An interesting judgment was issued recently concerning the impact that the letting history of a property can have on the ability of a subsequent owner to set rents in a rent pressure zone (RPZ).
In the Circuit Court, Judge John J. O'Connor held that a purchaser of a property is bound by RPZ restrictions even if the purchaser (now landlord) is not actually aware of the property's letting history. In this case, an earlier letting by the seller meant that a later letting by the purchaser was subject to RPZ rules. The level of rent set by the later letting prompted an investigation by the Residential Tenancies Board which resulted in a finding of improper conduct against the purchaser as landlord (for increasing the rent by more than 4% in a 12 month period in an RPZ) and a financial sanction.
It appears from the judgment that the purchaser in this case bought the property from a mortgagee (lender), and that somewhat ambiguous responses were given to the purchaser's queries concerning the letting history. In the Court's judgment a lack of knowledge of the letting history on the purchaser's part was not a meaningful defence to a charge of failing to respect the RPZ rules.
The Court was explicit that residential tenancies legislation was created for the benefit of tenants, and it appears that a duty lies on the purchaser of a residential investment property to establish the letting history so that it may then comply with RPZ rules. This position applies even though the seller may be unable or unwilling to confirm the precise facts, so if a purchaser decides to proceed absent full information then it bears the risk.
Wow Investments Limited v Residential Tenancies Board [2022] IECC 3
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.