Landlords must follow certain procedures if they want to review the rent. The rules are set out in the Residential Tenancies Act. Breaching Rent Pressure Zone legislation may lead to a criminal conviction.
Regardless of the level of rent, even if it is substantially below market rent, you must comply with the legislation.
Rent Pressure Zone rules also apply to a new purchaser buying a property.
What is a Rent Pressure Zone (RPZ)?
A Rent Pressure Zone (RPZ) is a designated area where rents cannot be increased by more than 4% per annum. This applies to new and existing tenancies (unless an exemption is being applied).
When were Rent Pressure Zones introduced?
RPZs were introduced in Ireland in 2016, however RPZs commenced in different areas on different dates.
How does an area become a rent pressure Zone?
For an area to become a Rent Pressure Zone:
- The average rent in the previous quarter must be above the average national rent in the quarter.
- The annual rate of rent inflation in the area must have been 7% or more in four of the last six quarters.
There are three different standardized averages rents to be used when assessing an area:
- Dublin areas will remain compared to the national standardized average rent.
- The ‘Greater Dublin Area’ (Kildare, Meath, Wicklow) – excluding Dublin – will be compared to a new criteria which is the national standardized average rent excluding Dublin.
- The rest of the country – areas outside the ‘Greater Dublin Area’ and Dublin – will be compared to an outside GDA standardised average rent.
How do I check If my property is in a Rent Pressure Zone?
How long will Rent Pressure Zones be with us?
RPZs were originally intended for a three-year period but now have been extended for a further 2 years.
What are the exemptions to Rent Pressure Zones?
There are exemptions to Rent Pressure Zone rules. Exemptions are:
- Properties where there has been no tenancy for a period of two years prior to a letting.
- Protected Structures with no tenancy in the preceding year.
- Substantial change in the nature of the accommodation.
What is Substantial Change?
A ‘substantial change’ will only be deemed to have taken place where the below criteria are met:
“the works carried out to the dwelling concerned – consist of a permanent extension to the dwelling that increases the floor area (within the meaning of Article 6 of the Building Regulations 1997 (S.I. No. 497 of 1997)) of the dwelling by the amount equal to not less than 25% of the floor area (within such meaning) of the dwelling as it stood immediately before the commencement of those works,
in the case of a dwelling to which the European Union (Energy Performance of Buildings) Regulations 2012 (S.I. No. 243 of 2012) apply, result in the BER (within the meaning of those Regulations) being improved by not less than 7 building energy ratings,
or any 3 or more of the following:
- the internal layout of the dwelling being permanently altered.
- the dwelling being adapted to provide for access and use by a person with a disability, within the meaning of the Disability Act 2005.
- a permanent increase in the number of rooms in a dwelling.
- in the case of a dwelling to which the European Union (Energy Performance of Buildings) Regulations 2012 (S.I. No. 243 of 2012) apply and that has a BER of D1 or lower, the BER (within the meaning of those Regulations) being improved by not less than 3 building energy ratings; or
- in the case of a dwelling to which the European Union (Energy Performance of Buildings) Regulations 2012 (S.I. No. 243 of 2012) apply and that has a BER of C3 of higher, the BER (within the meaning of those Regulations) being improved by not less than 2 building energy ratings.
How is rent calculated in a Rent Pressure Zone?
There is a prescript formula to calculate the rent.
R x (1 +0.04 x t/m)
R= The last rent set under a tenancy.
t = The number of months between the date the current rent came into effect and the date the new rent will come into to effect.
m = 12 or 24
For tenancies that begin after an area is designated as an RPZ, the rent can be reviewed each year but cannot be increased by more than 4%. The rent amount being set should not be more than that of local market rents for similar properties.
If a tenancy was already in existence at the time an area was designated an RPZ, the rent can only be reviewed 24 months after the tenancy came into existence, or 24 months after the date the rent was last set. When the next rent review is due, the RPZ formula can be applied to determine the rent increase. After this, the rent can be reviewed every 12 months.
You may wish to refer to the RTB Calculator to do your calculation.
*Rent Reviews During Covid-19
Rent increases cannot take “effect” during the Covid-19 Emergency Period from the 27th March to the 1st August 2020. The emergency legislation did not preclude a landlord from serving a rent review notice during this Emergency Period. However, it did not take effect until the Emergency Period ended.
A landlord may not recover monies for rent increases that should have taken effect during the Emergency Period – there is no entitlement for a landlord to “clawback” the rent increases.
27th October to 1st December Level 5 – rent increases could be served during and take effect except in the cases of Relevant Tenants.
During Level 5 Emergency Periods, rent increases may be served.
For rent reviews to be valid, they must contain items detailed in the Residential Tenancies Act 2004 as amended. Sample notice can be found here.