Property Law Update: 2015 Review
14 January 2016
2015 was another buoyant year for the Irish property market across both the residential and commercial sectors. The legislature has also been busy with a significant number of new and important property related enactments in 2015.
Key topics in 2015 included:
2015 has seen continued growth in the Irish economy and the introduction of a number of significant pieces of legislation designed by the Government to address the housing supply shortage.
The Urban Regeneration and Housing Act 2015 introduced a vacant sites levy and made changes to social and affordable housing requirements and development contributions. The hope is that owners of vacant sites will either develop or sell to developers.
The Planning and Development (Amendment) Act 2015 introduces a number of changes to planning legislation, in particular, to strategic development zone planning scheme procedures. It will also enable the uniform application by local authorities of the new apartment standard guidelines which have just been published by the Minister for the Environment. Among other things, the guidelines propose a reduction in the minimum size of apartments.
2015 also saw the enactment of the Residential Tenancies (Amendment) Act 2015 which implements changes to existing residential tenancy rules.
The main aim of the legislation is to stabilise the rent increases in the residential sector. Rent may now only be reviewed once every two years and cannot be reviewed within the first two years of a tenancy.
Where a tenant has been in continuous occupation of a property for longer than six months, the Act increases termination periods for longer term residential tenancies offering greater security for tenants occupying property for longer periods.
The law also provides for security deposits to be paid over by landlords to the Residential Tenancies Board but these provisions have not yet come into force.
Improving economic conditions have resulted in increases in market rents across multiple sectors. We are seeing a return to longer term leases with an increase in landlord bargaining power in lease negotiations.
Rent review clauses and their operation are of equal interest and importance to landlords and tenants approaching rent reviews in existing leases.
2015 has been a particularly interesting year and a relevant time to consider commercial lease rent reviews. Five years have now passed since the legislative ban on upward only rent review clauses in new leases. Some rent reviews are now due.
Both landlords and tenants should carefully examine each and every clause of the rent review provisions.
Important considerations include – the timing of the rent review, how the rent review is activated, how the new rent is determined, what happens if agreement cannot be reached between the parties, what the relevant factors are in determining the new rent and what the interim position is pending determination of the new rent.
Parties should take timely legal advice and arm themselves with knowledge of their respective legal positions pursuant to rent review provisions. This will enable the parties to engage strategically with one another in negotiations on rent review.
It remains to be seen whether the legislation designed by the Government to address the housing supply shortage and stabilise the private residential rental sector will yield the results intended.
Commercial landlord and tenant law also has an interesting future ahead in that the existing law is due to be consolidated and reformed in the next few years.
For more information, please contact a member of our Real Estate team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.