Donegal estate agent offers advice on major rental law changes coming in next month

Franklins Estate Agents has described the upcoming changes to residential rental legislation, effective next month, as “one of the most significant shifts in the Irish rental market in recent years.”

The new legislation introduces extended security of tenure for new tenancies and alters how rent may be set when a property becomes vacant. While existing tenancies remain unaffected, the long-term impact on the rental market is expected to be substantial.

For current tenancy agreements, there is no change. Rent Pressure Zone (RPZ) regulations remain in place, with rent increases capped at 2% per annum or the rate of inflation, whichever is lower. Existing rules governing termination also continue to apply.

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However, all new tenancies created on or after March 1 will fall under the revised framework.

From then on, new tenancies will provide for a minimum six-year security of tenure. While tenants are not obliged to remain in a property for the full six-year period and may terminate their tenancy by giving appropriate notice, landlords must be in a position to facilitate occupation for up to six years unless valid statutory grounds for termination arise.

Landlords will now be categorised as either large landlords (more than three tenancies) or small landlords (three or fewer tenancies). Large landlords will face tighter restrictions on termination, generally limited to tenant breach of obligations or unsuitability of the property. Small landlords retain additional grounds, including financial hardship requiring sale or where a landlord or close family member requires the property as a principal residence.

According to Franklins, this represents a meaningful strengthening of tenant security.

“Security of tenure has been significantly enhanced for new tenancies,” a spokesperson for Franklins, Letterkenny, said. “Landlords entering into new agreements must do so with a long-term outlook.”

A major development within the legislation is the ability for landlords to reset rent to open market value when a property becomes vacant and a new tenancy is created.

Under previous RPZ rules, rent caps continued to apply even between tenancies. From March 1, landlords may set rent in line with prevailing market conditions at the commencement of a new tenancy, after which RPZ limits will once again apply to future increases.

Franklins believes this measure will have a noticeable short-term effect.

The spokesperson continued: “In many cases, existing rents have been held below current market levels for a number of years. The ability to reset rent for new tenancies is likely to result in upward adjustments where properties change hands. While this may encourage some landlords to remain in the market, it will also create affordability challenges for new tenants.”
The Government has positioned the reforms as a means of balancing tenant protection with measures designed to encourage continued investment in the rental sector. Whether the changes will materially increase supply remains to be seen.

“What is clear,” Franklins noted, “is that the regulatory environment continues to evolve. Landlords must remain informed, strategic and fully compliant. Professional management has never been more important.”

Franklins Estate Agents will continue to advise landlords on compliance, rent reviews, tenancy structuring and market positioning under the new framework.