Jan O’Sullivan seeks review of law for tenants under control of receivers

Under current laws receiver has right to demand rent, but no legal responsibilities to tenants, says Minister of State for Housing

Jan O’Sullivan: “At present, the
 situation isn’t entirely clear and it is the tenant who may be disadvantaged as a result”

Jan O’Sullivan: “At present, the at situation isn’t entirely clear and it is the tenant who may be disadvantaged as a result”

Thu, Aug 15, 2013, 22:36

Receivers who take over rented housing could be forced to accept the full duty of landlords under legislation being considered by Minister of State for Housing Jan O’Sullivan.

Tenants whose homes have gone into receivership because of their landlord’s failure to pay mortgage debts are legally obliged to pay their rent to the receiver. However the receiver is not required to take on the responsibilities of a landlord.

Ms O’Sullivan said she wanted to review the legislation with a view to giving greater certainty and security to tenants who felt “caught” between their landlord and a receiver appointed by the bank.

A guide for residential tenants published this week by the Irish Banking Federation sets out the legal position whereby tenants contacted by a receiver must stop paying rent to their landlord and instead pay the receiver. However the guide states that all the landlord’s obligations remain the responsibility of the landlord. “In general, neither the bank not the receiver take over the landlord’s obligations to you.”

The receiver has no legal duty to carry out repairs to the property, no matter how long it may be under their control, and is not obliged to return a deposit to the tenant once a lease is ended.

Ms O’Sullivan said that while she welcomed the publication of the guide, the legal situation which could disadvantage tenants must be reviewed. “At the heart of the issue is whether a receiver appointed to a property takes on the responsibilities of the landlord or is the receiver solely concerned with recovering value from the asset.

“At present, that situation isn’t entirely clear and it is the tenant who may be disadvantaged as a result. Therefore I want to explore the possibilities for making legislative changes in order to ensure clarity and certainty for tenants.”

The increasing prominence of receivers in the property market had brought to light the deficiencies in legislation. There was a need to consider the interests of tenants who would not be accustomed to dealing with receivers, Ms O’Sullivan said.

“The numbers of receivers appointed to rental properties is increasing and this can be a very confusing time for tenants who often feel caught between their established landlord and the newly appointed receiver. For most tenants this is an entirely new situation and it is incumbent on all involved in this process to give tenants certainty and clarity. ”

Housing rights charity Threshold welcomed the Minister’s commitment to review the law and said new legislation was essential. “Threshold is dealing with 10 new cases per week where receivers have been appointed and tenants are caught in the crossfire between receiver and landlord,” chief executive Bob Jordan said.

With 29,000 buy-to-let mortgages in arrears of 90 days or more, the potential scale of the problem was very large, Mr Jordan said. “We absolutely believe the law has to be changed. We can’t have a situation where a receiver is getting rent but is refusing to carry out repairs. We need to ensure the receiver steps into the shoes of the landlord in all respects.”

The Minister had a “perfect opportunity” to make the necessary changes he said, as a Bill amending the 2004 Residential Tenancy Act was before the Dáil. The Bill already promised to set up a deposit protection scheme so that neither a landlord nor a receiver could withhold a tenant’s money, he said.