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Understanding tenancy obligations when selling a rental property

Posted by mario on March 1, 2016
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Being a landlord in Ireland has become increasingly more complicated in the last number of years. The market has changed, regulations are more demanding on the landlord and tax reforms have resulted in the financial rewards of letting a property being far less appealing. House prices in many areas are increasing, driven by higher incomes and pent-up demand, for those home owners that are disillusioned and not benefiting financially from their life as a landlord, selling up is becoming more appealing.

The Residential Tenancies (Amendment) Act 2015 introduced strengthened protections applying to tenancy terminations in order to guard against terminations on false grounds. These require landlords to follow certain procedures before asking a tenant to leave rented accommodation.

Intention to sell

A landlord who now intends to sell their property is obliged to make a statutory declaration as to their intention to sell. These provisions are subject to commencement order and will be enforced on the 01st April 2016. (Sections 34 and 34 of the Act). Section 56 of the 2004 Act provides that where a landlord terminates a tenancy on the grounds that he or she intends to sell and does not subsequently do so, a tenant may make a complaint to the Private Residential Tenancies Board (PRTB) that they have been unjustly deprived of possession of the dwelling by the landlord. On the hearing of such a complaint, the PRTB may award damages to the tenant, direct that the tenant be permitted to resume possession of the dwelling, or both.

Notice Periods

The Residential Tenancies (Amendment) Act 2015 introduced new requirements for notice periods with effect from 4 December 2015.

During the first 6 months of a tenancy, the landlord can ask a tenant to leave without giving a reason but must serve a valid written notice of termination, allowing a minimum 28-day notice period. If a fixed term tenancy is in place, a landlord cannot break the lease until the fixed period has ended, except in the case where the tenant is in beach of the agreement.

The 2004 Act states that for a tenancy that has lasted between 6 months and 4 years – known as a Part 4 tenancy –, one of grounds on which the landlord can end the tenancy which is if he/she intends to sell the property within 3 months.

6 months – 1 year: 35 days
1-2 years: 42 days
2-3 years: 56 days
3-4 years: 84 days

The Amended 2015 Act has extended the notice periods over 5 years to 8 years (the end of the second Part 4) or over, so if a landlord wants to sell and he has had a sitting tenant for 8 years or more will have to give 224 days notice. For tenancies of 5 years or longer in duration the notice periods are

5-6 years: 140 days
6-7 years: 168 days
7-8 years: 196 days
Longer than 8 years: 224 days

Notice of termination

The tenant must be provided with a notice of termination which can be posted, given to the tenant or left for the tenant at the property. In order to be valid, a notice of termination must:

Be in writing (not by text or verbal)
Be signed
Include a service date
Include a termination date. The day that is to be specified as the termination date is the last day of the notice period
State the reason – if over 6 months  (s34 of the Act)
Provide the whole of 24 hours of the termination date to vacate possession

Dealing with issues

If a tenant or landlord does not comply with a determination order issued by the PRTB, an application under the 2004 Act through the Circuit Court is required to enforce it. This is now changed under the amended 2015 Act with enforcement proceedings being brought to the District Court to assist parties in making the applications themselves and to speed up the process.

Landlords need to be aware of their obligations and the additional time they add to the timeline for selling a property.  If you are considering putting a property which is currently tenanted on the market, Clare Connolly Property Consultants would be delighted to offer advice or answer any questions you may have around these issues.

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