by Jeremy Erwin , Fiona Shipsey, John Deignan August-31-2022 in Property, Commercial & Business, Construction
Update on key changes to residential tenancies law
Termination of residential tenancies is the subject of significant and current public debate, where a combination of factors has led to a scarcity of rental properties in Ireland.
Two pieces of legislation which deal with, among other things, termination of tenancies recently came into effect and landlords and tenants should be aware of these key changes.
Residential Tenancies (Amendment) Act 2021 (the “2021 Act”)
On 11 June 2022, the relevant sections of the 2021 Act dealing with security of tenure came into effect, giving rise to a number of significant changes. In summary, those changes are: (1) the phasing out of a landlord’s right to terminate a ‘Part 4’ tenancy without reason on its expiry; and (2) transitioning to tenancies of unlimited duration. Below, we discuss the impact of these changes on existing and future tenancies.
Background
Under the Residential Tenancies Act 2004 (as amended) (the ‘Principal Act’), a Part 4 tenancy comes into operation after a tenancy has been in existence for a period of six months and the tenant has not been served with a valid notice of termination. A Part 4 tenancy arises automatically. Its creation grants significant rights to the tenant, principally, the right of the tenant to remain in the dwelling for a further five and a half years. During that period, the landlord may only terminate the tenancy on the limited grounds laid out in section 34 of the Principal Act, namely:
- The tenant has failed to comply with any of his or her obligationsunder the lease;
- The dwelling is no longer suitable to the accommodation needs of the tenant;
- The landlord intends, within nine monthsafter the termination of the tenancy to enter into an enforceable agreement to sell the dwelling;
- The landlord requires the dwelling for his or her own occupation or for occupation by a member of his or her family;
- The landlord intends to substantially refurbish or renovate the dwelling or the property containing the dwelling in a way which requires the dwelling to be vacated for that purpose; and
- The landlord intends to change the use of the dwelling.
However, under the old Part 4 tenancy regime, a landlord had the right to terminate a Part 4 tenancy upon the expiry of the six-year period (i.e. at the conclusion of the Part 4 tenancy), on notice to the tenant but without reason.
New Regime for Part 4 Tenancies
The 2021 Act changes the rules governing Part 4 tenancies to give tenants greater security of tenure. All new residential tenancies created on or after 11 June 2022 are tenancies of unlimited duration once the tenancy has lasted more than six months and provided a valid notice of termination has not been served on the tenant. This removes the right which was previously available to a landlord to terminate without reason upon the expiry of a Part 4 tenancy. Landlords remain entitled to terminate a tenancy on the specific grounds laid out in section 34 of the Principal Act.
Not only do the new measures apply to tenancies created on or after 11 June 2022, they also apply to tenancies which are renewed after that date. Where an existing Part 4 tenancy expires on or after 11 June 2022 and a valid notice of termination has not been served then, upon its expiry, a tenancy of unlimited duration will be created.
For Part 4 tenancies created before 11 June 2022, the old Part 4 regime still applies, and a landlord still has the right to terminate a tenancy after 6 years without the requirement to give reasons.
For pre-11 June 2022 tenancies, a landlord may opt-in at any stage to the new regime under section 28 (3) of the 2021 Act.
Comment
The 2021 Act clearly provides more security of tenure to tenants and over time tenancies of unlimited duration will become the norm. However, in the case of pre-11 June 2022 tenancies, landlords retain their right to terminate a Part 4 tenancy without reason on the expiry of the 6-year period notwithstanding that this right will cease to exist over time.
Regulation of Providers of Building Works and Miscellaneous Provisions Act 2022 (the “2022 Act”)
With effect from 6 July 2022, the 2022 Act introduces a number of amendments relating to, among other things, notice periods and service of notices of termination. Below, we summarise these amendments.
Notice Periods
The following notice periods have been introduced in relation to termination of a tenancy by a landlord:
- For tenancies of less than 6 months’ duration, the applicable notice period is now 90 days (increased from 28 days);
- For tenancies between 6 months and less than one year in duration, the applicable notice period is now 152 days (increased from 90 days);
- For tenancies between 1 year and less than 7 years in duration, the applicable notice period is now 180 days . Previously, the notice period for tenancies of between 1 year and less than 3 years was 120 days. This amendment brings about one fixed notice period of 180 days for tenancies between 1 and 7 years in duration. 180 days was already the notice period for tenancies between 3 years and less than 7 years in duration.
- The notice periods for tenancies of longer durations than those referred to above remain unchanged.
The revised notice periods referred to above apply to termination of tenancies generally with effect from 6 July 2022. However, it is important to note that these new notice periods do not apply where a notice of termination is served for a breach of tenant obligations or rent arrears.
Notices of Termination
The 2022 Act imposes further obligations on Landlords in relation to the termination of a residential tenancy. A landlord is now required to serve a copy of any notice of termination on the Residential Tenancies Board (RTB) on the same day that it is served on the tenant. This is the case regardless of the grounds for terminating a tenancy and failure to adhere to this requirement will render the notice of termination null and void.
Rent Arrears and Miscellaneous Issues
The changes outlined above in respect of service of notices of termination follow on from similar provisions which were previously enacted in relation to termination of tenancies for non-payment of rent. In summary, such terminations are governed by the Residential Tenancies and Valuation Act 2020. There are similarities between the two different termination procedures and in the case of non-payment of rent, the following procedures apply:
- A landlord must first serve a 28-day warning letter in relation to rent arrears and a copy of that letter must be sent to the RTB at the same time as it is served on the tenant;
- A landlord must then serve a notice of termination and a copy of that notice must be sent to the RTB on the same day as it served on the tenant;
- Failure to submit copies of the rent arrears notice or the notice of termination to the RTB within the strict timeframes required will render the notice of termination invalid.
Separately, with effect from 4 April 2022, a landlord must register each tenancy with the RTB on an annual basis, and pay an annual registration fee for each tenancy. The failure to do so can lead to a fine being imposed on the landlord by the RTB. This change has been introduced pursuant to sections 22-26 of the Residential Tenancies (Amendment) Act 2019. That Act was passed into law in May 2019 however the provisions dealing with annual registration of tenancies only came into operation on 4 April 2022.
Conclusion
The changes referred to above highlight the increasing protection for tenants which has come into operation recently. There is also an expanded role for the Residential Tenancies Board in processing the annual registration of all residential tenancies and notices of termination. For landlords, it emphasises the need to ensure all the statutory requirements are complied with if a residential tenancy is to be terminated for whatever reason.
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About the Authors
Jeremy Erwin
Jeremy specialises in insolvency, commercial litigation and dispute resolution, acting for a variety of companies and financial institutions in contract law cases, enforcement and recovery actions and in high value complex Commercial Court proceedings. Jeremy also specialises in intellectual property matters, including advising on registration and protection of trade marks and related rights and on trade mark disputes.
Fiona Shipsey
Fiona is a partner in the Property team at Hayes solicitors. She acts for clients in the purchase, sale, mortgaging and refinancing of both residential and commercial properties. She has particular expertise in advising receivers and banks in the sale of distressed properties.
John Deignan
John Deignan is an associate solicitor in the Commercial & Business team at Hayes solicitors. John predominantly specialises in commercial litigation and dispute resolution, and has acted for a wide variety of private companies, State bodies and financial institutions in contract law cases, enforcement and recovery actions, commercial landlord and tenant disputes and defamation actions.