In this post, we will explore the exemptions to RPZ restrictions and provide clarity on the criteria that apply.
RPZ Exemption Rules and Criteria
RPZ exemptions exist to accommodate specific circumstances where landlords are not bound by the 2% or (if it is lower) the HICP (Harmonised Index of Consumer Prices) rules when setting or reviewing rents.
Here are the three primary RPZ exemptions:
Exemption 1: Properties Not Rented for Two Years
The first exemption applies to dwellings that have not been rented for a period of two years before the new tenancy commencement date. In this case, landlords can set the rent without adhering to the RPZ formula. However, all subsequent rent reviews must then follow RPZ guidelines.
Exemption 2: Dwellings in Protected Structures
The second exemption pertains to dwellings within protected or proposed protected structures that have not been rented for a period of 12 months prior to the new tenancy commencement date.
Exemption 3: Substantial Change in Accommodation
The third and most intricate exemption involves a 'substantial change' in the nature of the accommodation. To qualify for this exemption, the following criteria must be met:
1. The works carried out to the dwelling should include a permanent extension that increases the floor area by at least 25% of the original floor area.
2. In cases where the European Union (Energy Performance of Buildings) Regulations 2012 apply, the Building Energy Rating (BER) must be improved by at least 7 building energy ratings.
or (three or more of the below combined):
- The internal layout of the dwelling must be permanently altered.
- The dwelling must be adapted to provide access for a person with a disability under the Disability Act 2005.
- A permanent increase in the number of rooms.
- For dwellings with a BER of D1 or lower, the BER must be improved by at least 3 building energy ratings.
- For dwellings with a BER of C3 or higher, the BER must be improved by at least 2 building energy ratings.
Applying for RPZ Exemptions
If a landlord believes they qualify for one of these RPZ exemptions, they must follow a specific process:
- Use the prescribed "Notice of Exemption from RPZ Rent Restriction" form.
- Attach all relevant supporting documentation to the form.
- Submit the completed form and attachments to the Residential Tenancies Board (RTB) within one month of the rent setting taking place (once the RT number has been confirmed).
This ensures that landlords can benefit from the exemption they qualify for while maintaining compliance with RPZ regulations.