Landlord looking to increase rent?

Thomas D

Case study.

I took on a rental of 2 bed apartment in November 2009 in Dublin 4. The rent paid was €1325. The landlord has recently sought an increase of rent after 3 years of tenancy of €300 pointing to ads on daft.

Now, they are entitled to increase the rent in line with market rate. What are the market rates?

the rent which a willing tenant not already in occupation would give and a willing landlord would take for the dwelling, in each case on the basis of vacant possession being given, and having regard to—

(a) the other terms of the tenancy, and

(b) the letting values of dwellings of a similar size, type and character to the dwelling and situated in a comparable area to that in which it is situated.

The issue is that every single property is unique. What a "similar" rents for has a bearing but again we have the problem. What are similar places renting for? Daft ads only show asking price and only a small sample of properties, many of which would not be entirely similar.

The only true way of knowing what the market rate for our rental is to actual go through the whole process of reletting. We can't do that so we need another method.


Now for unbreakable logic.

1. The rent agreed in November 2009 was the market rate as it was set at the margin. (See PRTB Decision :TR24/DR920/2011 )
http://www.prtb.ie/archive/2011%20Disputes/Tribunals%202011/TR24.DR920.2011/Tribunal%20Report.pdf

2. The PRTB maintains a databse of every new rental registered in the country. This is broken down by property type, rooms, area etc.
3. The PRTB index includes average rental prices which our property may be above or below at the time of renting. This is obvious as it might be a better or worse property, better spec, bigger floor area.
4. The general trend for similar rentals from our time of renting in this area is contained in the PRTB data.

So now we look at the PRTB data

Two bed
2007Q4 1,646.75
2008Q1 1,641.96
2008Q2 1,632.53
2008Q3 1,580.92
2008Q4 1,542.58
2009Q1 1,492.95
2009Q2 1,445.32
2009Q3 1,386.02
2009Q4 1,340.72
2010Q1 1,301.77
2010Q2 1,267.80
2010Q3 1,252.31
2010Q4 1,247.57
2011Q1 1,231.09
2011Q2 1,233.79
2011Q3 1,251.53
2011Q4 1,266.95
2012Q1 1,270.05
2012Q2 1,290.08
2012Q3 1,295.95
2012Q4 1,311.99
2013Q1 1,333.57
2013Q2 1,351.28

So Q4 2009 the average rental for a 2 bed in D4 was €1340 so actually our rent was very close at the time. Since then rents have increased by 0.8% up to Q2 2013. This would hold if our 2 bed was a bit bigger and rented for €1500 in Q4 2009.

So the maximum the landlord can ask for in an increase is €1335.

Caveats.
The data only goes up to June this year so is a little bit dated but that could hardly count for much of an increase. You can do the same with the monthly cso rental data but that isn't perfect as it is based on estate agents data and doesn't take into account the type of properties or the exact area.

The key thing is that you can take this to the PRTB and you will win. The landlord can point to daft rental prices but these are only speculative and suffer from sampling. The PRTB data is the most complete data. It is the most accurate data unless landlords are lying.

http://www.prtb.ie/landlords/rent-index

The Private Residential Tenancy Board (PRTB) publishes the most accurate and authoritative rent report of its kind on the private accommodation sector in Ireland. Compiled by the ESRI, and based on the PRTB’s own register of over 273,000 tenancies throughout the State, this index reveals the actual rents being paid for rented properties

murphaph

Why not allow viewings and see if the landlord really can get an extra 300? Then you have a definitive answer. If you think he's bluffing, call it. If he is he'll make another offer. If he's not you either match his increase request or fond somewhere else to live.

Thomas D

murphaph wrote: »

Why not allow viewings and see if the landlord really can get an extra 300? Then you have a definitive answer. If you think he's bluffing, call it. If he is he'll make another offer. If he's not you either match his increase request or fond somewhere else to live.

That's not right to mess people around.

odds_on

Thomas D wrote: »

That's not right to mess people around.

The landlord has made his offer, it is now up to the tenant to:
a) accept the new rent
b) negotiate a lower rent with the landlord
c) not accept the rent and vacate
d) not accept the rent and make a claim with the PRTB

In case d), it is up to the tenant to prove that the new rent is not in line with the market rent, while the landlord will have to prove that the new rent is in line with the market rate.

Thomas D

odds_on wrote: »

The landlord has made his offer, it is now up to the tenant to:
a) accept the new rent
b) negotiate a lower rent with the landlord
c) not accept the rent and vacate
d) not accept the rent and make a claim with the PRTB

In case d), it is up to the tenant to prove that the new rent is not in line with the market rent, while the landlord will have to prove that the new rent is in line with the market rate.

Yes. Option D is the one to always go with assuming the landlord is asking over the odds. You can continue to pay your current rent until the PRTB make a rulling.

odds_on

Thomas D wrote: »

Yes. Option D is the one to always go with assuming the landlord is asking over the odds. You can continue to pay your current rent until the PRTB make a rulling.

Personally, I prefer to go the route of negotiation, armed with certain facts that should I vacate there may be a void period, that I have been a reliable tenant etc.

And a prudent and wise tenant would be setting aside the extra in case the PRTB adjudicate in the landlord's favour.

Unfortunately, not all tenants are wise.

murphaph

Thomas D wrote: »

Yes. Option D is the one to always go with assuming the landlord is asking over the odds. You can continue to pay your current rent until the PRTB make a rulling.

Let us know how you get on then.

QuiteInterestin

How well do you know your neighbours? Could you ask them what they're paying at the moment as its probably the best comparison you'll get with similar properties (Check whats included if you can, they may have bins/broadband included in their rent that you don't etc)? Based on this information, if everyone else is paying lower then what your new rent will be you could negotiate with the landlord for a smaller increase or at least show him what the average rent is for similar properties.

borderlinemeath

Thomas D wrote: »

Case study.

I took on a rental of 2 bed apartment in November 2009 in Dublin 4. The rent paid was €1325. The landlord has recently sought an increase of rent after 3 years of tenancy of €300 pointing to ads on daft.

Now, they are entitled to increase the rent in line with market rate. What are the market rates?



The issue is that every single property is unique. What a "similar" rents for has a bearing but again we have the problem. What are similar places renting for? Daft ads only show asking price and only a small sample of properties, many of which would not be entirely similar.

The only true way of knowing what the market rate for our rental is to actual go through the whole process of reletting. We can't do that so we need another method.


Now for unbreakable logic.

1. The rent agreed in November 2009 was the market rate as it was set at the margin. (See PRTB Decision :TR24/DR920/2011 )
http://www.prtb.ie/archive/2011%20Disputes/Tribunals%202011/TR24.DR920.2011/Tribunal%20Report.pdf

2. The PRTB maintains a databse of every new rental registered in the country. This is broken down by property type, rooms, area etc.
3. The PRTB index includes average rental prices which our property may be above or below at the time of renting. This is obvious as it might be a better or worse property, better spec, bigger floor area.
4. The general trend for similar rentals from our time of renting in this area is contained in the PRTB data.

So now we look at the PRTB data

Two bed
2007Q4 1,646.75
2008Q1 1,641.96
2008Q2 1,632.53
2008Q3 1,580.92
2008Q4 1,542.58
2009Q1 1,492.95
2009Q2 1,445.32
2009Q3 1,386.02
2009Q4 1,340.72
2010Q1 1,301.77
2010Q2 1,267.80
2010Q3 1,252.31
2010Q4 1,247.57
2011Q1 1,231.09
2011Q2 1,233.79
2011Q3 1,251.53
2011Q4 1,266.95
2012Q1 1,270.05
2012Q2 1,290.08
2012Q3 1,295.95
2012Q4 1,311.99
2013Q1 1,333.57
2013Q2 1,351.28

So Q4 2009 the average rental for a 2 bed in D4 was €1340 so actually our rent was very close at the time. Since then rents have increased by 0.8% up to Q2 2013. This would hold if our 2 bed was a bit bigger and rented for €1500 in Q4 2009.

So the maximum the landlord can ask for in an increase is €1335.

Caveats.
The data only goes up to June this year so is a little bit dated but that could hardly count for much of an increase. You can do the same with the monthly cso rental data but that isn't perfect as it is based on estate agents data and doesn't take into account the type of properties or the exact area.

The key thing is that you can take this to the PRTB and you will win. The landlord can point to daft rental prices but these are only speculative and suffer from sampling. The PRTB data is the most complete data. It is the most accurate data unless landlords are lying.

http://www.prtb.ie/landlords/rent-index

Just on the basis of "D4" I would find that the PRTB data could be fairly flawed. There's a huge variety of accommodation in Dublin 4, you have huge discrepancies between a purpose built apartment and converted house 'apartment'. The quality between the two can be poles apart. Also, having a parking space would increase the rent, sometimes substantially. Even within a couple of square miles the values could increase or decrease due to the proximity of the dart line.

You don't show a link as to where you got the data from, ie is it Donnybrook? Or Ringsend? Or Ballsbridge? Or is it just Dublin 4? Even within these areas you would need to compare like with like. The data above could be comparing apples and oranges. If I was the landlord and the PRTB were trying to say that the average rent is based on their very broad/flawed data sheet I would certainly be challenging it. It's most certainly not 'unbreakable logic'.

djimi

borderlinemeath wrote: »

Just on the basis of "D4" I would find that the PRTB data could be fairly flawed. There's a huge variety of accommodation in Dublin 4, you have huge discrepancies between a purpose built apartment and converted house 'apartment'. The quality between the two can be poles apart. Also, having a parking space would increase the rent, sometimes substantially. Even within a couple of square miles the values could increase or decrease due to the proximity of the dart line.

You don't show a link as to where you got the data from, ie is it Donnybrook? Or Ringsend? Or Ballsbridge? Or is it just Dublin 4? Even within these areas you would need to compare like with like. The data above could be comparing apples and oranges. If I was the landlord and the PRTB were trying to say that the average rent is based on their very broad/flawed data sheet I would certainly be challenging it. It's most certainly not 'unbreakable logic'.

I made this point in the other thread. Basing an average price on property type and number of rooms for an area/town is nowhere near the definition of market rate. Rents can vary between two neighbouring complexes, let alone different areas.

The example I gave is where I live; according to the average rates that are published in the link in the OP the average for where I live is 720 for a two bed apartment. Now I know for a fact that you wouldnt get my place for anything remotely resembling 720 (youd be talking at least 150 more than that), and if I were to go to the PRTB to dispute a rent increase on the basis of that figure Id most likely be laughed at.

Thomas D

djimi wrote: »

I made this point in the other thread. Basing an average price on property type and number of rooms for an area/town is nowhere near the definition of market rate. Rents can vary between two neighbouring complexes, let alone different areas.

The example I gave is where I live; according to the average rates that are published in the link in the OP the average for where I live is 720 for a two bed apartment. Now I know for a fact that you wouldnt get my place for anything remotely resembling 720 (youd be talking at least 150 more than that), and if I were to go to the PRTB to dispute a rent increase on the basis of that figure Id most likely be laughed at.

You haven't read my post properly so don't bother commenting.

The_Morrigan

Thomas D wrote: »

You haven't read my post properly so don't bother commenting.

ThomasD this is a discussion forum and anyone is permitted to join in as long as they remain civil, adhere to the forum charter and the ethos of the boards community.

Thomas D

The_Morrigan wrote: »

ThomasD this is a discussion forum and anyone is permitted to join in as long as they remain civil, adhere to the forum charter and the ethos of the boards community.

What can I do when they keep on wilfully misinterpreting me. I'm all up for discussion but it breaks down when that happens.

The method above never mentions using the average rental rates to compare to your own. It's always about the relative change.

I

djimi

What has relative change got to do with it? The market rate is do with the current rental value of the property; what it might have rented for in the past is irrelevant. The RTA states that an increase is valid provided that the landlord could get this rate from a new tenant should the property go back on the market.

Thomas D

djimi wrote: »

What has relative change got to do with it? The market rate is do with the current rental value of the property; what it might have rented for in the past is irrelevant. The RTA states that an increase is valid provided that the landlord could get this rate from a new tenant should the property go back on the market.

D4 is different. Lots of professionals and analytical types earning big money and paying big rents. Like myself. It might be different in your area.

borderlinemeath

Thomas D wrote: »

D4 is different. Lots of professionals and analytical types earning big money and paying big rents. Like myself. It might be different in your area.

The point I made is that D4 is diverse, as are most areas so to pidgeonhole an 'area' and say that one average rent works for all within that area is flawed. Do you really think a 2 bed in Irishtown should have the same average rental as a two bed in Ballsbridge? And that the quality of the accommodation isn't taken into account whatsoever? It cannot and should not be used as a tool in an appeal to the PRTB. Particularly as it would come across as very biased towards the tenant, the PRTB using data that they themselves allegedly collated. We all know that the PRTB is unfairly biased as it is towards the tenant. At least in a conflicting situation like that they should use independent data.

It's not like the PRTB are exactly good at what they're meant to do either. They have such a bad reputation as a disorganised and slow quango, it's hard to see how their own data is above reproach.

The_Conductor

djimi wrote: »

What has relative change got to do with it? The market rate is do with the current rental value of the property; what it might have rented for in the past is irrelevant. The RTA states that an increase is valid provided that the landlord could get this rate from a new tenant should the property go back on the market.

100% correct.
The rate of increase- or what it may have been let for in the past is 100% irrelevant. What is relevant- is whether the landlord would achieve this rent were he/she to relet the property. If supply is in constraint- even an overly high increase could be considered to be reasonable- as they'd have no issue achieving it were they to relet.

I'd echo the above post- if you go with option 'D' and take a PRTB case-

put aside the amount of the increase in rent in full, in anticipation of loosing the case. If you don't loose- all the better- however if you do- the rise is backdated to the date on the elapse of the landlord's notice- not the date of the ruling- so you could owe a considerable sum if the PRTB take their normal glacial pace to come up with a ruling.

Thomas D

Dear Landlord,

Since November 2009, rents for two bed apartments in Ballsbridge have increased by 1% (based on PRTB rental price statistics). You have asked for a 23% increase. I will have to refuse this and refer you to the PRTB dispute resolution if you would like to query it further.

Regards.


Can I make it any clearer than that? This is 100% watertight. None of your methods come close to judging the current market price.

Thomas D

borderlinemeath wrote: »

The point I made is that D4 is diverse, as are most areas so to pidgeonhole an 'area' and say that one average rent works for all within that area is flawed. Do you really think a 2 bed in Irishtown should have the same average rental as a two bed in Ballsbridge? And that the quality of the accommodation isn't taken into account whatsoever? It cannot and should not be used as a tool in an appeal to the PRTB. Particularly as it would come across as very biased towards the tenant, the PRTB using data that they themselves allegedly collated. We all know that the PRTB is unfairly biased as it is towards the tenant. At least in a conflicting situation like that they should use independent data.

It's not like the PRTB are exactly good at what they're meant to do either. They have such a bad reputation as a disorganised and slow quango, it's hard to see how their own data is above reproach.

Here's Irishtown.

http://www.cso.ie/px/pxeirestat/statire/temp/2013121195914276104RIQ02_19592051.gif

Have you actually looked at the data?

murphaph

Thomas D wrote: »

D4 is different. Lots of professionals and analytical types earning big money and paying big rents. Like myself. It might be different in your area.

D4 is more diverse than you are letting on. There are plush neighbourhoods with folks earning enough money that they don't need to worry about a modest rent increase and there are working class neighbourhoods with ample social housing even!

borderlinemeath

Thomas D wrote: »

Here's Irishtown.

http://www.cso.ie/px/pxeirestat/statire/temp/2013121195914276104RIQ02_19592051.gif

Have you actually looked at the data?

I went onto the PRTB website but you didn't link to where your statistics come from so I had no information other than 2bed apartment D4 to put in. You didn't state whether it was Irishtown or Ballsbridge, or whether it was a D4 average.

I still think the data is flawed, (seriously, the PRTB find it hard to get anything right) You may think it's watertight but any landlord who does his homework properly should be able to put up a convincing argument, based on current rents available in the same building. If it were me as the landlord I would certainly be very much against the PRTB using it's own data to make a determination on an appeal brought by a tenant. It's biased in the tenants favour from the get go. Independent data needs to be used.

Thomas D

borderlinemeath wrote: »

I went onto the PRTB website but you didn't link to where your statistics come from so I had no information other than 2bed apartment D4 to put in. You didn't state whether it was Irishtown or Ballsbridge, or whether it was a D4 average.

I still think the data is flawed, (seriously, the PRTB find it hard to get anything right) You may think it's watertight but any landlord who does his homework properly should be able to put up a convincing argument, based on current rents available in the same building. If it were me as the landlord I would certainly be very much against the PRTB using it's own data to make a determination on an appeal brought by a tenant. It's biased in the tenants favour from the get go. Independent data needs to be used.

Why do you think the data is flawed? Any specific complaints or insights? Do you agree with the hedonic index?
How does a landlord know the current rents in his building? Are the apartments the exact same?

20/20

Am I missing something here? you have paid the same rent for 4 years and now the landlord wants to increase it by 300euro a month.
Why cant he its his property and if you dont like it pack your bags and move,you have that luxury compared to people with mortgages.
The landlords costs will have increased since you moved in and now a property tax and water charges will be on top of that,why should they come out of his pocket? If the landlord wants to increase by 500 why shouldnt he,the market will dictate what he gets.Why should the PRTB tell a landlord what he can charge for rent.

Thomas D

20/20 wrote: »

Am I missing something here? you have paid the same rent for 4 years and now the landlord wants to increase it by 300euro a month.
Why cant he its his property and if you dont like it pack your bags and move,you have that luxury compared to people with mortgages.
The landlords costs will have increased since you moved in and now a property tax and water charges will be on top of that,why should they come out of his pocket? If the landlord wants to increase by 500 why shouldnt he,the market will dictate what he gets.Why should the PRTB tell a landlord what he can charge for rent.

Oh dear. Start at the beginning.

http://www.irishstatutebook.ie/pdf/2004/en.act.2004.0027.pdf

The_Conductor

I think its based on the report the ESRI did for the PRTB- which has an interesting list of caveats associated with it, sufficient to put a reasonable question mark over some of the data. It also is up to the end of 2012- and was published in May/June of this year- so it doesn't factor the property price rises, or the rent increases of the last 9 months into the equation (these increases alone could well account for the vast bulk of the 23% being sought).

OP- feel free to take a case to the PRTB- if you feel strongly enough that you have a genuine case. Basing it on the out-of-date ESRI report- is far from a watertight case though........ If you disagree with their arbitration/mediation efforts- its only another 40 quid to bring it to tribunal.

If you intend to open a dispute- you have to do so- before the increase is due to take place or within 28 days of receipt of the notice to increase rent from the landlord (happily, whichever is later).

Anecdotally, I'd have serious issues with the contention that there has only been a 1% increase in rents achieved in Ballsbridge since Q3 2009- and indeed would highlight developments in the rental market there esp. in the last 3-4 months. The NAMA target increases have been met, which means they're releasing funding to finish two developments which had been mothballed- and funnily enough, I'd trust their figures more than I would the ESRI report with its caveats.

20/20

Iam only curious why you think the landlord should not charge what he wants,the property belongs to him?
You rented the property at a fair rent for 4 years now its time for an increase,get over it.

The_Conductor

Thomas D wrote: »

Oh dear. Start at the beginning.

http://www.irishstatutebook.ie/pdf/2004/en.act.2004.0027.pdf

That little stunt has just gotten you an infraction.
If you can't play nice with other posters- you will be banned.
This is a once and final warning.

borderlinemeath

Thomas D wrote: »

Why do you think the data is flawed? Any specific complaints or insights? Do you agree with the hedonic index?

Because they could be using tenants in situ for 4 years who haven't got an increase.
Because there is a big difference between the rent in a 2 bed dump in a converted house on Wellington Rd/Raglan Rd to a 2 bed in the sweepstakes, yet the rents will come in at an 'average' 2 bed in Ballsbridge.
Because not all tenants/landlords will disclose the correct rent. Any landlord could under declare what the rent is on the online form. A tenant could be happy to have the landlord under declare in order to avail of RA and stay in their preferred accomodation and pay the difference.
Because I find it very hard to believe that the PRTB are competent at anything.

Supply and demand will skew any figures. Right now supply is low and demand is high. It's not hard to do the maths.

Thomas D

The_Conductor wrote: »

I think its based on the report the ESRI did for the PRTB- which has an interesting list of caveats associated with it, sufficient to put a reasonable question mark over some of the data. It also is up to the end of 2012- and was published in May/June of this year- so it doesn't factor the property price rises, or the rent increases of the last 9 months into the equation (these increases alone could well account for the vast bulk of the 23% being sought).

OP- feel free to take a case to the PRTB- if you feel strongly enough that you have a genuine case. Basing it on the out-of-date ESRI report- is far from a watertight case though........ If you disagree with their arbitration/mediation efforts- its only another 40 quid to bring it to tribunal.

If you intend to open a dispute- you have to do so- before the increase is due to take place or within 28 days of receipt of the notice to increase rent from the landlord (happily, whichever is later).

Anecdotally, I'd have serious issues with the contention that there has only been a 1% increase in rents achieved in Ballsbridge since Q3 2009- and indeed would highlight developments in the rental market there esp. in the last 3-4 months. The NAMA target increases have been met, which means they're releasing funding to finish two developments which had been mothballed- and funnily enough, I'd trust their figures more than I would the ESRI report with its caveats.

It isn't based on an esri report. It is a regularly updated rental index managed by the CSO using PRTB data for rental registrations.

Thomas D

borderlinemeath wrote: »

Because they could be using tenants in situ for 4 years who haven't got an increase.
Because there is a big difference between the rent in a 2 bed dump in a converted house on Wellington Rd/Raglan Rd to a 2 bed in the sweepstakes, yet the rents will come in at an 'average' 2 bed in Ballsbridge.
Because not all tenants/landlords will disclose the correct rent. Any landlord could under declare what the rent is on the online form. A tenant could be happy to have the landlord under declare in order to avail of RA and stay in their preferred accomodation and pay the difference.
Because I find it very hard to believe that the PRTB are competent at anything.

Supply and demand will skew any figures. Right now supply is low and demand is high. It's not hard to do the maths.

1. It is based on marginal rents.
2. I never used average rents I use rates. Fourth time I've said this today.
3. You've imagined a ridiculous scenario
4. Great argument
5.

Thomas D

20/20 wrote: »

Iam only curious why you think the landlord should not charge what he wants,the property belongs to him?
You rented the property at a fair rent for 4 years now its time for an increase,get over it.

Hi 20/20, great insightful question. The government have unfortunately legislated for this situation to give tenants a little bit of security in their home.

19.—(1) In setting, at any particular time, the rent under the tenancy of a dwelling, an amount of rent shall not be provided for that is greater than the amount of the market rent for that tenancy at that time.