Which tenants can I make pay a 4 per cent rent increase?
Your property questions answered
Currently, I have three tenants each with their own bedroom and separate tenancy agreement; let’s say their names are Joe (a), Brian (b) and Mary (c). Each of these three current tenancies is of one year’s duration. Joe’s first tenancy commenced on August 1st, 2013, and has been renewed annually since then. Both Brian’s and Mary’s first tenancy commenced on August 1st, 2016 .
There has been no rent review/or increase levied, except for a 10 per cent increase on August 1st, 2015, on any of the residents at that date.
On that date I levied the 10 per cent increase in respect of Joe’s tenancy. A similar rent increase of 10 per cent was levied on the same date in respect of the two other tenancies in existence at the time. There have been no further rent increases over this period. The current rents are substantially below the market rates for the Booterstown/Blackrock area .
My question is, on which current tenants, or their successors, can I levy a 4 per cent or other levy on August 1st, 2017, renewal date ?
This is an interesting question in light of legislation introduced on December 24th, 2016, and the nature of tenancies in your property. It would be normal that when there are three tenants occupying a single apartment or house that the tenancy is on a “Joint and Several” basis.
Joint and several means that each of the tenants are individually and collectively responsible for the entire property to include rent payments and means that if a single occupier moves out the remaining tenants are responsible for the full rent payments and need the landlord’s consent for an additional occupier to be added to the tenancy.
Your situation is different as you state there are three separate tenancies, each for a one-year period and renting their own room. While this raises questions over responsibilities for those parts of the property that are shared, we will deal with the tenancies and rent review entitlements in the question.
While Joe may be renewing on a year to year basis, he is nevertheless entitled to rights to renew under the Residential Tenancies Act 2004 as amended in 2015 and 2016. These rights entitle tenants to security of tenure for a four-year period following their initial occupation of over six months, the period of four years has now been increased to six years upon the expiry of any existing four year cycle or on the creation of a new tenancy (following an initial period of six months). Once a tenant has been in occupation for more than six months, landlords are not entitled to serve notice without a valid reason and without giving the required notice period. Further details are available on rtb.ie.
The frequency of rent reviews and the level of rent increase are controlled by recent legislation. Under new requirements tenants must be given 90 days notice before the revised rent is due to take effect. Such a notice must contain a statement from the landlord that the rent is not greater than market rent having regard to the other terms of the tenancy and letting values of a similar size, type and character in a comparable location and detail three such comparable properties.
Recent legislation also introduced rent caps for properties within Rent Pressure Zones which restricts increases to 4 per cent per annum. Rent pressure zones include all of Dublin, much of Cork, Galway and Leinster regions. As your property is located in a rent pressure zone, you cannot increase the rent by greater than 4 per cent per annum. However, for rents fixed since 2015 no rent increase can be sought until the expiry of 24 months.
As you have three separate tenancies, Joe’s rent can be increased by 4 per cent following the expiry of 24 months, ie August 1st, 2017, while Brian and Mary’s rent cannot be increased until their 24 month period has expired. Following the expiry of each of the 24 month periods, rent can increase annually by 4 per cent.
In the event that one of the tenants moves out after giving their required notice, you are then allowed to increase the rent for the new tenant proportionate to the date the last rent was set at an annual percentage increase of 4 per cent. In the event that Brian moves out and a new tenant moves in on April 1st, 2017, you are entitled to an increase of 8/12 x 4per cent as it is eight months following the date the last rent was set.
The residential tenancies board has a Rent Pressure Zone Calculator on their website which is very helpful for calculating increases and provides information as to whether landlords are entitled to seek an increase.
Paul Mooney is a Chartered Property Manager and member of the Society of Chartered Surveyors Ireland, scsi.ie