Tenants may have statutory right to long leases

Tenants living in rented apartments and houses for six months are to be given a statutory right to renew their lease for up to four years if the Government endorses a new report on the rented property sector.

The security of tenure for tenants is the main recommendation made by the Commission on the Private Rented Residential Sector, which has spent almost 12 months studying the problems facing both tenants and landlords.

The report, which has been seen by The Irish Times, rules out rent control because of the likelihood that it would lead to a reduction in the number of residential units available and would ultimately be to the detriment of tenants. The commission found that existing rent yields are low because investors expect significant returns from capital gains.

The Government has yet to indicate how many of the commission's recommendations will be included in legislation to be introduced later this year. However, it is thought likely that it will want to give tenants a greater measure of security of tenure at a time when rents have risen sharply because of a shortfall in the supply of apartments, particularly in Dublin city centre.

The commission said a majority of its 18 members took the view that the recently introduced 9 per cent rate of stamp duty on residential investments, following the second report by Dr Peter Bacon, "is likely to be a deterrent to investment in the provision of rented accommodation and will lead to higher rents". It suggested the Government reconsider this measure, which it may be reluctant to do as long as the housing crisis remains on the agenda. The commission has suggested that once a tenant is entitled to a remain for up to four years from the start of the tenancy, rents should not be reviewed more than once a year. For existing tenants in rented accommodation, the initial six-month period would begin after the Government enacts the legislation.

Under the proposals, a landlord could terminate a tenancy during the first six months by giving 28 days' notice. A landlord would also have the option of cancelling a lease where the tenant had not paid the rent, had not looked after the property in a proper manner or had been guilty of anti-social behaviour. Landlords would be able to terminate tenancies if they wanted to sell or substantially renovate a property, change its business use or needed it for their own or family use.

Tenants would have the right to cancel a lease on the grounds that the landlord had not complied with obligations.

The report has recommended the establishment of a statutory body, to be known as the Private Residential Tenancies Board, to deal with disputes between tenants and landlords. It also suggests that landlords should be obliged to register all rental properties and tenancies with the board.

To encourage more investment in rental properties, the commission proposes that those renting accommodation should be treated for tax purposes in the same way as any other business. However, it says it may be appropriate to restrict the application of this principle to "identified categories of housing needs" - presumably tenants on low incomes. It says targeted tax incentives are required to stimulate increased investment in the rented sector.

It recommends a number of measures tailored specifically to attract corporate investment such as securitisation - allowing private investors to take a stake in investment funds.

The commission, chaired by Mr Tom Dunne of Dublin Institute of Technology, was told that according to the 1997 labour force survey, 264,000 people or almost 131,600 households were in rented accommodation. The figure has increased substantially since then.