A NEW law passed last night aims to slash residential and industrial rents for a period of one year, in a bid to ease the pressure on tenants and shopkeepers amid the financial squeeze.
Residential rents up to €300 will see a reduction of 15 per cent (up to €45). From €300 and above, a reduction of 20 per cent applies, with a maximum reduction in absolute terms of €120.
Commercial rents up to €600 will be slashed by 15 per cent (€90). For rents in the €600 to €2,000 bracket, there will be a 20 per cent decrease, but with a reduction cap of €250, including the €90 in the first bracket. Rents over €2,000 will see a reduction of 20 per cent with a cap of €400.
Any rent fluctuations agreed between the tenant and landlord during the period up to 24 months prior to the enforcement of the new law will be offset against the new arrangements. For instance, if a landlord has recently decreased your rent (initially set at €300) by 10 per cent, they must now cut it by a further 5 per cent only.
Moreover, in the event a landlord had the right under an initial contract with the tenant to raise the rent after a certain period of time (usually two years) but did not exercise this right, this will also be taken into consideration.
The law has force starting from November 1 this year and ending October 2014. It applies to all contracts (rents and leases) concluded prior to October 2012.
Any tenant or leaseholder with more than two rents in arrears must first settle the amount outstanding before being eligible for any of these reductions.
Lawmakers however have omitted to provide for a mechanism to resolve disputes, for example in the event a landlord refuses to comply with the provisions of the new law.
The legislation – voting on which was postponed several times – was authored by AKEL, despite opposition from business groups arguing that the market should be left to regulate itself.
My rents have all been reduced in many cases up to 50% in the last two years This law will create more upset and ultimately push more owners near the edge of the precipice with the banks. Can the government and it’s associated cronies think up any more ludicrous ideas to benefit the people? …… I’m sure they can!
This does help tenants but what about the tenants who already took out a new contract on a reduced rate already? The rents have decreased in the last year and a half, for example a house for rent in 2011 was at 700 Euros and by 2012/13 that same house has already been reduced to 450-500, so doesn’t that count?
Now the rents will go down even more and the landlord will fall behind with the banks on repayments if they have any. This is going to cause more problems for people who owe to the bank!
I am not sure how this is going to work out, but surely there will be problems!
The government just wants to look GOOD to the people, like they are helping but in the long run they are not!
In usual cases when properties are not being sold, the rental market increases due to demand which helps the economy. This is not helping anyone, it is just giving people an excuse to reduce rent which they more than likely can pay.
Am I correct in assuming that this excludes holiday rentals? The “market” it seems has already reduced this yield.
@tony – the full details of the law have yet to be published – so answering your question is difficult at the moment.
Also, it might exclude some types of rental.
We’ll just have to wait and see.
Trying to work out. My tenant moved in and year contract done July 2012. Contract renewed July 2013. So does this apply because the tenant’s original contract was before Oct 12 or is it not applicable because the last contract was after Oct 2012.?
@Manilal Shah – the law has been welcomed by the small shopkeepers’ union – it will ease the pressure on tenants and shopkeepers during the financial crisis.
Residential rents up to €300 will see a reduction of 15 per cent (up to €45). From €300 and above, a reduction of 20 per cent applies, with a maximum reduction in absolute terms of €120.
Commercial rents up to €600 will be slashed by 15 per cent (€90). For rents in the €600 to €2,000 bracket, there will be a 20 per cent decrease, but with a reduction cap of €250, including the €90 in the first bracket. Rents over €2,000 will see a reduction of 20 per cent with a cap of €400.
The law has starts from November 1 this year and ends on October 2014. It applies to all contracts (rents and leases) concluded prior to October 2012.
Residential Rent has already gone down by 20 to 25%. I cannot understand how stupid Government can be. Rent goes up or down on its own due to supply and Demand. I cannot see current Government can Improve Living Standard of its People. Government cannot control Markets.
As far as the residential market is concerned this will no doubt be another nail in the coffin.
I rent to help with the bills as I cannot sell without title deeds and in the last two years I have already seen my income drop from a yield of 3.44% to 2.16% before tax and costs.
I would therefore suggest that the residential market has already regulated itself.
Does the rent allow for the tenant not paying for the common expenses or can the landlord now include the common expenses in the rent and then reduce the rent by 20% ?