Market rent ‘resets' may undermine security of tenure plans, Threshold says
Threshold has also predicted that the rental market will become 'far more expensive' within five years if current trends on tenancy turnover continue.
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It said current rates of churn in rental properties would leave the majority of tenants paying market rents within that time period.
Last month, rent pressure zones were extended nationwide as part of a series of sectoral reforms brought by Housing Minister James Browne.
The system, which caps rent increases at the rate of inflation or 2 per cent, whichever is lower, is in place until the end of February, when further proposals are slated to take effect from March.
New tenancies created from March 1st onwards will be set at market value and offer six-year minimum rolling tenancies.
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At the end of the six-year tenancy, the rent can be reset and put back to the market.
Sinn Fein's Eoin O Broin (Niall Carson/PA)
Large landlords, defined as having four or more tenancies, will be banned from carrying out no-fault evictions for tenancies beginning from March.
A small landlord can end tenancies via a 'no fault eviction' in limited circumstances, such as economic hardship or to move a family member in, but if they do that, they cannot reset the rent.
Ann-Marie O'Reilly, the organisation's national advocacy manager, told the Oireachtas Housing Committee on Tuesday that the measures on rent resets could leave people 'priced out of their home or potentially priced out of their community'.
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She added: 'Everyone will be paying those much higher rents.
'And while the RPZs aren't being ended on a certain day and that cliff edge scenario has been avoided, by allowing the change to happen on an individual tenancy basis, it's creating a cliff edge for each and every individual household, just at different points.'
Threshold, which advocates for the prevention of homelessness, was appearing before the Committee during a session on issues relating to the rental sector.
Sinn Féin housing spokesman Eoin Ó Broin asked for the charity's view on the impact the new rental sector reforms will have on tenants.
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Ms O'Reilly said: 'Overall, we're very supportive of what's been proposed in regard to security of tenure and the limitation of the no-fault evictions.
'However, the proposal to allow a market rent reset at different points – in particular at the turnover of a tenancy where the tenant leaves by their own choice or if its evicted for breaching the agreement – that is a concern.
'We think that will actually undermine the entire security of tenure that is being proposed.'
Ms O'Reilly said tenancies tend to turn over every three to four years, whether it is by the tenant's choice or not.
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'If we continue in that vein, probably within a very short space of time – maybe four to five years – we'll actually see the majority of rents at market rent, so we'll actually have a far more expensive rental market.'
Ms O'Reilly said it was a possibility that there would be a rise in evictions of tenants who are unable to pay rents.
Mr O Broin had noted that this was a trend which precipitated the creation of rent pressure zones.
The president of the Institute of Professional Auctioneers and Valuers disputed the claims that all tenants would be paying much higher rents.
Fintan McGill said: 'I don't believe that personally, and I don't think it's right to say that everybody will pay much higher rent – I don't think that's the case.
'I think everybody will pay market rent. And whatever the market says, people will pay it.'
As an example, Mr McGill told the committee that the changes may mean that rates 'may well be higher' for a tenant who is renting off a landlord since 2016 at 50 per cent of market rents.
He said landlords had been discriminated against because they could not charge a 'full rent for their property'.
Mr McGill also disputed that rents never going down, saying he had seen that happen in the early 2000s.
'So I don't believe that the change of this particular scenario that we're talking about after March 1st is going to change rents and bring them up.
'I think that these changes are going to be very good for a landlord.'
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