Letting house - to travel the world!

ElecKtrA

Hi guys,

So here is the situation:

I'm 28 years old, and in a job 5 years come Xmas. I own my own house, i bought it three years ago. I have decided that i want to take a gap year out to travel some of the world. I've not long left before i am no longer eligible for the Australian Work Visa, which is where i eventually want to end up, after touring parts of Asia and New Zealand.

I am thinking of letting my house out for the year. I have no idea where to start! I don't know anything about leases/lettings. I would like to maybe get a management company to oversee the running of it for the year as i don't want the hassle of dealing with tenants.

So, what i'm really looking for is some advice on letting it out, any terms & conditions that i should be aware of, useful informative websites that i should read etc.

Also, does anyone know if there is a government policy in place that states that i should be living in the house for a minimum number of years before i can let it out? For some reason, i think there might be...i could be wrong of course.

Thanks for any replies in advance

djimi

If you are going travelling then you are better off hiring the services of a letting agent to look after the place for you while you are away. The last thing you need while off around the world is to be getting phone calls all the time from your tenant looking to get issues sorted!

Have a look the likes of Citizens Information, Threshold and Irish Landlord, which will all have useful information.

One thing to be aware of is that if you sign the tenant to a one year lease, and for whatever reason you need to return early, then the tenant has no obligation to give back the property until the lease has expired.

Pawwed Rig

ElecKtrA wrote: »

Also, does anyone know if there is a government policy in place that states that i should be living in the house for a minimum number of years before i can let it out? For some reason, i think there might be...i could be wrong of course.

Not as such but you would need to inform your bank with regard to mortgage interest relief. If it was a self build there may be conditions on how long you need to live there imposed by the planning permission. It used to be the case that if you bought as a first time buyer and were exempt from stamp duty then you needed to stay for 5 years or there would be a stamp duty claw back but that was reduced to 2 years. If you paid SD after this FTB exemption was scrapped then this will not apply to you.

ElecKtrA

Pawwed Rig wrote: »

Not as such but you would need to inform your bank with regard to mortgage interest relief. If it was a self build there may be conditions on how long you need to live there imposed by the planning permission. It used to be the case that if you bought as a first time buyer and were exempt from stamp duty then you needed to stay for 5 years or there would be a stamp duty claw back but that was reduced to 2 years. If you paid SD after this FTB exemption was scrapped then this will not apply to you.

Cheers for your reply, it isn't a self build, just a house in a housing estate.
I was exempt from stamp duty when i was buying the house three years ago as i was a first time buyer. So i won't be liable to pay anything back to the goverment as they have reduced the minimum number of years to two years living in the property! Sweet

ElecKtrA

djimi wrote: »

If you are going travelling then you are better off hiring the services of a letting agent to look after the place for you while you are away. The last thing you need while off around the world is to be getting phone calls all the time from your tenant looking to get issues sorted!

Have a look the likes of Citizens Information, Threshold and Irish Landlord, which will all have useful information.

One thing to be aware of is that if you sign the tenant to a one year lease, and for whatever reason you need to return early, then the tenant has no obligation to give back the property until the lease has expired.

Thanks for your reply. Yes, thats another thing..if i decided to come home a few months earlier (which would be unlikely :P) but if the lease is not up then i can't kick them out of my house (i guess tenants have rights too :eek:). Is there different lengths in leases i.e. 6 mth, 10 mth lease etc?

fricatus

Pawwed Rig wrote: »

Not as such but you would need to inform your bank with regard to mortgage interest relief. If it was a self build there may be conditions on how long you need to live there imposed by the planning permission. It used to be the case that if you bought as a first time buyer and were exempt from stamp duty then you needed to stay for 5 years or there would be a stamp duty claw back but that was reduced to 2 years. If you paid SD after this FTB exemption was scrapped then this will not apply to you.

This is all correct except for one point - it's the Revenue Commissioners that you have to inform about the mortgage interest relief. They then contact the bank.

Hopefully the bank won't cop that you've moved out and put you on a different interest rate (especially if you're on a tracker for instance).

Definitely use the services of a letting agency. I'm using one even though I live near the house I have let out, just so that we don't have to deal with the hassle of finding tenants, etc. 10% of the rent is a small price to pay.

What part of the country are you in? Maybe people can recommend agencies to you via PM...

Pawwed Rig

fricatus wrote: »

This is all correct except for one point - it's the Revenue Commissioners that you have to inform about the mortgage interest relief. They then contact the bank.

Apologies. Fricatus is correct on this point.

Re the Stamp duty issue here is a link for sanity.

http://www.revenue.ie/en/tax/stamp-duty/certificates/clawback.html

djimi

ElecKtrA wrote: »

Thanks for your reply. Yes, thats another thing..if i decided to come home a few months earlier (which would be unlikely :P) but if the lease is not up then i can't kick them out of my house (i guess tenants have rights too :eek:). Is there different lengths in leases i.e. 6 mth, 10 mth lease etc?

Standard fixed terms would be either 6 months or 12. I suppose in theory there is nothing to stop you setting it to whatever length you like, but tenants might find it funny to be asked to sign something non-standard.

You could always sign the tenant to a 6 month lease and then let it run over into a part 4 tenancy. Under the terms of a P4T you can terminate the lease (with set notice; 28 days for less than a year, 35 days if between 1 and 2 years etc) if you require the property for your own use. This would give you some degree of flexibility should you decide to return home early. It would, however, mean forfeiting some of the security that a fixed term lease offers you, in that there would be nothing to stop the tenant giving notice and leaving after 6 months if they wanted to.

ElecKtrA

fricatus wrote: »

This is all correct except for one point - it's the Revenue Commissioners that you have to inform about the mortgage interest relief. They then contact the bank.

Hopefully the bank won't cop that you've moved out and put you on a different interest rate (especially if you're on a tracker for instance).

Definitely use the services of a letting agency. I'm using one even though I live near the house I have let out, just so that we don't have to deal with the hassle of finding tenants, etc. 10% of the rent is a small price to pay.

What part of the country are you in? Maybe people can recommend agencies to you via PM...

Thannks for the information. Yeah, i definately intend on using the services of a letting agency as i think it would be for the best. If that is all they are charging (10%) then it would absolutely be worth it!

I'm in Cork City..so i guess there are a few agencies i can check out. Another question, when should i start advertise the house up for lease, should i give myself 2 months before i leave? It obviously depends on demand out there which is difficult to gauge! i would prefer to have an input on what tenants i would like to lease the house out to (i.e. professional people/young family/a couple).

Pawwed Rig

You should also make yourself aware of your tax obligations. There are too many to go into detail here and they can be complicated for someone who is new to filing their own returns.
Additionally there are PRTB requirements and landlord tenant law with which you should familiarise yourself.
Being a landlord is not something you should take lightly as if you do not know what you are at you can be very badly burned.

fricatus

ElecKtrA wrote: »

Thannks for the information. Yeah, i definately intend on using the services of a letting agency as i think it would be for the best. If that is all they are charging (10%) then it would absolutely be worth it!

That seems to be the going rate in Waterford for the second and subsequent months, although they seem to differ about the initial setup cost. I went with a crowd that charge a very low rate for the first month - the rationale being that I want them to have an incentive to get and maintain a good long-term tenant, rather than turning the place over every six months and charging me for the privilege!

ElecKtrA wrote: »

I'm in Cork City..so i guess there are a few agencies i can check out. Another question, when should i start advertise the house up for lease, should i give myself 2 months before i leave? It obviously depends on demand out there which is difficult to gauge! i would prefer to have an input on what tenants i would like to lease the house out to (i.e. professional people/young family/a couple).

I would call around the agencies and discuss these points with them. If you understand, and tell them, that you're more interested in securing a good tenant for the longish term, as opposed to signing up the first guy that comes along, they should act according to your wishes. They tend to have experience of who's good and who's bad. In any event, you should have the final say.

Pawwed Rig wrote: »

You should also make yourself aware of your tax obligations. There are too many to go into detail here and they can be complicated for someone who is new to filing their own returns.

Very true - get someone who understands this stuff to help you out. Keep all your receipts for anything spent on the house, although if it's fully managed through an agency, they will issue a statement including deductions for electrical, plumbing or other repair work carried out.

Pawwed Rig wrote: »

Additionally there are PRTB requirements and landlord tenant law with which you should familiarise yourself.
Being a landlord is not something you should take lightly as if you do not know what you are at you can be very badly burned.

In our case the agency took care of the PRTB bit for us.

ElecKtrA

Thanks guys for all the helpful advice!

Just one other question....is there a threshold on how much you can receive in rent before it is taxed?

Grandpa Hassan

When you've taken into account the tax, and the hassle of making it all legit with the PTRB, you might find that you're better off just renting a room given that it's just 1 year, maybe less. There's bound to be a friend of a friend looking for a place. As you're only travelling there is no reason it wouldn't still be counted as your primary residence, and there is a tax free threshold (€8k?) under the rent a room scheme. There is no tax free threshold for normal rental income

That's what I would do, and indeed have done a couple of times before when I've taken off for a few months. Less hassle for just the 1 year

Pawwed Rig

OP to be honest with you your knowledge base on this is starting from a very low position so if I was you I would not even consider going ahead with this until I had done ALOT of research. We can answer questions here but there are literally hundreds of things that have not been touched on yet in this thread that you need to be aware of. Being a landlord can be extremely difficult at times.
Look at the following links. These will give you an overview of your obligations
www.revenue.ie
www.prtb.ie
www.threshold.ie
http://www.irishstatutebook.ie/2004/en/act/pub/0027/index.html
http://www.citizensinformation.ie/en/

Also you can scroll back through this section of boards and look at the issues that keep arising for landlords.

ElecKtrA

Pawwed Rig wrote: »

OP to be honest with you your knowledge base on this is starting from a very low position so if I was you I would not even consider going ahead with this until I had done ALOT of research. We can answer questions here but there are literally hundreds of things that have not been touched on yet in this thread that you need to be aware of. Being a landlord can be extremely difficult at times.
Look at the following links. These will give you an overview of your obligations
www.revenue.ie
www.prtb.ie
www.threshold.ie
http://www.irishstatutebook.ie/2004/en/act/pub/0027/index.html
http://www.citizensinformation.ie/en/

Also you can scroll back through this section of boards and look at the issues that keep arising for landlords.

Ok, that is very true..i can only imagine that there is so much information out there regarding leasing a house..and it appears not to be as straightforward as i was thinking...perhaps maybe just renting a few rooms out to some professional people would be a better option for me

I'm going to research into the above sites mentioned and read back through other threads on this forum and maybe it's not as daunting as i think.

Cheers

ElecKtrA

Grandpa Hassan wrote: »

When you've taken into account the tax, and the hassle of making it all legit with the PTRB, you might find that you're better off just renting a room given that it's just 1 year, maybe less. There's bound to be a friend of a friend looking for a place. As you're only travelling there is no reason it wouldn't still be counted as your primary residence, and there is a tax free threshold (€8k?) under the rent a room scheme. There is no tax free threshold for normal rental income

That's what I would do, and indeed have done a couple of times before when I've taken off for a few months. Less hassle for just the 1 year

Thanks for your reply. Yes, that is something i was thinking of doing (rent out a few rooms to professional people) but the only issue i would have with that is that if one of them or two ..were to leave after a few months, it would create alot of hassle with me trying to find new tenants when i am not in the country...again maybe a management company would look after this aspect for me .. there is alot to be considered!

djimi

ElecKtrA wrote: »

Thanks for your reply. Yes, that is something i was thinking of doing (rent out a few rooms to professional people) but the only issue i would have with that is that if one of them or two ..were to leave after a few months, it would create alot of hassle with me trying to find new tenants when i am not in the country...again maybe a management company would look after this aspect for me .. there is alot to be considered!

While that issue might also occur with a tenant, its obviously more likely to occur with a licensee who has no formal obligation to stay or give notice at all. The other side of that though is that not many licensees will be virtually guaranteed exclusive use of the entire property, which would obviously be seen as a big plus point for them.

quietsailor

Grandpa Hassan wrote: »

When you've taken into account the tax, and the hassle of making it all legit with the PTRB, you might find that you're better off just renting a room given that it's just 1 year, maybe less. There's bound to be a friend of a friend looking for a place. As you're only travelling there is no reason it wouldn't still be counted as your primary residence, and there is a tax free threshold (€8k?) under the rent a room scheme. There is no tax free threshold for normal rental income

That's what I would do, and indeed have done a couple of times before when I've taken off for a few months. Less hassle for just the 1 year

This is thebest advice you've been given so far as the legal requirements that you need to comply with are huge and you'll only be a landlord for a year.

A second thing to think about is if your considering coming home and living in this house again is it really your home or an investment property? I'm currently an owner occupier renting rooms but I've never regarded this house as "home", if furniture gets broken I fix or replace it and there is no hassle given to the tenants about repairs unless they acted the maggot in the first place and damaged it. If you've an emotional attachment to the house, the way its decorated and the furnishings within be warned that you'll probably get upset if you come home and see damaged furniture, dirty walls etc. If your attached to the house it might be worth looking around for a friend you trust to rent a room off you and let it to them cheap on the understanding that it is to be returned to you in the EXACT same condition you let it out. No matter how nice they are people don't care for rented property as well as they care for their own.


Rent a room scheme You can take in MAX €10,000 before you pay tax on the rental income. BE WARNED that if you take in €10,000 & 1c then they consider you over the limit and tax you on all of it.

I really wouldn't think of this as a way to earn any profit, if you decide to rent it out as a house you'll have to hire a management agent and probably an accountant to file your returns as rental income is considered non-PAYE income and needs a different return, you'll have PRTB costs, maintenance costs etc. I would only look at renting as a way to stay even with your costs

Pawwed Rig

ElecKtrA wrote: »

I'm going to research into the above sites mentioned and read back through other threads on this forum and maybe it's not as daunting as i think.

It is as daunting as you think. Probably more so. But still achievable