The Tyrrelstown Amendment – restrictions on terminating tenancies in multi-unit developments

This amendment follows the public outcry after the high profile attempt to terminate multiple tenancies in a development in Tyrrelstown, Dublin last year. The Tyrrelstown Amendment came into force on 17 January 2017.

Part 4 Tenancies

Once a tenant has remained in continuous occupation of a property for 6 months, they will acquire security of tenure under Part 4 of the Residential Tenancies Act 2004 (the 2004 Act) – known as a Part 4 Tenancy. This type of tenancy will be of most concern for a landlord who wishes to obtain vacant possession of a multi-unit development as they will only be able to terminate the tenancy in limited circumstances. For further detail on Part 4 Tenancies please see our article here.

Changes under the Act affecting multi-unit developments

The 2016 Act introduces a radical amendment which will have a significant impact on landlords and in particular institutional landlords and investment companies who wish to sell multi-unit developments which are subject to Part 4 tenancies. The 2016 Act amends the 2004 Act to provide that where a landlord proposes to sell ten or more units within a single multi-unit development within a period of six months, that sale will be subject to the existing Part 4 tenants remaining in situ.

But there is an exception to this new rule where:

• the market value of the property sold with the tenants in situ is 20% below the price which could be obtained for the property with vacant possession
• the application of the rule would be unduly onerous or cause hardship to the landlord

The 2016 Act does not provide any guidance on what would be considered “unduly onerous” or “hardship” to a landlord and this is likely to be the subject of much debate.

The Tyrrelstown Amendment will apply to all Part 4 tenancies including those in existence prior to the commencement of the 2016 Act. However, the Tyrrelstown Amendment does not have retrospective effect and will not affect the validity of a termination notice served prior to the commencement of the provisions on 17 January 2017.

Key take-away for landlords

Over the last number of years, the obligations of landlords when terminating tenancies have become more and more onerous, so landlords should ensure that they consider all formalities under the legislation and ensure they are strictly adhered to.  Where proper procedure is not followed this could significantly delay the termination of the tenancy and frustrate any future sale of the property. Legal advice should be sought in advance of any steps towards terminating tenancies in a multi-unit development in anticipation of a sale.