Setting Rent and Rent Reviews in a RPZ

Overview

A Rent Pressure Zone (RPZ) is a designated area where rent increases are capped. Rents in a RPZ cannot be increased by more than 2% per annum pro rata or if it is lower, by the percentage change in the rate of inflation since the rent was last set. Inflation in this context is measured by the Harmonised Index of the Consumer Prices (HICP).   

The easiest way for a landlord to work out the permitted rent for a tenancy in a RPZ, is to use the Rent Pressure Zone Calculator.  

There are serious consequences for landlords who set rents in breach of the RPZ rent caps. It is an offence to do so and it also amounts to ‘improper conduct’. The RTB is empowered to prosecute landlords who commit offences under residential tenancies legislation or alternatively, may investigate and sanction landlords for engaging in improper conduct. 
 

How do I know if my Property is in a RPZ?

The Rent Pressure Zone Calculator can be used to identify if a property is in a RPZ, The Rent Pressure Zone Calculator can be found here. A full list of RPZs can also be found here.

Tenancies to Which RPZ Rules do not Apply

The RPZ rent caps do not apply to an Approved Housing Body or a Cost Rental tenancy or where an exemption applies.

The RPZ rent caps otherwise apply to all tenancies in RPZs, as well as licences of Student Specific Accommodation.

Setting Rent at the Start of a Tenancy in a RPZ

Setting rent

At the start of a tenancy in a RPZ, the landlord cannot set the rent at a rate that amounts to an increase of more than 2% per annum pro rata on the last rent set under the previous tenancy. However, if the rate of inflation as measured by HICP over the period since the last rent was set is lower than the 2% rate, the HICP percentage change is the rate that must be applied instead.

The easiest way for a landlord to work out the permitted rent for a tenancy in a RPZ, is to use the Rent Pressure Zone Calculator. The calculator explains how any permitted increase in rent is calculated.  

Summary of rent review process  

The following is a summary of the steps a landlord must take, when carrying out a rent review in a RPZ:

1. Check a rent review is permitted – rent reviews in RPZs can only occur once every 12 months
2. Calculate the new rent – this can be done using the RPZ Rent Review Calculator;
3. Complete a Notice of Rent Review and serve it on the tenant;
4. Give the tenant 90 days’ notice of the new rent (i.e. serve the Notice of Rent Review on the tenant at least 90 days before the rent is to have effect);
5. If the landlord relies on an exemption to the RPZ rules, serve an RPZ Exemption Form on the RTB within one month of serving the Notice of Rent Review on the tenant;
6. Inform the RTB of the new rent, within one month of it taking effect

Each of these steps are explained in detail below.

How Often Can I Carry out a Rent Review in a RPZ?

Frequency – once very 12 months

Rent in a RPZ can only be reviewed once every 12 months. This means that at least 12 months must have passed since the tenancy commencement date or since the date of service of the last valid Notice of Rent Review.

A rent review occurs when the Notice of Rent Review is served.

Exception

A rent review can be conducted more frequently than once every 12 months, where there has been a “substantial change in the nature of the accommodation” and the rent under the tenancy if it was set after that change, would be different to the market rent for the tenancy at the time of the last review. “Substantial change in the nature of the accommodation” is a defined term and specific criteria must be met. Details of the criteria that apply can be found below.

Notice of Rent Review

Required form and minimum notice

If a landlord wishes to review the rent, the landlord must serve a valid Notice of Rent Review on the tenant in the prescribed form. This form can be downloaded in the Download section below.

The tenant must be given a minimum of 90 days’ notice of the new rent, meaning the landlord must serve the Notice of Rent Review on the tenant at least 90 days before the date on which the new rent is to have effect. It is recommended that landlords give extra days’ notice to avoid any issues that may arise in the calculation of the minimum notice period.

The Notice of Rent Review form must be followed closely, and landlords should not deviate from the wording used in it, change the format of the notice, or delete information contained in it, as doing so could invalidate the Notice of Rent Review in full.

Permitted rent

The Notice of Rent Review must state the new rent and how it is calculated. A landlord is under no obligation to increase the rent. If a landlord wishes to do so, the rent increase permitted cannot be more than 2% per annum pro rata. However, if the rate of inflation as measured by HICP over the period since the last rent was set is lower than the 2% rate, the HICP percentage change is the rate that must be applied instead.

The Rent Pressure Zone Calculator is the easiest way for landlords to work out the permitted rent for a tenancy in a RPZ. It explains how any permitted increase in rent is calculated.  The Rent Pressure Zone Calculator also permits landlords to print off the calculations with a date and time stamp included.  It is recommended that landlords keep a record of the calculation print out from the Rent Pressure Zone Calculator in the event the tenant disputes the validity of the rent review.

It is also recommended that landlords confirm and verify their calculations for any rent increase on the same date that the Notice of Rent Review is served on the tenant. This is particularly important where the HICP rate applies, as calculations can vary from day-to-day in line with changes in HICP values. The RTB maintains and publishes a table of HICP values.

Comparable Dwellings

Where rent is being set pursuant to a rent review, examples of the rent sought for 3 comparable dwellings must be provided in the Notice of Rent Review. These 3 comparable dwellings must have been advertised in the last 4 weeks immediately preceding the date on which the Notice of Rent Review was served (see below).

The comparable dwellings chosen must be of a similar size, type and character as the dwelling subject to the rent review i.e. a one bedroom apartment cannot be compared to a 3 bedroom house.

The dwellings must also be in a similar area. If no comparable dwelling is in the immediate area where the rented dwelling is situated, the landlord can use a dwelling in a comparable area i.e. town to town, suburban to suburban or rural to rural. By way of example, a 3-bed property in one rural town can be compared with a 3-bed property in another rural town. 

For more information on comparable dwellings click here. 

Exemptions to the Rent Pressure Zone rental cap

Exemption

Not all rented properties in RPZs are subject to rent caps (i.e. the restriction on rent increases to 2% per annum pro rata or the rate of HICP inflation, whichever is lower). Properties that are exempt from RPZ rent caps are as follows:

1. A property that has not been rented for a period of two years prior to the immediate tenancy commencement date;
2. A property that is a protected or proposed protected structure and has not been rented for the period of 12 months prior to the immediate tenancy commencement date;
3. A property that has undergone a 'substantial change in the nature of the accommodation'. 

Substantial change

A 'substantial change in the nature of the accommodation’ is a defined term. A substantial change will only be deemed to have taken place if the works carried out to the dwelling concerned meet one of the following criteria as summarised below:  

(1) The works consist of a permanent extension to the dwelling that increases the floor area of the dwelling by the amount equal to not less than 25% of the floor area of the dwelling as it stood immediately before the commencement of those works,  

or  

(2) the works result in the Building Energy Rating (BER) being improved by not less than 7 building energy ratings, 

or 

(3) the works result in any 3 or more of the following:

• the internal layout of the dwelling being permanently altered; 
• the dwelling being adapted to provide for access and use by a person with a disability, within the meaning of the Disability Act 2005; 
• a permanent increase in the number of rooms in the dwelling;  
• in the case of a dwelling that has BER of D1 or lower, the BER being improved by not less than 3 building energy ratings; or 
• in the case of a dwelling that has a BER of C3 or higher, the BER being improved by not less than 2 building energy ratings. 

If the works above were carried out for the purposes of a landlord complying with his/her repair and maintenance obligations, the landlord cannot rely on those works for the purposes of the RPZ exemption.

Rate of rent if exemption applies

If an exemption to the RPZ rent caps applies, the landlord cannot set the rent at any rate. The rent set must not be above “market rent”. Click here for details of what “market rent” is.

Consequences of falsely relying on an exemption

It is an offence for a landlord to falsely rely on an exemption to the RPZ rent caps. The RTB is empowered to prosecute landlords who commit this offence. You can find out more information at Investigations & Sanctions.

Landlord must notify RTB of reliance on an RPZ exemption 

RPZ Exemption Form

Landlords must inform the RTB that they are relying on an exemption to the RPZ rent caps. Landlords must fill out an RPZ Exemption Form with all the correct relevant information and supporting documentation and send it to the RTB within one month of the setting of the new rent under the tenancy. Rent is set either at the start of a tenancy or on the date the notice of the rent review is served.

The RTB asks landlords to retain a copy of the RPZ Exemption Form for their records. The RTB will not acknowledge receipt of the form. 

The RPZ Exemption Form is an additional document to the Notice of Rent Review. If a landlord wishes to review the rent and rely on a RPZ exemption, a Notice of Rent Review must still be served on the tenant and separately the RPZ Exemption Form on the RTB.

Consequences of failing to provide exemption notice

It is an offence for a landlord to fail to serve an exemption notice on the RTB, where he or she is required to do so. This failure also amounts to ‘improper conduct’. The RTB is empowered to prosecute landlords who commit this offence or alternatively investigate and sanction landlords for engaging in improper conduct.

Landlord’s obligation to update the tenancy register

Landlords must notify the RTB that the rent amount for a tenancy has changed, via their RTB online account or by using a Tenancy Update Form (found in the download section below). This must be done within one month following the date when the new rent amount applies. The RTB then updates the tenancy register.

A landlord will have engaged in ‘improper conduct’, if they fail to update the tenancy register, within one month of the rent changing. Landlords who engage in improper conduct may be investigated and sanctioned by the RTB.

It is an offence for a landlord to knowingly provide materially false or misleading information to the RTB when updating the tenancy register. The RTB is empowered to prosecute landlords who commit this offence.

For information on RTB powers to investigate and sanctions click here.

Dispute in relation to rent review

The RTB encourages tenants and landlords to discuss problems promptly, keep lines of communication open and respect each other’s positions. If a tenant considers that they are being asked to pay more rent than permitted in a RPZ, he/she can seek clarification from the landlord or take a dispute case to the RTB. Any dispute application must be referred to the RTB before the date the new rent amount is to have effect/becomes payable.

Tenants must continue to pay their rent at the existing rate for the tenancy until the case is determined unless both parties agree otherwise.

For further information visit the RTB’s Dispute Resolution Service.

Examples of how rent increase restrictions apply in practice

It is recommended that you use the Rent Pressure Zone Calculator to better understand the following examples. 

Example 1 

A rented property is located in a RPZ. A tenant moved in on 11 December 2020 and a rent of €1,800 was set. The landlord is entitled to review the rent 12 months after the tenancy commencement date. On 11 December 2021, the landlord goes about calculating the new increased rate of rent permitted. The landlord proceeds to enter the relevant details into the RTB Rent Pressure Zone Calculator. The Calculator informs the landlord that the maximum increase in rent permissible is €36. This is because the RPZ rent rules state that rents cannot increase by more than 2% per year pro rata or if ir is lower, by the rate of HICP inflation. In this example, the 2% per year cap applies, as HICP inflation is 5.7% for the period of time between the rent first being set and then being set pursuant to the rent review. This means that new maximum rent for the property is €1,836, w ich represents a 2% per year pro rata increase (€1,800 x 2% p.a.)  

Example 2 

A rented property is located in a RPZ. A tenant moved in on 11 December 2016 and a rent of €1,400 per month was set.  Five years later, on 11 December 2021, the landlord decides to review the rent and proceeds to enter the relevant details into the RTB Rent Pressure Zone Calculator. The Calculator informs the landlord that the maximum increase in rent permissible is €92. This is because the RPZ rent rules state that rents cannot increase by more than 2% per year pro rata or if it is lower, by the rate of HICP inflation. As the HICP inflation for the 5-year period between the rent first being set and reviewed is 7.1%, this applies as it is lower than the cap of 2% per year pro rata (2% per year for 5 years = 10%). The new maximum rent for the property is €1,499, which represents a 7.1% increase in accordance with HICP inflation (€1,400 x 6.6% = €92). 

Approved Housing Bodies: Rent setting and Rent Reviews

Rent setting  

Rent is set for Approved Housing Body (“AHB”) tenancies in accordance with the contract or lease between the public authority and the AHB or in accordance with the terms of assistance given by the housing authority to the AHB.  

Rent reviews  

A rent review for an AHB tenancy must be carried out in accordance with the terms of the tenancy agreement between the AHB and the tenant.   

If the tenancy agreement does not deal with rent reviews, either party may require a rent review to be carried out but this cannot occur more than once in any 12-month period.  

Where there is a change in the rent payable following a rent review, the AHB must notify the household of the new rent in accordance with the terms of the tenancy agreement or if the tenancy agreement does not deal with this, as soon as practicable.