I am trying to get some clarity regarding the new rental rules from next March and how they might affect elderly people who entered into a Fair Deal contract and who have rented their principal private residence to help pay for their own care.
The Fair Deal contract says their estate/executors must pay off the loan within a year of their death. This is currently a reasonable amount of time, if probate isn’t complicated, because any tenant-in-situ can get very long notice before the house is sold.
But what will happen if a new tenant moves into a Fair Deal resident’s private home after March 2026 and then the Fair Deal resident passes away? The new rules will allow a tenant to stay for six years, but is this still the case if the owner has died?
My mother’s home is in the Fair Deal and has been rented for two years. The previous tenants moved out, so we have repainted etc and are about to re-rent. We need to put it up for rent because we have to find €2,400 per month to pay for the nursing home, but we are very nervous about this.
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Since the property is a principal private home and was never intended as an investment property, will Fair Deal nursing-home residents be forced to stay on as “landlords” after their own death? Or will their executors be forced to be landlords?
Or will it force a sale with sitting tenants, which can only be to investors and landlords and not to people wanting to occupy as their own family home? Or will a buyer who wants a private home be forced to become landlords until they can get vacant possession?
I recently wrote to Minister for Housing James Browne about this, but have heard nothing back.
Ms G.B.
New rent rules are coming all right, though there seems to be some concern in the property sector whether they will be ready for the start of March, as flagged.
Among the complications is precisely the scenario you outline.
To be fair to the Minister who has yet to get back to you, the Department of Housing tells me a “pre-legislative scrutiny report” – produced by the members of the Oireachtas Joint Committee on Housing, Local Government and Heritage after a public examination of upcoming legislation – has only been sent to the Department of Housing in the past week.
This report feeds into the final wording of the legislation at the Department’s discretion so, until now, we don’t have that final wording.
The Department tells me the actual wording of the legislation governing the new rent controls – the General Scheme of the Residential Tenancies (Amendment) (No. 2) Bill 2025 – is currently in the priority listing for drafting.
It would be a foolish minister that would make commitments in writing before they even knew the precise parameters (and exemptions) in the legislation.
So what do we know?
Well, the legislation will cover three areas: how rent increases are undertaken; a tenant’s security of tenure; and how tenancies can be brought to an end. We’re not going to spend time here on the issue of rent controls because it is not relevant to you.
What is certain is that while tenants will have the right to six-year rolling contracts, there will be very different rules applying to small landlords – such as your mother or, following her death, her executors – and large landlords.
The issue of people in Fair Deal renting their homes has only been a recent feature. Originally, if the home of the person in care was rented, 80 per cent of the income would go towards the Fair Deal contribution. That meant it made no sense for people in nursing home care to consider such a move given the inevitable complications and administration.
The housing crisis focused government minds. Over 30,000 people use Fair Deal to subsidise the cost of their care. If even half of these, mostly elderly, people live alone, there would be around 15,000 homes lying vacant across the State in the midst of a housing crisis. That made no sense.
In almost all cases, as people do not have the ready cash to meet the charge on the home, the charge becomes a Fair Deal loan secured against the property
So the government of the day eased the rules. Back in November 2022, it was decided that homeowners would only have to contribute 40 per cent of rental income to Fair Deal costs – half of the standard amount under Fair Deal income rules. From February 2024, all rent on the home of a Fair Deal nursing-home resident was exempt from Fair Deal assessment – though not from taxation.
The incoming rules for the rented sector will consider anyone with three or fewer tenancies to be a small landlord, so it will certainly include anyone in your mother’s position who is simply renting out their own home.
And how does that favour her? Essentially, the rules are more forgiving for smaller landlords.
Let’s look at two scenarios – ending a tenancy during the six-year security of tenure and ending a tenancy when that six years has come to an end.
Larger landlords will only be able to end a tenancy mid-contract if tenants are not meeting their obligations – for instance, not paying their rent – or if the property is no longer suitable, perhaps because the tenant’s family is growing in number or they require an accessible property because of disability. That’s it.
Those same criteria apply to smaller landlords but they can cut a tenancy short if they, the landlord, need the property for themselves or an immediate family member – such as a child or a parent – to live in.
Crucially in your case, they can also end a tenancy agreement within the six years if they are facing financial hardship requiring sale of the property.
Among the reasons for this are things like separation, homelessness, bankruptcy or because they are returning to Ireland from abroad. Now, in their discussion with me, the Department did not confirm specifically that the death of a landlord in Fair Deal would qualify, but they did say: “The matter raised in your question is being considered during the legal drafting process.”
The way Fair Deal works – apart from taking 80 per cent of your income – is that it levies an annual charge of 7.5 per cent against the value of any assets you own, including the family home. In the case of the family home, that charge is capped at three years, or 22.5 per cent of its value.
In almost all cases, as people do not have the ready cash to meet the charge on the home, the charge becomes a Fair Deal loan secured against the property.
I would be surprised if the death of a landlord in Fair Deal and the consequent requirement to repay the amount – up to 22.5 per cent of the value of the home – due under Fair Deal within a year of the death did not qualify as an exemption under the financial hardship rule. This will be clear when we see the final legislation.
Once you go beyond the one-year deadline, Revenue applies interest – backdated to the date of death – on outstanding money owed under a Fair Deal loan at a rate of interest which is currently 0.0219 per cent per day, or 8.32 per cent annually.
So if your mum’s home was valued at the national median (€381,000), she had been in Fair Deal for three or more years and the six-year tenancy was only signed seven months before she died, her estate would face an interest bill of €44,380 if they were obliged to see out the six year tenancy term on top of the original €81,915 Fair Deal loan balance.
If her home was in Dublin, where the median home is worth €475,000, the interest bill would be higher, at almost €55,330. And if she lives in Dún Laoghaire-Rathdown – the most expensive end of the State – her estate would owe more than €78,600 in interest alone.
I cannot see how the legislation would not deem such a situation “financial hardship”, so I do expect provision will be made in the Bill. I do not foresee executors being forced into being landlords or being restricted only to selling the house with tenants in situ.
Ultimately, however, we will have to wait until the Bill is published, which the Department assures me will be “as soon as possible”.
It is worth noting that if you rent out your mother’s home again before March 1st, the new rules will not apply. They only come into force on that date – and that might yet be forced back if the legislation is delayed much further as it still has to get through the Oireachtas.
I did say we’d also look at what happens at the end of the six-year period. At that point, small landlords can ask a tenant to leave if they are selling the property, substantially refurbishing it, changing its use or accommodating a family member there.
Those options are not available to large landlords.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dominic.coyle@irishtimes.com with a contact phone number. This column is a reader service and is not intended to replace professional advice.
