You will recall that earlier this year we provided an update regarding the Joint Committee on Housing, Local Government and Heritage’s PLS report on the Residential Tenancies (Right to Purchase) Bill 2023. The full bill has now been published, renamed as the Residential Tenancies (Amendment) (No.3) Bill 2004 (the Bill). This post considers the various scenarios where the legislation may apply, if it were to become law in its current form.

Background

By way of reminder, the Bill actions the Government’s stated policy of introducing a tenant right of first refusal where their home is being sold by the landlord and the landlord is seeking to terminate the tenancy for that reason. The General Scheme of the Bill indicated that the requirement to issue an invitation to bid to the tenant would not apply to:

  • student-specific accommodation,
  • dwellings within a build-to-rent development, and
  • a dwelling which is one of 2 or more dwellings comprised in the same property which the landlord intends to sell in its entirety.

Current draft and potential application

However, the Bill which has been published doesn’t precisely reflect the exclusions anticipated by the General Scheme and we have therefore summarised below a number of scenarios and how they would be affected by the current wording of the Bill.

Sale of investment property where the tenants are to remain in situ post-sale

The most important thing to bear in mind in the context of this legislation is that the tenant right of first refusal is only of relevance where a landlord is seeking to serve a notice of termination on the grounds of the prospective sale of the property. It therefore will not affect sales of fully-tenanted investments where the tenants are remaining in situ. The only scenario where it may become of relevance is if a landlord is for some reason seeking vacant possession in order to facilitate the sale – see below scenarios for further detail on where this may bite.

Student-specific accommodation

This is, as expected, exempted from the legislation – the right of first refusal provisions do not apply and a landlord can therefore terminate on the grounds of the sale of the property without first having to offer the property to the tenant.

Cost-rental accommodation

Also exempted from the legislation – the right of first refusal provisions do not apply and a landlord can therefore terminate on the grounds of the sale of the property without first having to offer the property to the tenant.

PRS scheme where the landlord owns the entire and no management structure in place

Again, exempted from the legislation – the right of first refusal provisions do not apply and a landlord can therefore terminate on the grounds of the sale of the property without first having to offer the property to the tenant. This analysis is based on the following wording in the Bill:

“This Chapter shall not apply where the dwelling […] is one of 2 or more dwellings contained in a property owned entirely by the landlord and the landlord intends to enter into an enforceable agreement for the transfer to another, for full consideration, of the whole of the landlord’s interest in the property”.

PRS scheme with a management structure (MUDs or otherwise) where the common areas are held by a management company

Arguably the current drafting of the Bill would mean that these schemes are not exempt from the notice of invitation to bid provisions – i.e. if a landlord of one of these schemes is selling it will need to offer to the tenants first if it is seeking to terminate the tenancies on the grounds of the sale. Where the landlord intends to sell the scheme fully-let, no issue arises.

“Pepper pot” arrangement where a landlord owns a number of discreet units within a scheme

Again, such an arrangement is not exempt from the notice of invitation to bid provisions and if the landlord wishes to sell the units it will need to offer them to tenants first if it is seeking to terminate the tenancies on the grounds of the sale. Again, where the landlord intends to sell the units fully-let, no issue arises.

Impact on bulk sales

Note overall that the so-called Tyrrellstown amendment continues to apply i.e. where 10 or more units within a development are sold together, the sale is subject to the existing tenants remaining in situ.

Next steps

The Bill remains at the very early stages of the legislative process and has yet to be debated in either house. The pace of its passage through the Oireachtas is likely to be determined by the timing of any general election, which is as yet uncertain.

We will continue to keep its provisions under review and will provide further updates in due course. For more information in the meantime, please contact Aoife Smyth, Knowledge Consultant, or any member of ALG’s Real Estate team.

The Government published the Housing (Miscellaneous Provisions) Bill 2024 (the Bill) on 27 September 2024. It introduces amendments to the Housing (Regulation of Approved Housing Bodies) Act 2019 and the Affordable Housing Act 2021. The primary objectives of the Bill are to ensure the permanent registration of Approved Housing Bodies (AHBs), redefine “alleviation of housing need”, and establish new allocation plans for cost rental homes.

Below is a summary of the key provisions:

Amendments to the Housing (Regulation of Approved Housing Bodies) Act 2019

  1. Permanent registration of AHBs
    • The Bill removes the requirement for “deemed” AHBs to apply for registration, ensuring their permanent registration unless an action is taken to cancel their registration by the Approved Housing Bodies Regulatory Authority (AHBRA) or through an application by the AHB itself.
    • This amendment is stated to have the aim of preventing the cliff-edge cancellation of the largest 20 AHBs on 1 January 2025.
  2. Redefinition of “alleviation of housing need”
    • The Bill removes references linking specific AHB constitutional objects to AHBRA’s powers.
    • The Bill amends the definition of “alleviation of housing need” to ensure all properties ever funded by the State under Section 6 of the Housing Act 1992 and properties designated as Cost Rental under the Affordable Housing Act 2021 fall under AHBRA’s powers.

Amendments to the Affordable Housing Act 2021

  1. Household composition and income eligibility
    • The Minister is empowered to prescribe the composition of a “household” in the context of cost rental eligibility requirements, including considerations of tenant income in shared households.
  2. Allocation plans for cost rental homes
    • The Bill allows for the creation of allocation plans for cost rental homes, which can include alternatives to the standard allocation process and additional selection criteria for tenants, subject to the Minister’s approval.
    • It also provides for the allocation of cost rental tenancies to tenants in-situ and the transition of homes already acquired into the cost rental sector at the commencement of the legislation. 

The Bill is available here and is scheduled for all stages in the Dáil this week (8 and 9 October).

We will continue to track this Bill as it moves through the legislative process. In the meantime, if you have any queries please reach out to your usual ALG Real Estate contact.

The Department of Housing, Local Government and Heritage has this week published a report reviewing the private rented sector in Ireland. This report arises from the Housing for All Action Plan Update, published in November 2022, which included a commitment to “review the operation of the private rental sector and report on policy considerations”.

The review is published by the Department of Housing, Local Government and Heritage. As part of the review process the Government “invited households, other market participants and commentators to provide their perspectives and describe their experiences of market renting”. It also takes into account information relating to stakeholder sentiment gathered through research undertaken on behalf of the RTB and “the experiences of public institutions in their respective roles interacting with the private rental market”.

It covers the following key themes:

  • Composition of the Rental Market: Providing data and analysis on the size and composition of the sector, as well as on rental levels of and the impact of the COVID-19 pandemic and the RPZ legislation on rents.
  • Sectoral Policy Objectives: Outlining the main policy objectives for the sector, which include creating economic conditions to support investment in the sector, increasing supply and affordability, enhancing security of tenure, and ensuring appropriate standards and regulation.
  • Potential Avenues for Policy Change: Suggesting some potential avenues for policy change, such as incentivising investment in the rental sector, supporting affordability through increased supply of cost rental homes, reviewing rental regulation, undertaking a periodic critical review of the RTB, and ensuring appropriate rental standards.

For more information please contact Aoife Smyth, Knowledge Consultant, or your usual ALG Real Estate contact.

A short update to confirm that the legislation referred to in our last post, which limits the letting / licensing of student-specific accommodation to the academic year, passed all remaining stages of the legislative process on Thursday 11 June, without amendment.

The Seanad has also passed a motion for early signature by the President, and we therefore expect the Act to be published in very short order.

Commencement of the legislation will require further ministerial order. Given the stated intention of Government of having the legislation in force before the commencement of the new academic year, we expect this ministerial order to be made very quickly once the Act is published.

We will provide a further update on commencement in due course. In the meantime, should you have any questions please contact Aoife Smyth, Knowledge Consultant, or your usual ALG Real Estate contact.

The Irish Government has this morning published the Residential Tenancies (Amendment) (No.2) Bill 2024 (the Bill), which is the draft legislation intended to limit leases and licences of student-specific accommodation to 41 weeks.

As reported on in a previous post, the Bill has come about due to concerns over students being required to take year-long leases / licences, with the Government taking the view that such long-term commitments are neither affordable nor practical for the majority of students.

The Government’s press release in respect of the publication of the Bill can be found here.

Key provisions

The draft Bill is a very short piece of amending legislation. Its provisions relate to student-specific accommodation as defined in section 3(1A) of the Residential Tenancies Act 2004 (there have been no amendments to that definition). The Bill provides that:

  • A landlord / licensor cannot seek or accept an advance rental payment of more than one month’s rent unless the landlord / licensor is also the party to which the student is paying tuition fees – in other words, only educational institutions will be in a position to accept an advance payment of more than one month’s rent, even where the student is prepared to pay more. (As a related aside, the arrangements in respect of deposits have not changed – providers can still require the payment of a deposit equating to no more than one-month’s rent.)
  • Leases / licences cannot be more than 41 weeks in duration – as the explanatory memorandum published with the bill says, the legislation is intended to work such that students cannot be “forced to pay for student specific accommodation during the summer months”. However, there is provision for arrangements of a longer duration to be entered into at the request of the student.
  • A student can now serve a 28-day notice of termination at any time during the period from 1 May to 1 October in a given year without the need for the landlord / licensor to have breached any tenancy obligations.
  • Residential Tenancy Board sanctions will apply to a landlord / licensor who demonstrates “improper conduct” by breaching the 41 week cap.

Next steps

The legislation is still in draft form and will need to go through the usual legislative process before it becomes law. However, the Government has indicated that it intends to accelerate that process to introduce these provisions before the end of the current Oireachtas term, which is currently scheduled for no later than 15 July. The legislation will apply to all leases / licences entered into after its commencement.

We will be tracking the legislation through the Oireachtas and will provide further updates in due course. For more information in the meantime, please contact Aoife Smyth, Knowledge Consultant, or any member of ALG’s Real Estate team.

In two judgments delivered together late in December 2023, the Supreme Court (the Court) dismissed appeals in respect of challenges regarding zoning changes to the Meath County Development Plan for 2021 to 2027 (the Development Plan). The challenges had previously been dismissed by the High Court in July 2022, with the Supreme Court granting leave to appeal in determinations dated 28 March 2023. See our previous note here.

In Killegland Estates Limited -V- Meath County Council [2023] IESC 39 (Killegland), the Court addressed a number of issues before ultimately dismissing the appeal.

Challenges to the entirety of a plan or challenges to parts of a plan?

The High Court had decided that, in order to challenge part of a plan which was set by the core strategy of the plan, that core strategy had to also be challenged. The Court disagreed with this approach and held that it was not necessary on the facts of this case for Killegland Estates to challenge the entirety of the Development Plan. The Court noted that it would be “perfectly possible” for the courts to quash parts of development plans if the invalidity of individual zoning decisions affecting relevant applicants was established. The Court noted that a challenge to the entirety of a development plan would only generally be possible where the plan was adopted following an “inherently structurally flawed process” or was based on an incorrect interpretation of the Planning and Development Act 2000.

Reasons for re-zoning decisions

The Court began by stating that any zoning of land in a development plan could be subject to change at a future date via the democratic process by the elected members of the local authority. It noted that given the nature of the decision-making process of the local authority, reasons for a particular decision may not be as neatly packaged as they may be had the decisions been made in other fora.

The Court referred to the leading authority regarding the giving of reasons relating to a development plan; Christian v Dublin City Council [2012] IEHC 163 (Christian). In Christian the court concluded that while, in general, elected members were not required to give reasons in respect of the policy aspects of a plan, where individual rights (such as those of prospective developers) were affected then reasons were required. Where the members departed from the recommendations of experts in planning and zoning, the onus to give reasons was even more necessary.

The Court held that in the present case where the councillors had gone against the advice of the Chief Executive and the planning officials, the reasons for their decision needed to be clear either from the resolution itself or from the documentation before the councillors when the resolution was discussed. The Court found that the reasons were contained in the minutes of the meeting and the papers supporting the resolution. The Court also accepted that the reasons given for the de-zoning were valid planning reasons and that while some considerations were taken into account by the councillors which were not relevant, these factors were described as being “at best marginal” and were not sufficient to invalidate the overall decision.

Compliance with the National Planning Framework (NPF) and the Regional Spatial and Economic Strategy (RSES)

The Court found that the language used in the relevant sections of the NPF suggested that it was “largely…aspirational” rather than mandatory in nature and concluded that the de-zoning did not infringe any objectives contained in the NPF or RSES.

In McGarrell Reilly Homes Limited & Anor -V- Meath County Council [2023] IESC 40 (McGarrell) the Court recommended that the judgment be read in conjunction with Killegland given the overlap of issues. One issue dealt with in McGarrell which was not addressed in Killegland related to the question of whether a Council can commit itself to reserving certain lands as residential lands beyond the lifetime of an existing development plan. The Council here had reserved the lands in question for future housing development beyond the lifetime of the existing plan (the 2013-2019 Development Plan) by way of an amendment to the plan (the variation). On foot of the commitment from the Council, McGarrell had spent a considerable amount of money on preparing the lands in question for subsequent residential development. The new development plan for 2021-2027 de-zoned or re-zoned the lands in question and was adopted by councillors. The validity of this decision was then challenged.

The Court held that despite the language in the variation, the Council could not legally give a commitment to reserve certain lands for residential purposes in future development plans. This was a matter to be determined by the elected members of the Council when they came to vote on a new development plan. The lands in question were therefore not zoned lands for either the purposes of the 2013-2019 Development Plan or for the NPF or RSES. Because of this finding the Court concluded that no infrastructure assessment report was required to be prepared.

The Court also held that the reasons given for the zoning decision were sufficiently “rational, intelligible and comprehensive” to meet the threshold required.

Key takeaways

  • The decisions provide welcome clarity regarding the ability of developers and other affected parties to challenge parts of development plans rather than having to challenge the entirety of the relevant plan.
  • The decisions underscore the requirement for reasons to be given where changes are made to development plans and such changes affect individuals, such as prospective developers. The giving of reasons is particularly important where decisions are made which go against the advice of planning and zoning experts.
  • McGarrell clarifies that local authorities cannot legally commit to reserving certain lands for particular purposes after the lifetime of a current development plan. The adoption of a development plan and related zoning decisions is a task which is legally assigned to the elected representatives of the council at the relevant time, and the courts will be very slow to interfere with this process, even where developers have expended money on foot of zoning commitments from the council.

For more information please contact Alison Fanagan, Consultant and Joint Head of A&L Goodbody’s Environmental & Planning Group, Rachel Kemp, Senior Knowledge Lawyer, or any member of our Environmental & Planning Group.

In a development of interest to those owning and managing student accommodation, the Irish Government has recently announced its intention to introduce legislative changes aimed at “protecting” students from year-long leases.

Background to the announcement

The announcement was made by Simon Harris TD, then Minister for Further and Higher Education, Research, Innovation and Science, and Darragh O’Brien TD, Minister for Housing, Local Government and Heritage. They expressed the Government’s support for legislative amendments that would ensure student accommodation leases / licences align with the academic calendar.

This decision was prompted by concerns over situations where students had been required to take 51-week leases / licences. It is the view of Government that such long-term commitments are neither affordable nor practical for the majority of students, leading to a call for change.

Implications of the proposed changes

It is anticipated that the proposed changes will confine student-specific accommodation leases / licences to the duration of the academic year, or at least prevent providers from requiring a minimum 51-week lease where that is in excess of the particular student’s requirements.

The requisite amendments to the Residential Tenancies Acts are scheduled to be brought in before the summer recess, with the aim of having them in place for the upcoming academic year. The draft legislation has yet to be published and there is no definite timetable for its enactment. However it must be assumed that, as this initiative is sponsored by our now Taoiseach and is likely to have cross-party support, it will become law in advance of the next academic year as intended.

As the Government has yet to publish a draft of the relevant legislation, it is not possible at this point to provide any further detail regarding how the proposal will operate in practice. We will, however, provide further updates in due course.

For more information in the meantime, please contact Aoife Smyth, Knowledge Consultant, or any member of ALG’s Real Estate team.

A&L Goodbody is delighted to announce the return of its Construction, Planning and Procurement seminar on Wednesday 21 February 2024, 7.15am – 9.15am at the Banking Hall of the College Green Hotel (formerly the Westin).

Trying to plot a path through the challenges that the coming year might present, our breakfast seminar will address some important topics impacting our clients. The items for consideration will include:

  • Are we being hasty in abandoning the Public Works Contract in favour of NEC4.
  • Demolition-free zone; is the refurbishment of older building stock now the only game in town?
  • Ten years of BC(A)R – some issues that remain to be resolved.
  • The legal issues that may arise in refurbishing buildings.
  • The potential for increased regulatory scrutiny in 2024: bid-rigging, green procurement, and the Foreign Subsidies Regulation.

The seminar promises to be informative, practical and lively with insights being shared by leaders in their respective fields. The seminar also qualifies for Legal/General CPD with the Law Society of Ireland.

Breakfast and registration will be from 7.15am and the seminar will begin at 7.45am. As always there will be a Q&A session for our speakers at the end of the agenda items with a view to finishing up at 9.15am, or a little later if you would like to stay on and connect with some people who you may not have met for some time.

Please RSVP here by Wednesday 14 February. We look forward to seeing you.

The Joint Committee on Housing, Local Government and Heritage has just published its report (the Report) on its pre-legislative scrutiny of the General Scheme of the Residential Tenancies (Right to Purchase) Bill 2023 (the General Scheme).

Background

On 7 March 2023, the Government agreed in principle to the introduction of a new legislative measure giving tenants a “right of first refusal” in respect of their rented accommodation. The General Scheme is the product of that agreement in principle and essentially represents the draft workings of the officials at the Department of Housing, Local Government and Heritage (the Department) before the formal bill is prepared. It is therefore a very early draft and and its terms should be seen as subject to further revision, both in the initial legislative drafting process, and also during its subsequent journey through the Oireachtas.

Right of first refusal

Head 7 is the head which deals with the right of first refusal, referred to as an “invitation to bid”. In very basic terms, when serving a notice of termination on the ground of the sale of the property, the landlord will be required to simultaneously invite the tenant to make an offer to buy the property, which the tenant must do within 90 days. Note that, as presently drafted, this obligation only arises where the landlord is seeking to terminate on the grounds of the sale of the property. Consequently, notwithstanding the specific exclusions (more of which below), it will not be of relevance on the sale of a fully-tenanted investment where the expectation is that the tenants will remain in situ.

A landlord cannot contract to sell the dwelling to a party other than the tenant, a local authority, an AHB or the Housing Agency (any of which wish to acquire the dwelling for the continued occupation of the tenant), during the initial 90 day period. If a tenant makes one or more unsuccessful bids during the 90 day period and the landlord then proposes to contract at the end of that period with a third party for an amount equal to or lower than the tenant’s bid, the landlord must give a further invitation to bid to the tenant, giving the tenant a further 10 days within which to make a further (i.e. matching) bid.

Where a tenant is not in a position to exercise their right of first refusal, they can contact their local authority for assistance and any local authority, AHB or the Housing Authority (as appropriate) can make a bid on the property during the 90 day period where the tenant is deemed to be at risk of homelessness.

Application

Presently, the right of first refusal can only be availed of by:

  • a Part 4 tenant in situ in a rented dwelling as their principal private residence;
  • who does not own residential accommodation in Ireland;
  • who can provide to the landlord evidence (in a form to be prescribed by Ministerial regulation) of their financial capacity to meet their bid; and
  • who is not in breach of their obligations to pay rent, repair, not behave in an anti-social manner etc.

Exclusions

Under the General Scheme, the requirement to issue an invitation to bid to the tenant does not apply to:

  • student-specific accommodation;
  • dwellings within a build to rent development;
  • dwellings provided by approved housing bodies to social tenants;
  • cost-rental dwellings under the Affordable Housing Act;
  • a dwelling which is one of 2 or more dwellings comprised in the same property which the landlord intends to sell in its entirety (note the so-called “Tyrrellstown amendment” continues to apply and where 10 or more units are sold together the tenants of those units will remain in situ);
  • dwellings where the landlord lives in a separate self-contained dwelling within the same property, originally constructed as a single dwelling;
  • dwellings where the landlord wishes to gift, or partially gift, it to a third party;
  • the sale of a dwelling bequeathed to one or several beneficiaries by that beneficiary / those beneficiaries.

Build to rent

It is proposed that “build to rent development” will be defined as a development comprising purpose-built residential accommodation and associated amenities built specifically for long-term rental that is managed and serviced in an institutional manner by an institutional landlord.

The explanatory notes state that such accommodation may include houses, duplexes and apartments. It goes on to state that “In practice, the planning permission granted would specify that the development in question is ‘built to rent development’ – such development being a separate class of development. The development description on the planning application form, site notices and planning permission must have Build to Rent (BTR) as the proposed development description. A planning condition is applied to the permission stating that the development must be used as BTR.”

Recommendations

The Report makes a number of recommendations, as follows:

  • The title of the legislation be amended to reflect the intention of the legislation – i.e. a right of first refusal or invitation to bid, rather than a right to purchase.
  • FAQs should be developed by the Department to understand the various circumstances in which the legislation is to be applied.
  • The draft should be amended such that the 90 day period does not apply where the tenant submits in writing that they are not interested in bidding for the property.
  • There should be a standardised process set out to ensure that there is an official record of the tenant’s bid, for example by way of statutory declaration.
  • Safeguards should be incorporated into the conveyancing to ensure counteroffers are bona fide.
  • A mechanism should be set out in the legislation for a tenant to transfer their right to bid within the 90-day period to an eligible agency, such as a local authority or approved housing body.
  • Any new functions arising from the legislation should be evaluated for resource allocation to the relevant bodies.
  • Any discrepancies in language between landlord and tenant obligations should be reviewed.

Next steps

The next step in the legislative process is for the General Scheme to be converted into a formal bill, which will be considered and debated in both houses of the Oireachtas. It is therefore likely to be a number of months before we see these provisions (or further iterations thereof) become law.

Further elements

The General Scheme also proposes a number of technical amendments to the Residential Tenancies Act 2004, not related to the right of first refusal. We will provide further information on these proposed changes in a separate post.

Our Real Estate Team is tracking the legislation as it moves through the legislative process and will be providing further updates to this post.

For further information on this topic, please contact Aoife Smyth, Knowledge Consultant, or any member of A&L Goodbody’s Real Estate team.

On 21 November, the long awaited Planning and Development Bill 2023 (the Bill) was published by the Department of Housing, Local Government and Heritage. The original Heads of the Bill were released in January 2023 and went through pre-legislative scrutiny. This, considerably amended Bill was approved by Cabinet in early October but was only published on Tuesday night. As detailed in our previous article (here), the Bill seeks to restructure An Bord Pleanála (renamed An Coimisiún Pleanála) and to improve development consenting processes by  imposing strict time periods for planning decisions, as well as reforming the judicial review procedure.

In May, the Joint Committee on Housing Local Government and Heritage published its report on pre-legislative scrutiny and made a number of recommendations, some of which have been carried through to the text of the Bill. The resulting text is said to have been refined to ensure consistency throughout the Bill and is accompanied by an explanatory memorandum – a welcome addition.

Judicial Review

Some key changes made to the Bill as drafted in January include more specific provisions on the operation of the judicial review system. These include allowing for unincorporated bodies to judicially review a decision in narrow circumstances and removing the strict procedural time limits set out in the draft heads of the Bill. In particular the 8 week deadline for delivery of a judgment has been replaced with an obligation on the Court to deal with the matter “as expeditiously as possible consistent with the administration of justice.” A welcome retention is the limitation that any appeal from the High Court can only go to the Supreme Court.

The Bill also provides for a scheme known as the “environmental legal costs financial assistance mechanism” whereby those taking a judicial review challenge can apply to the Department of the Environment for a “contribution” to their legal costs, to be paid whether or not they are successful. This is novel and will require detailed consideration.

Statutory time limits

The Bill also sets out mandatory time limits for determining planning applications as follows.

In respect of applications to local/planning authorities:

  • 8 weeks where no Appropriate Assessment (AA) or Environmental Impact Assessment (EIA) is required;
  • 12 weeks where AA or EIA is required;

In respect of appeals to An Coimisúin Pleanála:

  • 18 weeks where no AA or EIA is required, if an RFI is issued 6 further weeks from when the RFI is complied with or is required to be complied with;
  • 26 weeks where AA or EIA is required, if an RFI is issued 10 weeks further from when the RFI is complied with or is required to be complied with

Our Environmental and Planning Team is busy reviewing the Bill.  We will be updating this post and our website with further analysis pieces in the coming weeks.

For more information, please contact Alan Roberts, Partner, Jason Milne, Partner, Alison Fanagan, Consultant, or any member of ALG’s Environmental & Planning team.