You might want to clarify the bit re a landlords ability to reset the rent to the market rent Michael. This will only apply to new tenancies created after Mar 1st 2026 so the current 200,000 odd tenancies are not impacted by this change until a tenant leaves of their own volition. Given the significant number of under rented tenancies in place the likelihood of tenants leaving of their own volition will decrease significantly now with the reduced rents now effectively acting as golden handcuffs which will restrict movement even more.
Thanks for your comment Paul, that is very true. At the moment the average tenancy is about three years which would mean a large proportion of properties would fall under the new regime within the next five years. But as you say the reforms might lead to tenants remaining longer.
Always good to identify the meaning of your acronyms. Most in an Irish audience might understand the PRS refers to "Private Rented Sector," but some might not.
The PRS is messy in reality. Tom & Rory rent a 2 bed apartment in March 2026. Rory moves out 3 years later as he got a job in another city and Conor moves in. Presumably the landlord can still evict Tom or increase his rent in March 2032. But what about Conor - is his eviction/rent increase date based on Tom's move in date or based on his own? If the landlord wants vacant possession to sell being able evict Tom alone in 2032 is not much use to him.
Especially if you have a 3 or 4 bed house, over a six year period you're likely to have tenants coming and going. How does the 6 year rule work in these circumstances?
My understanding is that in the above example the tenancy commenced in March 2026. When Conor moved it he joined an existing tenancy. This tenancy would then expire, so to speak, in 2032. Having said that, I'd have to ask Threshold as they seem to be the only people in the country have a full grasp of these intricacies. I'll mention to one of them next time I get a chance.
Thanks Mick. A bit unfair on Conor though - he gets kicked out or gets a rent increase after 3 years. What if he took over from Tom 9 months before the 6th anniversary?
A further, rather long point (my apologies!)
While this is not my area (I am a former practitioner and currently an academic specialising in insolvency law), I really fear that what insolvency law calls ‘perverse incentives’ are being created here as tenant in situ sales will be increasingly unavoidable for landlords.
Take the following example:
1. Two town houses side by side both in the same condition
2. One has a low-income family in situ
3. The second has a doctor and an engineer in situ
Which will command the higher sale price for a tenant in situ sale? The latter obviously. Conversely, it may even command a premium to vacant possession if a year 6 rent review is in train. The tenants will be able to bear a substantial increase.
The low-income family is a bad bet from the investor’s standpoint. They will not be able to bear a significant increase. They could be evicted, of course, if they can’t pay the new rent, but that is costly, expensive and risky (the RTB may have a different view to the landlord as to what market rent is). Also, the landlord will bear more costs here as white goods will require more frequent replacement etc. They are unlikely to leave of their own accord. So, while the landlords’ association are cherry-picking, they are probably correct about the 40% discount where you have a low-income family as a tenant, especially if a large landlord is involved as the tenancy will be permanent.
Likewise, if I understand these rules correctly (insolvency law is less complex at this stage), a low-income family under a current lease can be evicted to sell but their rent cannot ever increase beyond what it was in 2016 plus the annual HICP/2% increase. The landlord is therefore incentivised to evict and sell as his or her costs will increase in real terms while the rent will not. However, because of the issue outlined above, the family are highly unlikely to find a new tenancy. The landlords will only be interested in engineers and doctors!
In summary, and apologies for the length of this, the new rules are incentivising evictions on the one hand for low-income tenants, but they are not incentivising new tenancies for these renters.
You might want to clarify the bit re a landlords ability to reset the rent to the market rent Michael. This will only apply to new tenancies created after Mar 1st 2026 so the current 200,000 odd tenancies are not impacted by this change until a tenant leaves of their own volition. Given the significant number of under rented tenancies in place the likelihood of tenants leaving of their own volition will decrease significantly now with the reduced rents now effectively acting as golden handcuffs which will restrict movement even more.
Thanks for your comment Paul, that is very true. At the moment the average tenancy is about three years which would mean a large proportion of properties would fall under the new regime within the next five years. But as you say the reforms might lead to tenants remaining longer.
Always good to identify the meaning of your acronyms. Most in an Irish audience might understand the PRS refers to "Private Rented Sector," but some might not.
Thanks for your comment John
The PRS is messy in reality. Tom & Rory rent a 2 bed apartment in March 2026. Rory moves out 3 years later as he got a job in another city and Conor moves in. Presumably the landlord can still evict Tom or increase his rent in March 2032. But what about Conor - is his eviction/rent increase date based on Tom's move in date or based on his own? If the landlord wants vacant possession to sell being able evict Tom alone in 2032 is not much use to him.
Especially if you have a 3 or 4 bed house, over a six year period you're likely to have tenants coming and going. How does the 6 year rule work in these circumstances?
My understanding is that in the above example the tenancy commenced in March 2026. When Conor moved it he joined an existing tenancy. This tenancy would then expire, so to speak, in 2032. Having said that, I'd have to ask Threshold as they seem to be the only people in the country have a full grasp of these intricacies. I'll mention to one of them next time I get a chance.
Thanks Mick. A bit unfair on Conor though - he gets kicked out or gets a rent increase after 3 years. What if he took over from Tom 9 months before the 6th anniversary?
A further, rather long point (my apologies!)
While this is not my area (I am a former practitioner and currently an academic specialising in insolvency law), I really fear that what insolvency law calls ‘perverse incentives’ are being created here as tenant in situ sales will be increasingly unavoidable for landlords.
Take the following example:
1. Two town houses side by side both in the same condition
2. One has a low-income family in situ
3. The second has a doctor and an engineer in situ
Which will command the higher sale price for a tenant in situ sale? The latter obviously. Conversely, it may even command a premium to vacant possession if a year 6 rent review is in train. The tenants will be able to bear a substantial increase.
The low-income family is a bad bet from the investor’s standpoint. They will not be able to bear a significant increase. They could be evicted, of course, if they can’t pay the new rent, but that is costly, expensive and risky (the RTB may have a different view to the landlord as to what market rent is). Also, the landlord will bear more costs here as white goods will require more frequent replacement etc. They are unlikely to leave of their own accord. So, while the landlords’ association are cherry-picking, they are probably correct about the 40% discount where you have a low-income family as a tenant, especially if a large landlord is involved as the tenancy will be permanent.
Likewise, if I understand these rules correctly (insolvency law is less complex at this stage), a low-income family under a current lease can be evicted to sell but their rent cannot ever increase beyond what it was in 2016 plus the annual HICP/2% increase. The landlord is therefore incentivised to evict and sell as his or her costs will increase in real terms while the rent will not. However, because of the issue outlined above, the family are highly unlikely to find a new tenancy. The landlords will only be interested in engineers and doctors!
In summary, and apologies for the length of this, the new rules are incentivising evictions on the one hand for low-income tenants, but they are not incentivising new tenancies for these renters.