Rental body gets teeth – but are they sharp enough?

From criminalising struggling landlords to rooting out the cowboys, the new powers bestowed on the Residential Tenancies Board (RTB) have provoked starkly different reactions from those on either side of the rental crisis – but will they solve anything?

The board, which is the body charged with resolving disputes between landlords, tenants and third parties, will soon be able to proactively investigate suspected breaches in the rental laws rather than having to wait for tenants to make complaints.

What’s more, landlords who illegally increase rents will stand to be criminalised. Notice periods for tenants will also increase, although this will vary depending on the length of time a tenant has let the property.

All of these changes have been welcomed by Lorcan Sirr, a housing lecturer with Dublin Institute of Technology, who says tenants have up to now been afraid to make complaints for fear of being served with a notice for termination.

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However, Sirr also believes “the thing that’s really missing” is a deposit protection scheme. “It’s always one of the top three disputes between landlords and tenants,” he says. “We have a scheme ready to go, and it needs to be implemented.”

While Sirr doesn’t accept that landlords are “fleeing the market”, he does believe they are taxed unfairly. “They’re competing with funds that have different tax structures and get away with paying little or no tax, as against the small landlord,” he says.

Criticism

That being said, he doesn’t accept the criticism of Government interference in the market. “The aim is to professionalise the market and get rid of the cowboys,” he says. “Serious investors and landlords don’t mind regulations because they bring professionalism to the market. There is still a rogue element that needs sorting out.”

It's bash the landlord, but don't do anything at any point to promote their involvement in the sector

John Leahy, the founder of irishlandlord.com and author of the book Renting in Ireland, says landlords are frustrated with the constant flux in the regulations governing the sector.

“We have this constant barrage of kneejerk political reactions to things,” he says. “The vast majority of landlords are one-property landlords. They have day jobs. This constant barrage of rules and regulations is scaring people out of the market.

“Landlords feel they are getting the brunt of the blame for a dysfunctional market. This bill does nothing to support landlords. There have been constant calls from independent experts to reform the taxation of rental income. But nothing is being done on that.

“Landlords see this as a one-way street. It’s bash the landlord but don’t do anything at any point to promote their involvement in the sector.”

Leahy acknowledges that rents are at all-time high, but also points out that turnover does not equal profit. “The net take for the average landlord with a mortgage is at an all-time low,” he says.

“That’s because of the changes in taxation during the recession, and also the number of items that you’re not allowed offset as an expense. It’s also forgotten that there is a vast number of landlords who are still in mortgage arrears.

Any landlord that is currently letting and has kept their rent low has been penalised. They are restricted now to the formula under the Act

“The biggest issue in the rental market at the moment is the non-payment of rents, rent arrears, and over holding. That’s the biggest category of case that the RTB deals with, yet there is nothing in this Bill to address that.”

In terms of the criminalisation of landlords who break the rules, he believes it is “emotive” and fears for those who might not fully understand the legislation. “They’ll hear a headline that there’s a proposal to criminalise landlords and decide to sell up.”

Complexity

Indeed, this view is echoed by Irish Property Owners’ Association spokeswoman Margaret McCormick who says the complexity of the legislation governing the sector is “a nightmare”.

“It is not balanced legislation,” she says. “It’s one-sided all the time. It isn’t fair. Any landlord that is currently letting and has kept their rent low has been penalised. They are restricted now to the formula under the Act.

“There’s no protection for landlords where rent is not being paid. If a property owner is not in receipt of rent, they have to keep the tenants in situ during the process, which is very unfair. They are also increasing the amount of time a tenant can stay in place.”

John Mark McCafferky, chief executive of Threshold, the national housing charity, isn’t unsympathetic to the view that small-scale landlords ought not be criminalised for genuine lapses in following the law.

“Making it a criminal offence to flout the act is welcome,” he says. “I’d be mindful of small landlords who aren’t completely au fait and need to get up to speed on it. We certainly don’t want a situation where a landlord unwittingly falls foul of the system.”

That being said, McCafferky believes a proposal to publish average rents in a given area – dubbed “rent transparency” – will help to prevent landlords hiking up rents above market rate. “This is something we’ve been seeking for some time,” he says.

However, he is also mindful of the danger of driving landlords out. “The tax code needs to be amended to reflect a more even playing field for small-scale landlords so they are treated in a way that keeps them in the rental sector, and attracts other landlords in.”