The Impact of the Residential Tenancies (Amendment) Act 2015 on Fixed Asset Receivers

The Residential Tenancies (Amendment) Act 2015 (the “2015 Act”) came into effect on 4 December 2015 in the midst of much controversy and concern about the state of the Irish residential rental market. As the Government came under increasing pressure to address the shortage of residential accommodation and provide additional protection for tenants, the 2015 Act was introduced as a first step in dealing with the challenges faced by the sector. While the introduction of improved rights for tenants is to be welcomed, the legislation has, at the same time, resulted in increased costs, burdens and responsibilities for landlords. In particular the position of a receiver appointed by secured lenders has become increasingly onerous in respect of carrying out their duties required under their appointment.

Sufficient time has now passed to allow the various stakeholders in the residential rental market to assess and understand how the 2015 Act will work. What does the 2015 Act mean for receivers at a practical level?

Rent Reviews

One of the most fundamental changes introduced by the 2015 Act is the restriction on a landlord to carry out rent reviews. A landlord is not permitted to charge more than the market rate and rents may only be reviewed once every 24 months. This is a temporary restriction in that it applies only up until 3 December 2019, when rent reviews may revert to once every 12 months. Furthermore, the notice period to which a tenant is entitled before a new rent can take effect has been increased from 28 days to 90 days. A landlord is required to provide evidence which justifies the increase with regard to the local market rent and to inform tenants that they are entitled to challenge this increase.

Notice Periods

Receivers appointed over a property subject to a tenancy seeking to obtain vacant possession will be particularly interested in the increased notice periods set out in the 2015 Act.

For tenancies of 5 years or longer, the 2015 Act has increased the notice that landlords must give as follows:

Duration of Tenancy

Notice Period

5 years or more but less than 6 years

140 Days

6 years or more but less than 7 years

168 days

7 years or more but less than 8 years

196 days

8 or more years

224 days

The 2015 Act provides for exceptions to the above periods. Where the tenant has engaged in anti-social behaviour, the notice period is reduced to 7 days. Also, where the tenant has not paid rent, the landlord may terminate the tenancy, following the service of notice on the tenant advising that the rent is due. Once 14 days have elapsed without the arrears being paid, the tenancy may be terminated.

Venue for Enforcing Determination Orders

It should be noted that there are new provisions dealing with the resolution of disputes arising in connection with the terminations of tenancies. When a PRTB determination order has been breached, applications should now be made to the District Court instead of the Circuit Court in a move aimed at reducing the time and costs involved in resolving disputes. The change of court venue may create an element of uncertainty for receivers, who may have become used to the approach taken by Circuit Court judges in previous years.

Grounds of Termination

Additional proofs are now required when a landlord is seeking to terminate “Part IV” tenancies. In particular, where a landlord is seeking to recover vacant possession on the ground that the asset is being sold within 3 months, a statutory declaration must now accompany the notice of termination. Particular care should be taken when serving such notice to ensure that the correct procedures are followed. The Residential Tenancies Board (“RTB”) will scrutinise such notices should they be referred to the RTB.

Conclusion

The 2015 Act has significantly added to the burdens of receivers appointed to realise a secured asset in line with their statutory and contractual duties by requiring more onerous proofs when terminating tenancies and increasing tenants’ rights by placing restrictions on the frequency of rent reviews.

Receivers will need to be increasingly cognisant of the rights of tenants and how these rights impact their ability to deal with a property.