to new tenancies created after 1 March 2026.

All subject to seeing the legislation.

While I don't disagree, this would lead to a lot of landlords with existing tenancies to 'force' out tenants to avail of the newer more favorable rules, especially being able to reset rents in between tenancies/every 6 years.

 

[ClubMan]

and I think is going to give rise to a lot of confusion.

Isn't that self evidently the case already given the number of threads, posts and questions on the proposed measures and how existing landlords/tenants/tenancies are impacted and how things work/will work?

 

[TRS30]

Isn't that self evidently the case already given the number of threads, posts and questions on the proposed measures and how existing landlords/tenants/tenancies are impacted and how things work/will work?

The more I read (here & elsewhere), the more confused I get!!

 

[TomEdison]

Isn't that self evidently the case already given the number of threads, posts and questions on the proposed measures and how existing landlords/tenants/tenancies are impacted and how things work/will work?

Yes. But part of the confusion right now stems from the fact that we only have bullet-point highlights of the changes. A lot of questions arise to which there aren't, at present, any answers. Hence people don't know where they stand.

But what Sarenco says suggests that there's a degree of confusion baked into the proposals. The grandfathering in of existing arrangements is going to produce bizarrely random outcomes. That's not something that will be resolved up by the publication of more detail (unless the detail, when published, contradicts Sarenco's understanding).

 

[Brendan Burgess]

So, the rules that apply to an existing tenancy today will continue to apply post 1 March 2026.

The ability to reset to market rates, the 6-year cycle and enhanced security of tenure provisions only apply to new tenancies created after 1 March 2026.

OK, I will put that major caveat into the original post.

I thought that the additional safeguards applied to existing tenants but not the rent increases. But that might not be the case.

 

[Greenbook]

While I don't disagree, this would lead to a lot of landlords with existing tenancies to 'force' out tenants to avail of the newer more favorable rules, especially being able to reset rents in between tenancies/every 6 years.

I think that is why if you evict now you can't reset to market rent later. So if you evict a current tenant now based on a sale and you then change your mind, you can relet alright but only at the current rent.

Bottom line is this new system is adding a huge layer of confusion and anomalies in to an already very complex system. Draft legislation will hopefully clarify what the rules are, but expect further amendments and changes to keep appearing as anomalies are spotted and loopholes are closed off.

Personally, I think that if the old system continues to apply to leases currently in existence, if you're rent is anywhere near market value, you are far better off. You have absolute flexibility as to sales etc.

But what a mess. A new complex system is introduced based on an incorrect and vague press statement and a Minister reading out stuff at a press conference