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Advice for this first-time Landlord?

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  • 18-08-2011 5:29pm
    #1
    winterlight
    Registered Users Posts: 70 ✭✭


    I've just moved into my partner's house and I am going to rent out my own.

    It's a 4-bed and I was going to rent it out room by room:
    2 x Double Rooms (1 ensuite)
    2 x single rooms

    I rented in various house-shares for years before I bought my house in late 2009 so I know what to expect from a tenant's point of view.

    However I fear I may be a bit 'green' about the rights/responsibilities and legal side of being a landlord.

    I'd be grateful for any tips you might have.


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    #2
    Treehouse72
    Registered Users Posts: 1,003 ✭✭✭Treehouse72


    winterlight wrote: »
    However I fear I may be a bit 'green' about the rights/responsibilities and legal side of being a landlord.



    If that's the case I think renting out individual rooms is a bad idea. You make your life much easier if it's a single lease covering the whole house.


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    #3
    odds_on
    Closed Accounts Posts: 1,869 ✭✭✭odds_on


    Treehouse72 wrote: »
    If that's the case I think renting out individual rooms is a bad idea. You make your life much easier if it's a single lease covering the whole house.

    If you rent out by room, you don't have to register with the PRTB; if the house is rented out as a single unit you must register with the PRTB and all its inconveniences and costs.


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    #4
    winterlight
    Registered Users Posts: 70 ✭✭winterlight


    Treehouse72 wrote: »
    If that's the case I think renting out individual rooms is a bad idea. You make your life much easier if it's a single lease covering the whole house.

    Thanks, I'm just trying to educate myself so that I'm not 'green' anymore!
    I've checked daft for rental properties in my area. The rental market in my area seems to be absolutely flooded with whole-house lettings and there are very few options for people who just want to rent a room. I've heard younger people at work complain to this effect also. So I thought I would have a better chance if I let it room by room.


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    #5
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    Treehouse72 wrote: »
    If that's the case I think renting out individual rooms is a bad idea. You make your life much easier if it's a single lease covering the whole house.

    The big plus from a landlord's perspective to letting a house separately on a room by room basis- is Housing standards regulations as they pertain to a rented property doesn't apply.

    There have been precious few cases up in front of the PRTB on this matter (yet), however TR10/DR532&589/2006 (I know its from over 5 years ago) states that letting a house room by room, does not entitle the tenant to the safeguards afforded to a renter of a self contained residential unit- which is defined under the 2004 Residential Tenancies Act.

    Personally I think letting a property on a room-by-room basis, is a recipe for disaster- I'd be gunning for getting a group of people to sign a joint lease of the property in its entirety- as this would make them jointly responsible for the property and their obligations towards you (principal of which is the payment of rent) also becomes a joint obligation.

    I think letting the house room by room- is a really really bad idea- but thats just me......?


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    #6
    Treehouse72
    Registered Users Posts: 1,003 ✭✭✭Treehouse72


    winterlight wrote: »
    Thanks, I'm just trying to educate myself so that I'm not 'green' anymore!
    I've checked daft for rental properties in my area. The rental market in my area seems to be absolutely flooded with whole-house lettings and there are very few options for people who just want to rent a room. I've heard younger people at work complain to this effect also. So I thought I would have a better chance if I let it room by room.


    You may very well be right, I don't know your area or the market there.

    But in general terms amateur landlords underestimate how much of a pain in the ass the whole thing is. I suspect the #1 factor in that is having to deal with tenants. I can imagine that being a nightmare. So in theory with 4 tenants you are increasing those potential headaches by a hell of a lot.

    And remember it will often mean 4 times the advertising costs (assuming they all leave at different times, which is likely) and 4 times the void periods on each room.

    I am not certain the benefits of not having to sign for the PTRB outweigh that hassle. But as I say, you know the market in your area better than anyone so if that's the only way to fill the house then you might have no choice.

    My ideal advice: If the market is flooded with rentals, price yours miles below the competition, and take the pick of the best/most reliable tenants who come to see it (you'll get a decent choice if you price well). Unfortunately, taking that hit on rent might not be financially possible for you, but if it is it might be worth it to get a secure income for the whole house for 12 months and tenants you trust.


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    #7
    Penny Dreadful
    Registered Users Posts: 3,041 ✭✭✭Penny Dreadful


    I rented out my house on a room by room basis for a number of different reasons. One of them was that I thought it would be easier to rent the place out like that rather than as a single unit for the same reasons you have stated.
    The rooms got rented out quickly and easily enough but as others have said it became a difficulty in time. One couple who rented the master bedroom have caused some damage to the house and I've had to ask them to leave (previous thread posted here on how much of a deposit can a landlord keep if you wish to read it). Now the house will be let to one couple only and I'm much happier about it.


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    #8
    BostonB
    Closed Accounts Posts: 18,056 ✭✭✭✭BostonB


    All it takes is one person that no one likes to empty the other rooms and you'lll find it impossible to rent them while that person stays. You'll end up with a partially rented house.


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    #9
    catch me if you can
    Closed Accounts Posts: 150 ✭✭catch me if you can


    I have a 4 bed house rented out. I rent by the room.
    This way I get more rental income for the property.
    i find it is a hassle at times when tenants leave but usually i loose maybe 1 tenant per year on average . have been doing it 5 years. i always get a replacement tenant.
    i have the rooms rented this way
    double bedrrom 420 (3 of these rooms in the house)
    double bedroom ensuite 520 (huge room with walk in closet and flatscreen tv and 1,000 euro worth of a luxury bed)
    the property is very modern and behind electronic gates with loads of safe parking in there and lovely garden., i maintain the house to a high standard for the tenants and I pay all bills including esb, bins, tv , 8g broadband.
    they pay their rent monthly and they buy their own oil as and when they need it.
    i had one difficult tenant in all the years. the others complained to me. i couldnt reach a resolution with the bad tenant so i got rid of her with a months notice. all other tenants happy out and stayed . so dont worry about issues like that just be careful and vet people before they move in .
    also i do not make my tenants find replacement tenants i do all the work on that. the tenants always get the deposits back off me once 1 months notice given.
    i look after the house even though im not living there . get all repairs done and last week had the house painted internally for them to freshen it up.


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    #10
    winterlight
    Registered Users Posts: 70 ✭✭winterlight


    BostonB wrote: »
    All it takes is one person that no one likes to empty the other rooms and you'lll find it impossible to rent them while that person stays. You'll end up with a partially rented house.

    Very true. I've been in that situation myself a number of times where one person manages to clear an entire house.


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    #11
    winterlight
    Registered Users Posts: 70 ✭✭winterlight


    I bought the property in September 2009, as a first-time buyer. So I got an owner-occupier mortgage and I didn't pay stamp duty. Three more points that I'm wondering about now:

    1. Will renting my house out affect Stamp Duty now?

    2. Will my mortgage change?

    3. Also, I am not moving out until December. A friend suggested to me today that I could rent 3 of the rooms as part of the rent-a-room scheme till December, then when I move out I'd have one room to fill and I'd know the other tenants. What do you think of that as an option?


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    #12
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    winterlight wrote: »
    I bought the property in September 2009, as a first-time buyer. So I got an owner-occupier mortgage and I didn't pay stamp duty. Three more points that I'm wondering about now:

    1. Will renting my house out affect Stamp Duty now?

    There is a 2 year exclusion on letting the property, other than under the rent-a-room scheme, under which you would have to continue to live there, and could generate including bill shares, a maximum revenue of 10k

    Breach of this 2 year rule classifies the property as an investment property, and stamp duty would be applicable at the price paid for property as an investor.

    There is one exception to this- and thats any papers signed after 1.12.2010- which you don't appear to meet.......
    winterlight wrote: »
    2. Will my mortgage change?

    Depends on your lender however in general-

    a- you are not entitled to favourable treatment as an owner-occuppier, your mortgage is moved onto an investor rate (depending on the lender 1-1.5% higher interest rate than a residential rate).

    b- you forfeit TRS- its no longer applicable

    c- mortgage interest is however now an allowable expense against rental income before determination of your taxable income (currently at the 75% rate)

    So- your mortgage goes up significantly, however 75% of the interest you're paying can be written off against the rental income.

    Something else to consider- your rental income gets added to any other income you have- you pay tax at your marginal rate on it......
    winterlight wrote: »
    3. Also, I am not moving out until December. A friend suggested to me today that I could rent 3 of the rooms as part of the rent-a-room scheme till December, then when I move out I'd have one room to fill and I'd know the other tenants. What do you think of that as an option?

    Any income you'd get between now and then would be tax free- if under 10k,

    I would *not* want to let any house under these conditions myself- when you have 4 different people renting 4 rooms- suddenly you have 4 times as much work and trouble- as you would have, had you one person/couple letting the whole property. There are plenty of threads in this forum where people give their thoughts vis-a-vis letting houses on a room-by-room basis. It works well for some people- for other people its a disaster.


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    #13
    ricman
    Closed Accounts Posts: 1,559 ✭✭✭ricman


    first rule is 1 person per room, 2nd,look for letter from employer,payslip,id, people will lie,make sure tenant is working earning at least 300 per week.ITS simpler choose either
    men or women, ie it doesnt work out ,1woman 2 men,there will be trouble.If you get a bad feeling bout a person,dont take,em , interview prospective tenant for 15mins ,get 4 weeks deposit ,at least 300euro.Make it clear, no sublets, ie you cant move in your girlfriend without permission,avoid renting to a couple ,its not worth the trouble.


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    #14
    Fol20
    Registered Users Posts: 3,624 ✭✭✭Fol20


    ricman wrote: »
    first rule is 1 person per room, 2nd,look for letter from employer,payslip,id, people will lie,make sure tenant is working earning at least 300 per week.ITS simpler choose either
    men or women, ie it doesnt work out ,1woman 2 men,there will be trouble.If you get a bad feeling bout a person,dont take,em , interview prospective tenant for 15mins ,get 4 weeks deposit ,at least 300euro.Make it clear, no sublets, ie you cant move in your girlfriend without permission,avoid renting to a couple ,its not worth the trouble.

    I always thought having a combination of both is the best way to go..Keeps both on their best behaviour


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