Planning and Development (Housing) and Residential Tenancies Act 2016 – affect on Part 4 Tenancies

When a tenant has been in continuous occupation of a property for six months, they will acquire protection under Part 4 of the Residential Tenancies Act 2004 (the 2004 Act) as amended. This is known as a Part 4 Tenancy. Prior to the Planning and Residential Tenancies Act 2016 (the 2016 Act), Part 4 Tenancies ran in 4-year cycles. This meant that where a tenant was in occupation of the property for six months, the tenant could remain in occupation for a further three and a half years with a landlord’s right to terminate in very specific and limited circumstances. Once the four-year cycle ended, a new tenancy started known as a "Further Part 4 Tenancy".

The 2016 Act now provides that Part 4 Tenancies and Further Part 4 Tenancies commencing on or after 24 December 2016 which now run in six-year cycles.

Grounds for terminating Part 4 tenancies & further Part 4 tenancies

A landlord can only terminate a Part 4 Tenancy or a Further Part 4 Tenancy in the following circumstances:

• the tenant has failed to comply with their obligations under the lease
• the landlord intends to sell the dwelling within the next three months (except for multi-unit developments as detailed in our article here)
• the landlord requires the dwelling for their own occupation or that of a family member
• vacant possession is required for substantial refurbishment of the dwelling
• the landlord intends to change the use of the dwelling
• the property is no longer suited to the tenants needs

Abolition of probationary period

Prior to the 2016 Act, the 2004 Act allowed a landlord to terminate a Further Part 4 Tenancy without giving any reason within the first six months of the new tenancy coming into existence.  This has now been abolished under the 2016 Act from 17 January 2017. The landlord must follow proper procedure and provide one of the above reasons if they wish to terminate a Further Part 4 Tenancy. However, where a Further Part 4 Tenancy was already in existence prior to 17 January 2017, there is a transitional provision which allows for the continuation of the “probationary period” in specific cases until the earlier of 16 July 2017 or six months from the commencement of the relevant Part 4 Tenancy.

Prevention is better than the cure

An important point to note is that a landlord can prevent a Further Part 4 Tenancy from coming into existence if they serve a notice during the original Part 4 Tenancy with the notice period expiring on or after the end of the original Part 4 Tenancy. While a landlord is required to give a reason for the termination of the tenancy in these circumstances, it does not need to be based on any of the grounds mentioned above. This option is often overlooked and is valuable option for a landlord who wishes to prevent a Further Part 4 Tenancy coming into force.

Lessons for landlords

The laws relating to residential tenancies have evolved in recent times and further strengthen the rights of tenants. Where a landlord is seeking to terminate a tenancy, they should obtain legal advice in advance to confirm that they are following proper procedure. In particular, where a landlord wishes to prevent a tenant acquiring a Further Part 4 Tenancy, they should ensure that they record the date of commencement of the original tenancy and serve notice of termination well in advance of the end of the original Part 4 Tenancy. Once the Further Part 4 Tenancy commences, a l landlord will no longer be in a position to terminate within six months of a Part 4 Tenancy and the tenant will be entitled to remain for a further six years save in limited circumstances.