Just a Small Number of Landlords Notify RTB of High Rent Hikes

Just a small number of landlords with properties in high-rent areas known as rent pressure zones have told the Residential Tenancies Board (RTB) that they’ve raised the rent more than is usually allowed.

Since July last year, landlords have had to notify the RTB if they’re hiking rents more than 4 percent in these zones – and why.

There are roughly 128,000 registered tenancies in Dublin, show RTB figures.

Between July 2019 and March 2020, landlords filed 265 times with the RTB to say they had raised the rent more than the 4 percent for homes in Dublin, ticking the boxes for one of the exemptions.

In 224 cases, they said they qualified to do so because the property hadn’t had a tenant in it for one or two years.

Meanwhile, in 39 cases, they justified it on the grounds of substantial changes.

Twice, they didn’t say.

But what does the data mean? It could be that many landlords aren’t hiking the rents much more than is usually allowed or that landlords haven’t been filing with the RTB.

Either way, how the RTB investigates and enforces continues to be key in making sure the rules are followed – and it’s early days to see how well it’s doing on that front, say some.

The Rules

Since 2016, rents can’t legally be increased more than 4 percent in a year in areas designated rent pressure zones (RPZ),except in particular cases, the criteria for which have changed over the years.

RPZs are located in parts of the country where rents are high and rising. Dublin and Cork were some of the first places to have RPZs, for example, and some of the latest include Athy and Killarney.

Critics in the past pointed to a lack of enforcement of rent pressure zone rules, and loose language in the law as undermining the effort to dampen rent rises.

From July last year, the rules were tightened. Since then, among other measures, landlords have had to tell the RTB if they are raising rent higher than the 4 percent in RPZ areas.

A landlord is now allowed to raise rent higher than 4 percent in RPZs for one of two reasons.

The first exemption allows for a rent increase if the property had no tenancy for the previous two years. Or, in the case of properties which are listed as protected structures, it must be vacant for only one year.

The second exemption is when a property has undergone a “substantial change”. That means, that the floor area has grown by 25 percent, or that the property’s energy rating has improved, among other things.

In most cases, landlords told the RTB that they were exempt from the rules because of past vacancies. In other words, the first exemption.

In Dublin, they accounted for 224 of the 265 filings. Nationwide, they accounted for 345 of the 413 filings, show RTB figures.

A spokesperson for the Department of Housing said that exemption is there “to encourage the supply of much needed new rental accommodation”.

The exemptions apply to “a small subset of the overall rental market”, they said.

Said the spokesperson: “It is expected that these numbers will increase over time as the supply of new or upgraded rental supply increases.”

A spokesperson for the Threshold, the national housing charity, said that the figures for those claiming the exemption for properties without a tenant attached to them seemed to indicate that some properties are coming back onto the market.

That’s “positive in the context of limited supply in the private rented sector”, they said.

But the low number of 224 times in Dublin “would suggest that it is at a slow pace […]”, said the spokesperson.

“This suggests they are not being let out or they are not notifying the RTB for the purposes of the exemption,” they said.

Michael Byrne, a lecturer in political economy at the School of Social Policy, Social Work and Social Justice at University College Dublin (UCD), says there “isn’t a culture of compliance” from landlords in the rental sector.

“There’s just a tolerance of the idea that landlords are not… it’s unrealistic to expect them to comply with the law,” says Byrne.

Sinn Féin TD and housing spokesperson Eoin Ó Broin said that there have been many piecemeal changes to the Residential Tenancies Act in recent years.

“I think that’s caused a lot of confusion for landlords and tenants,” he says.

Margaret McCormick, the information officer for the Irish Property Owners’ Association (IPOA), says that “the legislation out there is extremely complex”.

“It is extremely difficult for an individual landlord to understand and to comply with,” she says.

Are landlords aware of the need to notify the RTB of exemptions? McCormick said she doesn’t think landlords aren’t declaring the use of exemptions.

At the IPOA, they “get calls from members looking at investing in properties and trying to establish whether they are restricted to the previous rent”, she says.

She believes the figures are low because fewer investors are using the exemptions, she says.

Byrne says he thinks it makes sense to have some exemptions, and for those exemptions to be “targeted in a way that does, to the greatest extent possible, protect supply and not create incentives for disinvestment”.

He said that, from his understanding, both exemptions are “broadly targeted correctly”.

Ó Broin of Sinn Féin said that the exemption rule for protected structures, though, could allow “unscrupulous landlords” to leave a property like this vacant for a year and then potentially double the rent.

“Because while leaving a property vacant for a year is obviously a big loss of income, if you could double your rent,” he said, “well, you’ve made that back in at the end of year one.”

Ó Broin said he does think there’s a need to find better ways to bring older, vacant stock into use: “But I’m just not convinced that that was the right mechanism to do it.”

Checking It

The RTB now has powers and a team to investigate breaches of rental law by landlords, including raising rent by more than is lawful, said a spokesperson by email.

(In the past, it had limited powers to launch investigations into possible breaches.)

It can kick off an investigation on the basis of a public complaint, or information from its own records – relying, say, on registration data and exemption data, they said.

An investigation may lead to a sanction of up to €15,000, said the spokesperson, and up to €15,000 costs against the landlord if they are found to have breached the legislation.

The RTB has approved 188 investigations since it was given the powers to investigate potential RPZ breaches in mid-2019, said the spokesperson.

Of these, 49 investigations were based on information from members of the public, they said, and 139 from information identified by the RTB, they said.

The majority of the investigations were in regard “to a failure to comply with RPZ requirements”, said the spokesperson.

The RTB can’t provide any more detailed information on individual investigations at this stage, they said.

A conclusion is drawn by an independent decision-maker who is appointed to the investigation, which is then confirmed by the Circuit Court, said the spokesperson.

Until the courts resume their normal activity, they are unable to provide information on the results of an investigation, they said.

Meanwhile, a spokesperson for Threshold said that “rent review/increase queries accounted for about 12 percent of queries in 2019”.

Byrne, the lecturer at UCD, says he thinks the RTB should have more powers, for example broadening the range of issues they can initiate investigate action for.

The penalties should also be higher, says Byrne, say for cases that involve evictions. He says he feels like a €15,000 penalty in the current market is “derisory”.

“It wouldn’t put off anyone,” he says.

Byrne says however that if the sanction were to be raised above €15,000, there might have to be a more elaborate process to ensure fairness.

Ó Broin says that the RTB is set to upgrade their database capabilities and website.

The aim is to make it easier for the public to use, but also easier for them to mine the data that they have. “So for example, to red flag potential breaches, etcetera,” says Ó Broin.

As he sees it, it’s too early yet to judge how well the RTB’s stronger powers are playing out in practice.

“It’s not really until we get the annual report for this year, which will be out sometime next year, we’ll really have a sense of how this is all working out,” he says.