The Rent Pressure Zone legislation in Ireland has created unintended consequences for landlords seeking to let their properties at a fair market rate. The legislation restricts landlords from increasing rents by more than 4% in designated zones, once the initial rent cap has been set.
The legislation has created issues for landlords, particularly in areas with high demand for rental properties, such as in Rathmines. A reader who recently purchased a one-bed apartment in the area questioned whether they could bypass these restrictions if they let the property to a family friend on a casual agreement without registering with the Residential Tenancies Board (RTB) and registering a rent cap.
While the reader’s suggestion may seem like a viable solution, there are associated risks with renting without registering with the RTB. All landlords must register their residential property rentals with the RTB and do not have the option to opt-out of doing so. By circumventing the registration requirements, landlords may risk being exposed to penalties for not registering with the RTB in addition to risking further legal disputes or questions about the legality of the rental.
Additionally, there is potential for a range of issues to arise in the case of renting to a friend, particularly if business interests are not treated separately. In this case, the landlord has a financial investment by letting out their property. If any issues arise with the property or the tenants, it may present difficulties in the relationship between the landlord and friend. Given that rental agreements are legally binding, there may also be a need for both parties to seek legal counsel in disputes between renters and landlords.
In light of these risks, it is best to work within the framework of the Rent Pressure Zone legislation and comply with the RTB’s registration requirements. Furthermore, it is advisable to seek advice from a reputable agent who has knowledge and experience of current market challenges in the particular area. A qualified agent can secure a tenant who will pay the market rent.
The Rent Pressure Zone legislation has brought greater protection to tenants, yet it has created legal and financial challenges for landlords. By working closely with rental agencies, landlords can navigate the complex sector while still achieving a fair market rate.
It is notable that Rent Pressure Zones, which were introduced to counter rising rents in areas with a high demand for rental properties, are causing severe problems for landlords trying to let their properties at market rates. For instance, rents in Rathmines are capped at €1,500, a price that may be lower than the market rate, and landlords are unable to adjust the rent in line with inflation or fees associated with maintaining their properties.
A landlord’s financial security may come under threat if they cannot increase the rent in step with fees associated with maintaining the property. As a result, it is essential to comply with Rent Pressure Zone legislation to avoid financial risk and maintain a legal footing with relevant authorities.
The legislation may well be revised or removed altogether in light of the legal and regulatory challenges that it presents for landlords. Until then, landlords’ best course of action is to seek the advice of experts while complying with RTB registration requirements.
