For Rent sign represents Residential Tenancies Act 2020 introduced new rental protections for tenants who face rent arrears and, as a result, are at risk of their tenancy ending

Residential Tenancies Act 2020

The Covid-19 2020 Act was introduced on 27th March 2020 and banned all rent increases and tenancy terminations, with limited exceptions, during the Covid-19 emergency period. This emergency period expired on 1st August 2020. From 1st August 2020, when the Residential Tenancies and Valuation Act 2020 came into force, new rental protections applied to tenants who face rent arrears and, as a result, are at risk of their tenancy ending.

This new legislation introduces temporary restrictions which provide that tenants are not required to vacate their rental properties during an Emergency Period, except in limited circumstances relating to specific breaches of tenant obligations.

The Act seeks to recognise the impact that the rise in unemployment and reduced working hours associated with the pandemic has had on the rental sector, and the challenges that this presents for tenants in meeting their obligation to pay rent. The Act brings in temporary restrictions on ending tenancies when restrictions on travel outside a 5km radius of a person’s home are in place. Currently, this is in place for six weeks from 21st October 2020.

Rent increases already served will be effective on some tenancies but not on others. Tenants whose income was adversely affected by Covid-19 may be protected from increases.

Not that all tenants in arrears are protected by the changes in the legislation, but the Residential Tenancies Act 2020 does set out new protections and obligations for tenants in financial difficulty as a result of Covid-19 and increased obligations on the service of documentation around rent arrears on all tenancies.

A tenant who follows the procedures and provides a landlord with a self-declaration form relating to an inability to pay rent due to Covid-19, cannot be made to leave the rented accommodation before 11th January 2021, and do not have to pay any increases in rent until after 10th January 2021.

Where a self-declaration form is given to a landlord from a tenant highlighting a tenant’s inability to pay rent due to Covid-19, a tenancy cannot be ended before 11th January 2021 and the tenant must be given a minimum 90-day notice period to vacate.

In normal times, a tenant is required to pay rent in full and on time until the tenancy ends even where a dispute arises between the parties. If the rent is not paid it is a breach of a Tenancy Agreement.

If a landlord wants to end a tenancy due to rent arrears, a landlord must issue a tenant and the RTB with a written Rent Arrears Warning Notice providing a minimum of 28 days for the rent arrears to be paid in full. The 28-day warning notice period only begins to count down when both the tenant and the RTB have received the Warning Notice. Warning Notices must always be in writing as a text message or email is not considered suitable.

A Notice of Termination (NoT) is the official document which ends a tenancy. Landlords and tenants can serve a NoT as usual during an Emergency Period, subject to certain exceptions, but the notice period cannot begin to count until an Emergency Period is lifted.

Covid-19 has had a significant impact on jobs and incomes across Ireland. Since March 2020, there have been a series of new rules and requirements regarding tenancy terminations and rent increases that affect both landlords and tenants. Either party misunderstanding their obligations is best avoided.

A checklist of indoor pollutants, adequate ventilation is an important factor that ensures potential pollutants or moisture generated within a property can exit the property

An Important Factor

The quality of rental accommodation is critical to the success and sustainability of the residential rental sector and rented properties should provide efficient, safe and healthy environments for those who live in them.

Updating and improving standards and regulating their application to the sector are essential to ensuring the quality of accommodation. The Housing Acts 1966 to 2014 allocate responsibility to the Local Authorities for the enforcement of the Housing (Standards for Rented Houses) Regulations that prescribe the minimum standards for rented accommodation.

Regulations setting out minimum standards for rented accommodation were first set out in 1993 with the most recent iteration being the Housing (Standards for Rented Houses) 2019.  Regulation 8 of these standards requires that all rented homes have adequate ventilation.  Analysis of a recent inspection sample shows that 52% of the older rented housing stock and 32% of recently built rented housing stock are non-compliant in the provision of adequate ventilation.

In ‘normal’ times, we spend around 90% of our time indoors and around 16 hours a day on average at home.  Time spent in our homes has been estimated by some experts to have increased to 98% and 23.5 hours respectively during the Covid-19 pandemic.

With people spending so much of their time indoors, and with growing evidence of poor indoor air quality (IAQ) being linked to a range of health conditions, there has never been a more important time to ensure a building has effective ventilation. In addition, people who may be exposed to indoor air pollutants for the longest periods of time are often those most susceptible including the young, the elderly and those suffering from respiratory or cardiovascular disease.

Ventilation is the intentional introduction of fresh outside air and the removal of stale indoor air from the living spaces within our homes.  Without proper ventilation, an otherwise insulated and airtight house will seal in harmful pollutants, such as carbon monoxide as well as moisture that can damage a property’s structure.

Carbon monoxide is the odourless deadly gas produced as a by-product of the combustion of natural gas and home heating fuels such as propane, oil, coal, and timber.  Inhabitants of a home generate moisture when they cook, shower, and do laundry. Just by breathing and perspiring, a typical family adds about three gallons of water per day to their indoor air.

Effective ventilation facilitates the exchange of air between the outdoors and indoors and helps to prevent the build-up of airborne pollutants as well as reducing the threat of viruses taking hold inside buildings.

Outdoor air enters and leaves a building by infiltration, natural ventilation, and mechanical ventilation.

Air movement associated with infiltration and natural ventilation occurs as the air moves through opened windows, doors, and vents.  A secure ventilation opening located in a wall or window (trickle ventilation) ordinarily incorporates a controllable ventilation grille which can be fully opened or closed.

There are a number of mechanical ventilation devices, from outdoor-vented fans that intermittently remove air from a single room, such as bathrooms and kitchen, to air handling systems that use fans and duct work to continuously remove indoor air and distribute filtered and conditioned outdoor air to strategic points throughout a house.

Good indoor air quality is important to avoid health issues and ventilation is now generally accepted as an important factor in preventing the virus that causes Covid-19 from spreading.

Aside from the good sense of it, to achieve compliance with Regulation 8 Housing (Standards for Rented Houses) Regulations 2019, the means of ventilation chosen for each room within a rented property should ensure an adequate supply of fresh air for the people living within the property, dispersal of residual pollutants and removal of water vapour from the areas where it is produced in significant quantities.  This should reduce the likelihood of creating conditions that support the growth of mould, provide good indoor air quality while protecting investment in rented housing stock.

Two men on pedestal, one much higher then the other looking down showing an imbalance. A strong and balanced rental sector is a key component in any healthy housing market

Striking A Balance

This emergency period has presented significant challenges that few could have imagined and its full impact on the rental sector has yet to be realised. That said, it’s time for something completely different….

A strong and balanced private rented sector (PRS) is a key component in any healthy housing market. The successful provision of rented housing is considered of such importance it formed one of the five pillars of Rebuilding Ireland published in July 2016.

Historically the PRS in Ireland was a residual sector seen as a temporary arrangement on the way to owning a home or accessing social housing. The sector was virtually unregulated until the introduction of the Residential Tenancies Act 2004 that set out the rights and obligations of landlords and tenants and detailed rules around residential tenancies.

Over the last number of years, there has been considerable change to the sector’s regulatory framework with the Residential Tenancies (Amendment) Act 2015, Planning and Development (Housing) & Residential Tenancies Act 2016 and the Residential Tenancies (Amendment) Act 2019. The sector has seen an expansion of the Residential Tenancies Board’s (RTB) regulatory role, introduction of rent pressures zones, security of tenure protections, introduction and enforcement of minimum accommodation standards along with many other measures.

Buy-To-Let (BTL), where a property is specifically purchased to rent to tenants rather than lived in by the purchaser, used to be all the rage. Historically, most of the investment in the Irish rental sector came from these small-scale investors where a poorly regulated sector, with little or no limit on rental growth, made for an attractive investment and required little investor knowledge. Most were diligent landlords, but some were rogue.

Build-To-Rent (BTR) describes the practice of delivering purpose-built residential rental accommodation and associated amenity space for the purpose of being used as long-term rental accommodation. This new sector provides larger scale purpose-built apartment blocks that benefit from professional management, flexible tenure and the long-term, low-risk, steady growth requirements of the institutional investor.

To confront the problem of distressed assets in a post-2008-crash context, the system was encouraged to sell off assets and large portfolios to financial institutions, private equity firms, hedge funds, real estate investment trusts (REIT) and vulture funds. Property tax incentives introduced by the Government during the economic downturn, has been the target of criticism. Supporters believe these policies encouraged capital back into the Irish market at a time when it was much needed and bolstered the subsequent growth in FDI and our economic recovery.

While private institutional capital (investment funds and REITs) have been major purchasers of residential units in the Irish market, public capital in the form of Part V acquisitions, AHBs and local authorities are also significant buyers of residential property.

While turnover in the BTR sector more than doubled last year to €2.54 billion, many believe the Government’s encouragement of institutional investment away from the BTL sector and into the BTR sector has been costly for generation rent.

With increasing insurance, maintenance, management costs and less tax relief to be claimed, BTL investors are struggling to compete with BTR institutional investors. The tax and regulatory frameworks of the residential rental market are two of the disincentivising factors for smaller landlords, while institutional investors enjoy the benefits of organisational structure, economies of scale and stronger equity.

Even though investment funds have had the capacity to pay the high construction costs of apartment blocks in urban areas while satisfying the Government’s requirement to deliver scale in a demanding housing market, others believe some of the larger landlords are of now of sufficient scale to influence government policy as well as possessing rent setting powers in certain locations.

According to the RTB, some 40,000 smaller landlords have left the sector since 2012, while the sector has become increasingly attractive to large scale investors and corporate residential landlords. The market has expanded to include 340,000 tenants, 714,000 occupants and 174,000 landlords. But as it has expanded it has also become more expensive with rents rising by 40 per cent between 2007 and 2019, almost double the EU average.

The provision of rental housing is of such importance that an over-reliance on a limited number of third parties is a risk we shouldn’t take and one that can only be mitigated by ensuring we have a balanced mix of PRS housing providers.

Balance between money and housing, the extraordinary legislative measures to somehow contain the impact on housing provision during Covid19 pandemic

Containing the Impact

The speed with which the pandemic has struck left our policy makers with no option but to implement extraordinary legislative measures to somehow contain the impact on housing provision.

Self-isolation confirmed medical diagnosis and/or a reduction in working hours or loss of employment are likely to present significant financial challenges for both landlords and tenants over the coming months.

With effect from 27 March 2020, emergency measures were introduced into law, to protect tenants during the Covid-19 emergency period.  The Act provides for amendments to the Residential Tenancies Act 2004 – 2019 that are expected to last for a period of 3 months but may be extended if the Government considers it necessary.

The legislation ensures that tenants cannot be forced to leave their rental accommodation, other than in exceptional circumstances, during the emergency period. A notice of termination cannot be served and where a notice of termination was served before the 27/03/2020, it cannot take effect until the emergency period has ended. For tenancies of less than 6 months duration, a tenant now has 28 days, increased from 14 days, to pay rent arrears due.  If the tenant and landlord are unable to agree an approach to arrears, the landlord cannot issue a notice of termination during the emergency period. Rent increases are prohibited during the period but rent decreases can be implemented.

Landlord obligations in relation to the property and the tenant remain unchanged and tenants are obliged to continue to pay rent during the emergency period.

Some of the country's largest landlords and institutional property investors have said they will support government efforts to protect tenants who are impacted by the disruption caused by the pandemic through measures such as deferral of rent payments and payment plans.

The trickle-down effect of rents not being paid would be devastating leaving some landlords unable to make mortgage payments, meet insurance costs and pay their own bills.

Smaller landlords facing potential difficulties in making loan repayments are being advised that certain banks, retail credit and credit servicing firms have introduced 3-month payment breaks on mortgages.

While tenants are expected to pay rent during this period, income support and rent supplement provided by the Department of Employment Affairs and Social Protection is available to those struggling to do so. Any rent arrears built up during the period will be payable.

Tenants are advised to contact their landlords as soon as they can to talk through delayed or partial payment options.

The legislative changes are temporary in nature, lasting for the duration of the Covid-19 crisis, after which point residential tenancies will revert to the current legislative arrangements.

Gavel with words compliance above representing AHB regulation was formalised in statute with the enactment of the Housing (Regulation of Approved Housing Bodies) Act 2019

Raising the Stakes

Although the right to housing in Ireland is neither constitutionally nor legislatively protected, we are, under the United Nations Sustainable Development Goals committed to ensuring access to adequate, safe and affordable housing for all by 2030.

Due to the imposition of austerity measures over a decade ago and government funding cuts for social and affordable housing development, delivery of the actual housing units has been slow while demand continues to grow.

The concept and definition of social housing in Ireland has broadened over the course of time. Social housing is now described as housing provided by a Local Authority (LA) or a housing association to people who cannot afford housing from their own resources and properties rented by either of these groups from private landlords. Some experts include the provision of government subsidies, such as the Housing Assistance Payment (HAP), to facilitate lower income earners in securing rental accommodation in the private sector.

The establishment and registration of Approved Housing Bodies (AHBs) was first introduced in statute under the Housing (Miscellaneous Provisions) Act 1992. It set out the general scheme of how AHBs could and might operate alongside LAs in Ireland for the provision of social and affordable housing to those who could not afford to rent in the private sector and for groups with specific needs, such as the elderly, disabled or homeless.

By 2013 the AHB sector began to formalise in a meaningful way with the introduction of the Voluntary Regulation Code (VRC) by the Department of Housing. In doing so, the Department acknowledged the scarcity of funding for LA-led social housing supply and the growing need for AHBs to fill the void in social housing provision.

The Residential Tenancies (Amendment) Act 2015 brought AHB tenancies under the remit of the Residential Tenancies Board (RTB), while in 2019 the regulation of AHBs was formalised in statute with the enactment of the Housing (Regulation of Approved Housing Bodies) Act 2019.

The Act covers the areas of corporate governance, financial management and reporting, property and asset management and tenancy management with which all registered AHBs are now required to comply. The Approved Housing Body Regulator is required to submit for approval draft standards to the Minister for Housing within six months of the establishment of the Act to outline requirements in this regard, for example procedures to ensure control and oversight, requirements for financial and risk control and procedures for ensuring financial viability, and policies relating to the management of dwellings and communication with tenants.

With the significant public resources being invested in the AHB sector and organisational responsibilities growing exponentially, the idea of being too big to fail in the context of housing provision, cannot be contemplated. The challenge for AHBs to cater for housing needs and increasingly fill the LA void is a conferral of significant responsibility which must be carefully monitored and held to account.

A sample of inspections carried out by Inspex in 2020 on AHB owned and managed properties show that after first inspection, 99.5% of properties failed to comply with fire safety provisions, 72% failed to comply with structural provisions, 72% failed to comply with heating related provisions and just over 25% did not comply with ventilation requirements, per the Housing (Standards for Rented Houses) Regulations 2019.

These results demonstrate the importance of the LA proactive inspection programme and for the compliant and responsible landlords, large or small, to know that the non-compliant landlord, large or small, is detected through the system of regular inspection.

The role of independent inspection and verification of minimum standards in rented accommodation is as important as ever. The larger landlords, like any of the 520 registered AHBs in Ireland, focused on delivering housing at scale, should note that as stakes continue to rise so too do the systems to detect and uphold the necessary standards throughout the lifetime of each and every tenancy.

partnership in business agreement

Inspex Team Appointed

South Dublin County Council appointed the Inspex team in 2019 for the provision of housing inspections and support services to ensure properties available for letting in the South Dublin County Council administrative area are in compliance with the Housing Standards Regulations 2019.

Local authorities play a strategic role managing new and existing housing supply through a range of delivery mechanisms including the oversight of accommodation standards in the private rented sector (PRS).  Annually, the Department of Housing Local Government & Heritage (DHLGH) requires that 25% of all registered tenancies with the Residential Tenancies Board (RTB), in the administrative area of all Local Authorities, are inspected to ensure compliance with the Housing (Standards for Rented Houses) Regulations 2019.  At end June 2020, the total number of private registered tenancies in the South Dublin County Council area was 16,677.

All privately rented properties must comply with the Housing (Standards for Rented Houses) Regulations 2019. The current minimum standards for rented accommodation specify the requirements in relation to a range of matters including structural repair, sanitary facilities, heating, ventilation, lighting, fire safety as well as the safety of gas and electrical supply.

Together with Inspex, South Dublin County inspected the largest amount of rented dwellings by any Local Authority in 2020.

As part of its agreement with South Dublin County Council, Inspex notifies landlords and or tenants of the requirement for a property to be inspected, inspects the rented property and determines whether the property complies with the minimum standards.

All landlords, including Approved Housing Bodies (AHBs), have a legal obligation to comply with the standards and must ensure their properties are fully compliant with fire safety and minimum standards regulations for rental properties.

Failure to comply with the minimum standards can result in penalties and prosecution. South Dublin County Council can issue Improvement Notices and Prohibition Notices to landlords who breach the minimum standards regulations.