Giving tenants first refusal to purchase could worsen rental property shortage, committee hears

Giving tenants a right of first refusal when the property they are renting is put forward for sale could “end up worsening the already-severe shortage” of rental properties in the market, landlords have told politicians.

On Tuesday, the joint Oireachtas committee on housing conducted pre-legislative scrutiny of the Residential Tenancies (Right to Purchase) Bill 2023, under which landlords selling a property will be obliged to first offer it to the tenant on the basis of an independent valuation.

Under the rules of the proposed new legislation, once a notice termination is served signalling the landlord’s intention to sell, the landlord must simultaneously invite their tenant to make a bid to purchase the property. The tenant will then have a period of 90 days to make one or more bids.

After the 90-day period, the landlord will be obliged to invite a further bid from the tenant if the sales prices agreed with a third party on the open market “is lower than or equal to the tenant’s highest unsuccessful bid made during the initial 90-day period”.

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Speaking at the meeting of the Oireachtas committee, the Irish Property Owners’ Association (IPOA) said the issue facing the rental market is “lack of supply”, with investors assisting the State in their “obligation to house people by providing homes in rental accommodation”.

“Without investors willing to purchase, there is no private rental market. This legislation could end-up worsening the already-severe shortage of housing units faced by the rental market in Ireland,” Maurice Deverell, a committee member of the IPOA, said.

“Landlords will be discouraged from investing in rental properties if their ability to freely sell them is restricted. This, in turn, could further diminish the available rental supply, exacerbating the current housing crisis.

“This legislation could also lead to unintended consequences which could make the process of selling a rental more difficult, in the case of default by the mortgagee. The risk to the financial institution is increased which is likely to increase the interest rate.”

At the same meeting, the Institute of Professional Auctioneers and Valuers (Ipav) said the legislation is “unnecessary since what it seeks to provide is already happening in the market”.

[ Give Me a Crash Course in . . . tenants being offered new ‘right to purchase’ when landlord is selling ]

“Instead the legislation is likely to encourage the further flight of private landlords from the market,” the body said.

“It would have the effect of further diminishing the rights of property owners, making investment in rental property a far less attractive proposition than it has already become because of excessive and unbalanced regulation between owners and tenants,” Pat Davitt, chief executive of Ipav said.

Ann Marie O’Reilly, of Threshold renters’ charity, said the organisation is “largely supportive” of the right of first refusal, which could prevent individuals and families from facing homelessness.

However, the charity said it has “serious” concerns around wording in the Bill about the transfer of property which, she said, could potentially provide another avenue for landlords to evict tenants.

The committee will meet again on Thursday for further scrutiny of the Bill to hear contributions from officials in the Department of Housing, Local Government and Heritage and representatives from the First Home Scheme and Housing Agency.

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