Landlords are set to take a further beating from government between now and 1st February 2013 with the phasing in of the remaining provisions of the minimum standards legislation. The remaining provisions relate to 1. Sanitary, 2. Heating and 3. Food Preparation.
The Requirements
Sanitary Article 6 of the Regulations relates to sanitary facilities and requires landlords to provide within each dwelling a WC, a wash hand basin and a fixed bath or shower, both with a continuous supply of cold water and a facility for the piped supply of hot water, for the exclusive use of the dwelling. These facilities must have effective means of drainage, be properly insulated, have minimum capacity requirements for hot and cold water storage facilities and be provided in a separate room containing separate ventilation.
Heating Article 7 of the Regulations relates to heating facilities and requires landlords to provide a permanently fixed heating appliance and adequate facilities for the removal of fumes in every room intended for use. In addition the operation of any heating appliance must be capable of being independently controlled by the tenant. This in effect requires landlords to establish, at a significant cost, a separate heating system in each dwelling unit, whereas formerly one heating system was sufficient in respect of an entire property.
Food Preparation Article 8 of the Regulations relates to food preparation and storage and laundry facilities and requires landlords to provide various appliances for the exclusive use of each dwelling, to include:
i) a four ring hob with oven and grill and cooker hood/extractor fan, a fridge-freezer and a microwave oven,
ii) a sink with a piped supply of cold water and a facility for the piped supply of hot water together with a draining area,
iii) an adequate number of kitchen presses for food storage,
iv) a washing machine or access to a communal washing machine facility and also a dryer or access to a communal dryer facility if the Property does not have a garden/yard
The Cost
The overall effect of the Regulations is that Landlords may be compelled to invest a considerable amount of capital in their Property in an attempt to comply with these Regulations, particularly Landlords owning older properties, for example, bedsits. The Regulatory Impact Assessment (RIA) prepared by the Centre for Housing Research (“CHR”) in September 2008 estimated that the cost, for example, a landlord with an 8 bed pre-63 house might have to expend to convert this into a six-bed unit could be in the neighbourhood of €120,000 for plumbing, wiring, structural alterations, fixtures and fittings and labour. The RIA stated that “if the 8-bed unit was returning €60,000 per annum (€7,500 per unit), a six-bed unit would now need to yield €10,000 per unit to return the same gross rent”.
In an ideal world the carrying out of such works and improvements would result in the Landlord being successful in obtaining an increased rent in respect of the Property and thereby recouping even a small percentage of the refurbishment costs. However, in the current rental market it is unlikely that any of the costs of complying with the Regulations will be capable of being passed along to the tenant given the plethora of properties available at reduced rents. This may lead to Landlords deciding that the costs of compliance outweigh the benefits and consequently opting to withdraw from the residential rental sector.
More worryingly, a number of landlords may be forced to withdraw from the residential rental sector completely as it may be impossible for them to comply with the Regulations. For example, Landlords owning pre-1963 buildings may not be permitted to carry out the required improvements as such buildings are by and large protected structures (or “listed”) and so it is unfeasible for planning permission to be obtained permitting the major alterations that are required. In the 2008 RIA, the CHR estimated that there were approximately 8,750 bedsits in the country and that there were approximately 35,000 dwellings falling within the category of pre-1963, multi-unit dwellings which would most likely require works, so clearly the onerous and costly obligations imposed pursuant to the Regulations have affected far more than a minority of the residential rental sector.
Loss of affordable accommodation
For the most part it is housing at the lower end of the market that will require significant expenditure in order to comply with the Regulations. The rationale behind the Regulations is essentially to abolish the traditional bedsit and require Landlords to upgrade their properties with a view to improving the living conditions of tenants who are currently in accommodation below these standards. However, in order to get a return on investment (and stay in business), Landlords will have to turn target the higher end of the tenant market. If Landlords are successful in increasing their rents, even ever-so slightly, this could result in current rent supplements being inadequate which would in turn fuel the lack of availability of affordable housing for persons on lower incomes and unemployed persons.
Enforcement
A non-compliant Landlord can expect to receive a “notice of deficiencies” giving 30 to 60 days to remedy the infringement followed by and “improvement notice” which, if not complied with will lead to prosecution. Landlord should be aware that an extract of the PRTB Register of Tenancies is supplied to each Local Authority twice a year to assist them with inspections and the enforcement of minimum standards.
Ironically, it is Landlords who are funding the cost of inspections as the responsibility for the enforcement of the Regulations lies with the Local Authorities financed by revenue collected from landlords by the PRTB as part of the tenancy registration fees. The PRTB 2008 Annual Repost stated that five sevenths (over 70%) of the registration fee income was allocated to the Local Authorities, which amounted to €5,640,974 and that a total of €3,500,000 was actually recouped to Local Authorities.
Alternatives for Landlords
With the prospect of the full implementation of the Regulations in February 2013 looming over us what are landlord’s options?
Option 1: opt not to carry out the required works and take the property off the rental market
Option 2: carry out the required improvements at potentially huge costs and take the hit
Option 3: Alter the property so that it does not come within the definition of “house”. One possible way of doing this may be to convert it into shared property with common areas and facilities, to include a common kitchen, common living/recreational area and so on and to let the units as “bedrooms” as opposed to self-contained units. Careful design would be required in conjunction with a close reading of the relevant definitions and your architect and lawyer should get together. This option is also a possibility for avoiding the vicious NPPR tax (due in June 2010) and form part of our “landlordsolutions.ie gold for landlords” tips for Landlords which will be available on our site later this year.
February 2013 is fast approaching and Landlords need to put on their thinking caps so as to find possible ways of reducing, or even spreading out, the infinite financial consequences of the Regulations. If not, come February 2013 Landlords will either be hit with an unmanageable amount of expense in an effort to remain in the rental market, or they will be left with a vacant Property.
This document contains a general summary of recent developments and is not a definitive statement of the law. Specific legal advice must be obtained before taking action based on the summary set out herein and landlordsolutions.ie take no responsibility for any loss or damage caused in reliance on the information herein.
