Proposed Reforms for Residential Tenancies
On June 10th 2025, the government announced proposals for significant changes to Residential Tenancies. These proposals won’t come into effect until March 1st 2026. At the moment, the proposals are just that and haven’t been signed into legislation.
The proposals mainly deal with rent increases and security of tenure. There is a trade-off here, whereby landlords will be able to set the rent at market level between tenancies and in exchange, tenants will be given greater security of tenure.
To simplify things, the Rent Pressure Zones have been extended throughout the country, effective from June 20th 2025.
All existing tenancies and tenancies that commence prior to March 1st 2026, will follow the current legislation. Under the current legislation, security of tenure is explained in this blog piece and the rent caps are covered in this blog piece. Once the tenants vacate after March 1st 2026, the new legislation will apply. Until all tenancies are under the new legislation, a two-tier system will exist.
Under the new rules, a landlord will be able to reset the rent to market level once a tenant vacates the property by giving notice. Once the new tenant is in situ, annual rent increases will be capped for that tenant at 2% or the rate of inflation, whichever is lower.
Assuming the tenant remains in situ, the rent will be capped in this manner for six years. At the end of the sixth year, the landlord will have the opportunity to reset the rent to market level, subject to the correct notice being issued.
For newly built properties, i.e. any property that is subject to a commencement notice to planning authorities after June 10th 2025, the rules are slightly different. The annual rent increase in this instance is purely subject to the rate of inflation and not capped at 2%.
Dealing with security of tenure, the proposals make a distinction between small landlords and large landlords. Small landlords are defined as having three or fewer tenancies, and large landlords are defined as having four or more tenancies. This affects pre-63 properties, which are single properties but have multiple tenancies, often over four.
Smaller landlords will still be able to terminate tenancies for no fault evictions, namely, the landlord wishes to sell and or move an immediate family member into the property. In the case of sale, the landlord will have to demonstrate hardship. Hardship is narrowly defined as a landlord going through a separation, being declared bankrupt or experiencing homelessness. Larger landlords can’t avail of no-fault evictions in order to gain vacant possession.
In the case of smaller landlords, at the end of the sixth year, they will be able to give notice for selling, renovating or use by a family member. Hardship does not need to be proven ay the end of the sixth year. We envisage there will be a window to do this before a second six year cycle commences.
If a small landlord issues the tenant with a no fault eviction notice during the six years and for whatever reason, the property goes back on the rental market, the existing rent must stand and the opportunity to reset the rent at market level won’t apply.
Both small and large landlords will still be able to issue a notice in the case of a breach of obligations or if the property is no longer suitable for the needs of the tenant.
The proposals have been greeted by a degree of trepidation by both landlords and tenants. However, we feel that there is a net gain for both parties. The landlord has the ability to reset the rent between tenancies, and the tenant can benefit from increased security of tenure. Typically, the average tenancy has a three-year duration, so the rent should be reset frequently.
When a property becomes vacant, this will make landlords less inclined to sell, and in the case of a landlord selling, the new owner will be able to set the rent at the market level. These factors should improve supply, which will stabilise rental levels, and we don’t feel the first reset in March 2032 will be significant.