Aoife Smyth Knowledge Consultant
2024 AT A GLANCE
- 2024 has seen the new rates regime, which was legislated for late last year, come into force. The reforms are significant. They end secondary liability for arrears, require occupiers to clear outstanding rates before a sale and introduce criminal sanctions for a failure to notify the rating authority of changes in occupation.
- The revised EU Directive on the energy performance of buildings mandates progressive upgrades for energy performance, aiming for zero-emissions buildings by 2050; targets focus on the lowest-performing properties.
- Housing remains a priority policy issue for the Government, which in turn continues to impact on the regulation of residential tenancies.
- Budget 2025 has introduced tax changes affecting real estate, to include a 6% stamp duty applying to residential purchase prices over €1.5m and increased duty on the bulk acquisition of houses and duplexes.
- 'Housing for All’ Expert Group recommendations advocate for significant reforms of conveyancing practice, including an ambitious 2027 target for full eConveyancing adoption.
LEGISLATIVE DEVELOPMENTS
Commercial rates
Significant changes in commercial rates legislation came into force in 2024. These are still bedding down in practice, but the main developments can be summarised as follows:
- Liability for arrears: The concept of “secondary liability” for subsequent occupiers is no more – liability for arrears is now ring-fenced to the entity which was in occupation at the time they accrued.
- Set-off provisions: Local authorities can now offset sums owed to individuals against their rates liabilities.
- Interest: A daily interest rate of 0.0219% (approx. 8% per annum) now applies to overdue rates.
- Pre-sale requirements: Where the liable person (i.e. the occupier or person entitled to occupy) proposes to sell a property, they must, prior to completion, pay any outstanding rates. Rates can be apportioned with the local authority so that the liable person need only pay up to and including the day before completion. In practice, however, it is frequently easier to pre-pay the entire year’s rates and apportion with the purchaser on completion.
- Charge on property: Any unpaid rates and associated interest owed by the owner are a charge on the property for an unlimited period. This does not apply to unpaid rates owed by a tenant occupier (although the tenant can be pursued for those unpaid rates by the local authority). However, there is an important qualifier to the effect that this charge is only of relevance for so long as the defaulting owner remains the owner – where the property is sold, the charge no longer applies.
- Notification: Failure to notify the relevant local authority of a change in occupier now results in the commission of a criminal offence.
- Vacant premises abatement: Local authorities may establish abatement schemes for vacant premises, but the Minister for Housing, Local Government and Heritage (the Minister) may prescribe a maximum abatement allowed. Regulations for abatement schemes are in place, but no cap has (yet) been set.
Further guidance from the Department of Housing, Local Government and Heritage, originally anticipated in early 2024, is still awaited.
Building Energy Performance
The recast Energy Performance of Buildings Directive (EU) 2024/1275 (the EPBD), which aims to make all buildings within the EU zero-emissions by 2050, entered into force across the EU on 28 May 2024. The final text introduced significant changes to the draft which we reported on last year.
One of the most significant developments from the perspective of property owners relates to energy performance certificates (EPCs) (or ‘building energy certificates’ in Ireland). The original intention to harmonise EPCs across the bloc was dropped and replaced with the concept of “improved” EPCs based on a common template, making it easier to compare certificates across Member States.
The other key development is in relation to minimum energy performance standards (MEPS). The previously suggested requirement for individual buildings to achieve a minimum energy rating before they could be either let or sold has been replaced with a more general approach based on the average energy consumption of the building stock in each Member State. The new targets are for the lowest-performing 16% of commercial stock to be renovated by 2030 and the lowest-performing 26% by 2033. For residential properties, Member States must adopt their own national trajectories to reduce the average primary energy use by 16% by 2030 and by 20-22% by 2035 (when compared to 2020’s figures).
The EPBD also introduces the concept of “renovation passports” and provides specific requirements and timelines regarding the installation of solar energy panels on all buildings and the promotion of sustainable mobility in new and renovated buildings.
The EPBD must be transposed by Member States on a phased basis, commencing on 1 January 2025 and with full transposition to occur by 29 May 2026.
Housing
The Housing (Miscellaneous Provisions) Act 2024 (the Act) commenced, in its entirety, on 18 November 2024. It amends the Housing (Regulation of Approved Housing Bodies) Act 2019 and the Affordable Housing Act 2021 and introduces the following key changes:
- Registration of Approved Housing Bodies (AHBs): The Act ensures permanent registration for “deemed” AHBs unless revoked by the AHB Regulatory Authority or requested by the AHB.
- Definition update: The definition of “alleviation of housing need” is expanded to cover all state-funded properties under section 6 of the Housing Act 1992 and cost rental units under the Affordable Housing Act 2021.
- Cost rental eligibility: The Minister may define “household” criteria for cost rental eligibility, including tenant income considerations in shared households.
- Allocation flexibility: The Act permits alternative allocation plans, which can include alternatives to the standard allocation process and additional selection criteria, for cost rental homes with the Minister’s approval.
- Cost rental tenancies: The Act provides for the allocation of cost rental tenancies to tenants in-situ and the transition of homes already acquired into the cost rental sector.
Residential tenancies
Housing policy and the regulation of residential tenancies remain closely linked in 2024.
In July, the Residential Tenancies (Amendment) Act 2024 was enacted, limiting leases and licences of student-specific accommodation to 41 weeks (i.e. the standard academic term), unless the student requests otherwise. Students may terminate with 28 days' notice over the summer months, with penalties for providers who breach the 41-week cap. The provisions only apply to student-specific accommodation as defined in the Residential Tenancies Act 2004.
The Residential Tenancies (Amendment) (No. 3) Bill 2024, also published in July, proposes the introduction of a tenant’s right of first refusal if their home is being sold and the landlord looks to terminate the tenancy. See the 'Looking Ahead' section below for further detail on this legislation.
CASE LAW
Fixtures and fittings – an update
We reported last year on RGRE Grafton Ltd v Bewley’s Café Grafton Street Limited [2023] IEHC 25 and its implications for the law of fixtures and fittings. In September, the Court of Appeal ([2024] IECA 199), by a majority decision, varied the High Court’s rulings in this case concerning whether the Harry Clarke designed windows were landlord’s fixtures or the tenant’s fixtures.
The Court upheld the ruling that the four windows in the external wall were part and parcel of the premises, on the basis that they weathered, lit and ventilated the café and were part of the original structure passing to successive landlords. On the other hand, the Court overturned the lower court’s ruling that two other windows, which formed the inner layer of a double fenestration system, were tenant’s fixtures. The Court took the view that the earlier ruling with respect to these latter windows was based upon “impermissible speculation” and concluded that the landlord had proved, on the balance of probabilities and having regard to the totality of the evidence, that they too were part and parcel of the premises.
This case underscores the fact-specific nature of fixtures and fittings determinations.
Renewals
In its recent ruling in Howard & Ors v Crown Paints Ireland Limited [2024] IECC 10, the Circuit Court clarified elements of the law around a tenant’s right to a new tenancy under Part II of the Landlord and Tenant (Amendment) Act 1980. The Court affirmed that a tenant can withdraw their application for a new lease without penalty, provided there is no abuse of the process. While withdrawing may incur legal costs, the tenant is only liable for the passing rent under the expired lease until they vacate the premises.
The case involved a factory lease that expired in August 2018, after which the tenant continued its occupancy but later withdrew its claim for a new lease in November 2022. The Court ruled that the tenant's withdrawal did not trigger any obligation to pay market rent (which would have been significantly higher than the previously contracted rent) during its extended occupation. The Court emphasised that the initiation of a new tenancy application does not create an obligation to proceed with it.
This decision, currently under appeal, provides clarity for both landlords and tenants about the implications of withdrawing a lease renewal claim.
BUDGET 2025
Stamp duty on residential property
With effect from 2 October 2024, a new 6% stamp duty rate applies to residential property sales with a value over €1.5m — the so-called “mansion tax”. The 6% rate applies on the portion of the purchase price over €1.5m only. Revenue has confirmed that this uplift will not apply to the bulk purchase of three or more apartments in the same block, which are to continue to be taxed at 1% up to €1m and 2% on the balance.
The higher rate of duty that applies where ten or more houses or duplexes are acquired within a 12-month period has also been increased from 10% to 15%. Importantly, apartments continue to be excluded from this provision.
Transitional measures are available for contracts signed before 2 October 2024 and completed before 1 January 2025, subject to a certificate on the instrument. In such cases, the old rates will apply.
Residential Zoned Land Tax (RZLT)
From 2025, landowners engaged in genuine economic activity may request rezoning exemptions from RZLT. Guidance for local authorities on how to consider such requests is due to issue from the Minister.
Vacant Homes Tax (VHT)
The VHT rate has increased from five to seven times the basic local property tax rate, effective November 2024.
CONVEYANCING PRACTICE REFORM
In June, the ‘Housing for All’ Expert Group on Conveyancing and Probate published its final report, proposing 16 recommendations on conveyancing practice to reduce costs and delays. These can be summarised as follows:
- Legislative and procedural changes: The report advocates for legal reforms allowing for electronic signatures for statements of truth and title registration. It also suggests that the Law Reform Commission review planning investigation requirements with a view to possible recognition of "established non-conforming development" to minimise delays from searching outdated planning records.
- Performance targets and services from financial institutions and local authorities: The report recommends that financial institutions should respond to requests for title deeds within ten days and provide an online self-service facility for generation of a redemption figure. Similarly, local authorities should respond to requests for taking-in-charge status and planning information within ten days and enable online payment of fees.
- Title registration: A cost-benefit assessment for a project aimed at accelerating the registration of approximately 300,000 unregistered titles is recommended, alongside a suggestion that Tailte Éireann should prepare a short-term plan to promote eRegistration.
- eConveyancing: The report recommends full implementation of eConveyancing by the end of 2027, along with the establishment of a steering group to collaborate with stakeholders on its rollout. From our experience in practice, we are of the view that this is a very ambitious timeline.
- Conveyancer profession: The report references a study by the Legal Services Regulatory Authority suggesting a new conveyancer profession in Ireland and recommends that this should be revisited after the implementation of other reforms.
- Multi-Unit Developments (MUDs): An assessment of the current MUDs legislation is suggested to address delays in gathering necessary information and certifications for conveyancing MUD units.
The proposals contained in this report are very interesting and, if implemented, have the potential to significantly improve the conveyancing process.
LOOKING AHEAD
There are several potentially significant bills on the Dáil Order Paper (the daily agenda) which could affect real estate assets and transactions. However, their long-term fate is unclear pending the formation of the next Dáil (read Legislation and the dissolution of Dáil Éireann for more on the impact of the General Election on the legislative process).
- There are two substantial pieces of legislation, which support the Housing for All plan, and which did not become law before the dissolution of the Dáil: The Land (Zoning Value Sharing) Bill 2024, which would introduce a 'land value sharing' levy of 25% (reduced from the initially proposed 30%) on the value increase of land re-zoned for development. The levy would apply to land zoned for residential, mixed, commercial, or industrial use, or within a strategic development zone and, if introduced, could raise costs for developers. The Residential Tenancies (Amendment) (No. 3) Bill 2024 could give tenants a right of first refusal to buy their home if their landlord wants to sell it and end the tenancy as a result.
The Bill was published in July but has not progressed since. Its text differs significantly from the General Scheme (which we reported on last year) and it contains quite complex steps around how vacant possession can be achieved by the landlord. The legislation, if enacted, will not apply to a sale of investment property where the tenants are to remain in situ post-sale. However, there remain many open questions as to the extent and manner of its potential application.
- We reported last year on the Seller’s Legal Pack for Property Buyer’s Bill 2021, a Private Member’s Bill which remains on the Dáil Order Paper. It provides that a property cannot be marketed for sale until a “seller’s legal pack”, comprising specified documents, has been prepared. The Government did not oppose the Bill, but the Law Society of Ireland raised concerns around potential additional costs and delays. The Bill was referred for Committee Stage in October 2024, so it remains to be seen if it will be reinstated when a new Government is formed.