I rent out a property for €1,400 a month. The open-market rent would be about €2,300. I have a good relationship with the tenants, and they are not planning to move in the foreseeable future.
I am in the process of upgrading with renewables so the new Ber rating will be seven points higher, and therefore I could set the rent to market rent. I feel that they would react negatively if I put the rent up to €2,300, but I think it’s the only option.
I was considering leaving the rent at €1,400 until they move out and asking them to pay €150 month cash for the free electricity they will have. If I leave the rent at €1,400 while they remain, can I set it to market value in the future, when they eventually move, maybe in a few years’ time?
Your question is a good one. Like many landlords you have obviously been caught out by the introduction of the rental pressure zones (RPZ) rules, which apply when initially setting a rent or with current tenancies when issuing a rent increase notice.
An RPZ is a designated area where rent increases are capped. Rents in a RPZ cannot be increased by more than 2 per cent a year or if it is lower, by the increase in the rate of inflation as recorded by the Harmonised Index of the Consumer Prices. This restriction applies to new and existing tenancies in RPZs unless an exemption applies.
The good news is that the Residential Tenancies Board provides an RPZ calculator to allow landlords and agents set the correct rent.
You state that you are in the process of upgrading with renewables, and that the new Ber rating will be seven points higher. I can only assume that you are doing this work while the tenants are still living in the property. This would be unusual and, as a Ber assessor myself, I know that the work that needs to be done will create an extremely dusty environment and intrude on day-to-day living. However, I will base my answer on the fact the tenants are still in situ as there is no mention of you having issued a termination of tenancy to carry out substantial works.
In your case, I can see that you are looking to rely on the exception for the property whereby it has undergone a “substantial change in the nature of the accommodation”. Namely, in the case of a dwelling to which the European Union (Energy Performance of Buildings) Regulations 2012 (SI no 243 of 2012) apply, the works result in the Ber being improved by at least seven building energy ratings.
Therefore, you need to set the rent now to the new rent, making use of the exception allowed to you under the law by issuing the appropriate rent increase notice. In the RTB notice of rent review, it will have three categories that one can rely on for the exception and you will naturally tick the one for building energy rating.
If a landlord relies on one of the exemptions, then the landlord must also serve an RPZ Notification of Exemption form to the RTB along with supporting documents within one month of this notice being served. Finally, I understand that you have a good relationship with your tenants, but you have no other choice in real terms. The idea of taking €150 cash for the free electricity, which I think you mean are the savings the tenants will have with the much better Ber, is not a good idea. You should do everything by the book, otherwise it will probably come back to bite you in the future.
Marcus O’Connor is a chartered surveyor and member of the Society of Chartered Surveyors Ireland
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