Registration of Cost Rental Tenancies
Cost rental tenancies come within the remit of the Residential Tenancies Board (“RTB”), subject to certain exceptions outlined below and in our guidance note for cost rental tenancies.
Cost rental tenancies must be registered with the Residential Tenancies Board (RTB) within one month of the tenancy commencement date and again, within one month of each anniversary of the tenancy commencement date, for so long as the tenancy exists.
Security of Tenure for Cost Rental Tenants
Since 11 June 2022, for tenancies created on or after that date, the tenant will have the right to remain in occupation for an unlimited duration, after the tenant has been in continuous occupation for 6 months. Existing tenancies will transition to tenancies of unlimited duration over time.
The landlord can only terminate the cost rental tenancy under one or both of the following limited grounds:
The tenant has breached their obligations;
The dwelling is no longer suitable to the accommodation needs of the tenant and of any persons residing with them having regard to the number of bed spaces and the size and composition of the occupying household.
This means that most of the usual grounds on which a landlord can terminate a “Part 4 tenancy” do not apply to cost rental dwellings (i.e. the landlord cannot terminate the cost rental tenancy because the landlord wants to sell the property, the landlord or a family member wants to live there, the landlord wants to substantially refurbish/ renovate the property or to change its use).
Designating a Dwelling as a Cost Rental
An application must be made to the Minister for Housing, Local Government and Heritage (the “Minister”) to designated a dwelling as cost rental.
This application should contain the information contained here in Schedule 1. A single application may be made for the cost rental designation of multiple dwellings.
Information about the dwelling (e.g. number of bed spaces) must be provided in the application form, in addition to the following information:
- a proposed cost calculation period and minimum cost rental period (see below);
- the proposed initial maximum rent (see below);
- the estimated cost rental income;
- the estimated market rent (i.e. if it was not let as a cost rental); and
- details of costs associated with the dwelling – e.g. costs incurred in acquiring the dwelling and estimated costs for maintenance, management and financing.
Documentary evidence supporting the application must also be provided (e.g. to establish the applicant’s title to the dwelling). The applicant must also make a declaration that they will comply with the obligations applying to owners of cost rentals and must declare that they will take all reasonable steps to procure that the applicant’s successors in title will comply with these obligations.
Setting of the Rent
There are specific rules that apply to cost rental tenancies when setting the rent at the start of the tenancy and pursuant to subsequent rent reviews. Part 3 of the Residential Tenancies Act 2004 does not apply when setting rent for cost rental tenancies, however, disputes in relation to rent setting for cost rental tenancies can be referred to the RTB
A ‘cost rental’ dwelling is a rented dwelling, where the rent charged is no more than the cost incurred in delivering, managing and maintaining the dwelling.
The initial maximum rent for cost rentals is calculated on the basis of the cost of acquiring, developing, managing and maintaining the property in question and the maximum rent cannot exceed these costs to the owner over the cost calculation period (i.e. a minimum period of 40 years). The initial setting of rent and any subsequent rent review also includes a component linked to inflation based on the Harmonised Index of Consumer Prices as published by the Central Statistics Office (“HICP”).
A rent review is initiated by the landlord serving a rent review notice in the prescribed form found here. Rent reviews cannot take place more than once every 12 months or within the first 12 months of the tenancy.
The notice must be sent or served on the tenant either by sending it by pre-paid post to the tenant at the cost rental address or by email where the tenant has given prior consent in writing to the notice being served in this way. This also applies in the case of multiple tenants who are jointly and severally liable under the cost rental tenancy. For multiple tenants that are jointly and severally liable, the rent review notice can be addressed to or sent by email to one or more of the tenants.
A rent review notice shall be served not earlier than two weeks before, and not later than four weeks after, the date on which the setting of the rent by way of a review is to take effect.
The rent review notice must specify the date from which the new rent is to take effect. Where a tenancy agreement does not specify the frequency of rent reviews, then the anniversary of the commencement of the tenancy shall be the date the new rent set pursuant to the rent review, shall take effect.
Please read our guidance note on cost rental tenancies for further information on rent setting and rent reviews that can be found in the Dowload section at the end of this page.