Fixed term Tenancy coming to an end - Need to increase rent

Phantom99

Hi,

By the end of my tenants current tenancy she will be in my apartment for 3 years. We sign a contract each year. The latest lease expires at the end of February 2015. She is paying well below market rent.

I want to increase the rent once the current lease ends in February but I think she will be unwilling to pay any more.

I have been reading up and it appears that I can increase to market rent once a year (I will do from next March on). I will send a letter to notify her now of this so she will have 4 months notice.

Should I say in the letter that if she is unwilling to pay the increase then she should move out?

If so should I be giving 84 days notice and mention termination of the tenancy in the letter?

As the tenancy is over 6 months and under 4 years does this mean I cannot terminate the lease?

The_Conductor

Give notice (in writing) now of the increase in rent- and when you propose to apply the increase (e.g. from the 1st of February 2015). Give her as much notice as possible.

You could actually apply the increase with notice- immediately- as rent reviews do not have to coincide with 12 month leases etc- you just can't review the rent more than once in any 12 month period (and you haven't reviewed it in 3 years)........

You need to notify her of the increase as far ahead as possible- and I would also suggest printing off current rents from similar type dwellings in the area to back up your increase- as its entirely foreseeable that she may contest the increase..........

Do everything by the book- and give her loads of notice..........

Yawns

Would the resigning of a new fixed lease each year not be viewed as a rent review? Therefore a new higher rent could be applied until the current fixed lease runs out in February?

The_Conductor

Yawns wrote: »

Would the resigning of a new fixed lease each year not be viewed as a rent review? Therefore a new higher rent could be applied until the current fixed lease runs out in February?

Nope- its not.
It specifically states it cannot be reviewed more often than once every 12 months- and that the 12 month period does not need to correspond with the renewal of the lease (this has come up at the PRTB numerous times).

Victor

The_Conductor wrote: »

Nope- its not.
It specifically states it cannot be reviewed more often than once every 12 months- and that the 12 month period does not need to correspond with the renewal of the lease (this has come up at the PRTB numerous times).

That seems odd. Surely if one signs a new lease (as opposed to letting the existing one run on), then one is agreeing to the specific rent on that lease.

The_Conductor

Victor wrote: »

That seems odd. Surely if one signs a new lease (as opposed to letting the existing one run on), then one is agreeing to the specific rent on that lease.

They may be agreeing to a specific rent on the lease- it does not however infer that the rent has been reviewed.

There is actually a legal definition for a rent review (from Valuation Standards) which states:

"A rent review consists of the estimated amount for which a property, or space within a property, should lease (let) on the date of valuation between a willing lessor and a willing lessee on appropriate lease terms in an arm’s-length transaction after proper marketing wherein the parties had acted knowledgeably, prudently and without compulsion.”

Aka - unless a landlord conducts an arms length valuation of the market rate for letting a property on a particular date- and the lessor (the landlord) and the lessee (the tenant) agree to this rate, after proper marketing testing of the rate- a review of the rent has not occurred.

Simply renewing the lease- without revisiting the market rate for letting the property- would not, under the standard definition of a rent review, qualify as the landlord having reviewed the rent (as it would not have had any market testing against the prevailing market rates).

Graham

The_Conductor wrote: »

They may be agreeing to a specific rent on the lease- it does not however infer that the rent has been reviewed.

There is actually a legal definition for a rent review (from Valuation Standards) which states:

"A rent review consists of the estimated amount for which a property, or space within a property, should lease (let) on the date of valuation between a willing lessor and a willing lessee on appropriate lease terms in an arm’s-length transaction after proper marketing wherein the parties had acted knowledgeably, prudently and without compulsion.”

Aka - unless a landlord conducts an arms length valuation of the market rate for letting a property on a particular date- and the lessor (the landlord) and the lessee (the tenant) agree to this rate, after proper marketing testing of the rate- a review of the rent has not occurred.

Simply renewing the lease- without revisiting the market rate for letting the property- would not, under the standard definition of a rent review, qualify as the landlord having reviewed the rent (as it would not have had any market testing against the prevailing market rates).

How can a lease for a fixed term at a fixed amount be altered part-way through the contract?

I understand that the law provides that rent can be increased but I'm struggling to see how that can override a contract that has been agreed and signed by both parties unless a mid-term rent review forms part of the initial lease. What would be the point of a contract/lease if the terms can be changed arbitrarily.

Graham

I think I've answered my own question:

In general, a landlord can only increase the rent of a property once every 12 months. You should ensure that it has been 12 months or more since your last rent review. In you have signed a one year fixed term lease, the rent is generally set for the duration of the lease and cannot be changed.
Source: http://www.threshold.ie/download/pdf/top_tips_for_rent_reviews.pdf

Rent review
It is also important to note the level of rent can be renegotiated at the expiry of the lease by both landlord and tenant. Otherwise, the rent charged must be as set out in the agreement.
Source: http://www.prtb.ie/news/article/2014/02/11/breaking-a-fixed-term-lease

In the past, tenants in Ireland without a lease had no protection against rent increases.
Source: http://www.citizensinformation.ie/en/housing/renting_a_home/rent_increases.html

You're entitled to review the rent once per year (but, of course, not within the period covered by a fixed-term lease).
Source: http://www.irishlandlord.com/forum/showpost.php?p=10817&postcount=2

I'm open to correction as I think it's important to get this right for the benefit of both landlords and tenants operating under fixed term leases.

Mrs OBumble

At three years, you cannot give her notice (except for a small list of reasons).

You need to notify her of the rent change. If she wants to move out, she's allowed to give notice.

So - just tell her the rent increase and date, leave the next move to her.

Yawns

If she decides she doesn't want to pay the increased rate and gives notice, does she continue to pay the old rate until she moves out at the end of her notice?

CIARAN_BOYLE

Yawns wrote: »

If she decides she doesn't want to pay the increased rate and gives notice, does she continue to pay the old rate until she moves out at the end of her notice?

I think you need to give notice of the rent increase. So the two notice periods should cancel out

Victor

Yawns wrote: »

If she decides she doesn't want to pay the increased rate and gives notice, does she continue to pay the old rate until she moves out at the end of her notice?

That seems to be a little bit fuzzy as the act seems to have an unintentional conflict - only a short notice is required for a rent increase, but longer notice is needed if moving out.

Phantom99

Victor wrote: »

That seems to be a little bit fuzzy as the act seems to have an unintentional conflict - only a short notice is required for a rent increase, but longer notice is needed if moving out.

That is what I was wondering ie The rent increase (notice 28 days required) will most likely result in a termination of the tenancy by the tenant (notice of 56 days required to be given by tenant as the tenancy is over 2 years)

Thanks for your help

Yawns

What's the correct notice periods?

Threshold site: http://www.threshold.ie/advice/ending-a-tenancy/ending-your-tenancy/

Duration of Tenancy Notice Period
Less than one year 28 days
6 months to 1 year 35 days
1 - 2 years 42 days
2 - 3 years 56 days
3 - 4 years 56 days
More than 4 years 56 days

Citizen's Information: http://www.citizensinformation.ie/en/housing/renting_a_home/if_your_landlord_wants_you_to_leave.html#la1b6d

Notice periods

The length of notice required depends on the length of your tenancy, as below:

Length of tenancy Notice that the landlord must give
Less than 6 months 4 weeks (28 days)
6 months to 1 year 5 weeks (35 days)
1 to 2 years 6 weeks (42 days)
2 to 3 years 8 weeks (56 days)
3 to 4 years 12 weeks (84 days)
4 years or more 16 weeks (112 days)

The_Conductor

The information from Threshold- is the length of notice a tenant has to give- the information from the Citizen's Advice Bureau- is the length of notice a landlord has to give. They are different. If you look at the 2004 Act- all is explained.

Yawns

Ah thanks for clearing that up. I had thought before that any notice of termination by both parties had to be the same. Nice to learn something new.

Mrs OBumble

Yawns wrote: »

If she decides she doesn't want to pay the increased rate and gives notice, does she continue to pay the old rate until she moves out at the end of her notice?

Technically she has to pay the increased rate. Good luck with collecting it from her.

Oh, and the notice period can be reduced if you both agree.

Yawns

Yeah I knew if both parties agreed to a reduced notice rate, then it would be fine. I did not know that she had to pay at the new higher rent rate until the end of notice but like you said, it's more of a good luck getting the extra from them. Just to clarify, I'm not the OP, I was just confused about a couple of different things in regards to how it works such as the above.

runawaybishop

The_Conductor wrote: »

Give notice (in writing) now of the increase in rent- and when you propose to apply the increase (e.g. from the 1st of February 2015). Give her as much notice as possible.

You could actually apply the increase with notice- immediately- as rent reviews do not have to coincide with 12 month leases etc- you just can't review the rent more than once in any 12 month period (and you haven't reviewed it in 3 years)........

You need to notify her of the increase as far ahead as possible- and I would also suggest printing off current rents from similar type dwellings in the area to back up your increase- as its entirely foreseeable that she may contest the increase..........

Do everything by the book- and give her loads of notice..........

No you can't You cant change the terms of the lease midway through it, the rent will have been set out and agreed to in the lease. Any increase will be from the expiration of the lease in feb.

Phantom99

Yes that's correct. I rang the PRTB. You cannot increase the rent until the current contract comes to an end. (Unless perhaps there is a rent review clause in the contract. I did not query this as it is not applicable in my case)

One thing they did say was if I were to give notice due to one of the allowable grounds ie selling, moving in etc then the notice I give would start after the current contract ends. Again I did not query this too much as not applicable in my case. I would be wary about relying on information received over the phone unless I found it on their website.

I have sent a letter to the tenant to inform her of the rent increase so see what happens.