Rent increase megathread

jack_pearse

Hi, I am a landlord who has never increased rents for my tenants I have for 5 years. The rent is cheap but I am happy to leave it as they are good tenants.

My question is, the apartment is in a 'rent pressure zone'...if they leave and I get new tenants will I only be able to increase the rent by 4% for the new tenants? Or since they are new tenants will I be able to agree an entirely new rent for them?

Michael D Not Higgins

The rent for new tenants can't be more than 4% higher unless it has been unoccupied for over 2 years.

BBMcQ

The landlord in these situations need to put extra effort into getting good tenants. They were obviously happy with the previous rent and it was perhaps enough to pay the mortgage etc. I don't buy this "the landlord is taking an investment risk so should be able to charge max rents". All property will be worth more than you bought it for after 30 years. For decades it was intended as a low risk, low payoff investment until we all went made in the noughties. The landlord isn't buggered, they just don't have the opportunity to pillage some new tenant.

I don't agree with rent caps as an macroeconomic tool but they have exposed lot of underlying greed which I thought we left between as a country in 2008.

The property/rental crisis was another opportunity for massive redistribution of wealth from younger generations to old again and again. The spirit of the new laws, I do agree with mostly.

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This post has been deleted.

Paddy1234

If the landlord refurbishes the house is he not entitled to increase the rent higher than the 4%?

ImARebel

Hi all, see article below in the Indo today. Is the answer correct is it really not enacted into law? I did considerable research as we're due a rent review this year. But nowhere did I find the new 4% Rule not being law?

http://m.independent.ie/business/personal-finance/property-mortgages/my-landlord-is-increasing-our-rent-despite-rent-freeze-do-we-have-to-pay-up-35383973.html

So is it law or isn't it? Is the response in the Indo wrong?

exaisle

http://www.dublinlive.ie/news/rent-caps-come-effect-tomorrow-12365216

davo10

I suspect it's either an old article that was just used as a filler or, she was thinking of this:

http://www.irishtimes.com/news/ireland/irish-news/rent-cap-scheme-to-be-extended-to-15-more-electoral-areas-1.2945563

runawaybishop

Paddy1234 wrote: »

If the landlord refurbishes the house is he not entitled to increase the rent higher than the 4%?

Yes, but refurbishment means serious work, not just a lick of paint.

hidinginthebush

Is the rent cap scheme effective yet? We received a letter recently telling us our rent would be increasing from 1300 to 1900 in April, living in Dublin. Have we any recourse under this scheme?

ImARebel

thanks. I was half hoping it was right. We're one of the set of landlords getting screwed. First we were due a review after a year, then they brought in the you can't change it for 2 year and just before that rent review they brought in the 4%. *sigh* we're not getting market rate we're 250eur a month below it. It's a bit of a kicker as we reduced the rent when times were bad and now we can't put it back up.

You really get nothing for playing fair in this country.

daithi7

If I were you OP, I would do the place up, & charge market rent.

This law is very crude. Imho, They should have made allowances for landlords & leases that h had not gone up by 4%cpa over the previous 5 years, so that then when the landlord starts a new lease they could do a full increase of say max 5 years x 4%pa increase for the new lease.

When you think about the current situation, they are introducing rent increase controls to protect tenants from allegedly huge increases in rent, yet they are doing this by screwing the most patient, least greedy landlords in the market. (I.e those who have not sought an increase v for several years and hence are charging below market rents). Typical clumsy, stupid regulation making in Ireland.

April 73

I think in practice it is almost impossible to police or enforce this part of the new legislation.

Paulw

Mod Warning - advising illegal activity will not be permitted. Like it or not, there is rent control law in place. If you object to the law, then contact your TD about it. The law is fairly clear on what refurbishment is required, and it can't be just minor.

Paulw

hidinginthebush wrote: »

Is the rent cap scheme effective yet? We received a letter recently telling us our rent would be increasing from 1300 to 1900 in April, living in Dublin. Have we any recourse under this scheme?

Yes, rent control is in place. It was signed in to law on the 23rd Dec 2016.

http://www.rtb.ie/dispute-resolution/dispute-resolution/rent-reviews

The rent cannot increase above a maximum of 4% in rent control areas (new areas added yesterday).

emeldc

Michael D Not Higgins wrote: »

The rent for new tenants can't be more than 4% higher unless it has been unoccupied for over 2 years.

I've heard this said time and time again yet no one explains how it works.
If the tenant leaves of their own accord presumably they are happy out and wont be informing big brother what they were paying in rent.
How will big brother know what rent was being charged prior to the tenant leaving.
As long as the new rent is at market value why should it raise any red flags with anyone.
I understand that a tenant can't be put out just so the rent can be increased, that's fair, but if he leaves of his own free will, I fail to see what's to stop the LL putting the rent up to market value.

Paulw

emeldc wrote: »

I understand that a tenant can't be put out just so the rent can be increased, that's fair, but if he leaves of his own free will, I fail to see what's to stop the LL putting the rent up to market value.

The law is there to stop this.

Don't forget that rent is declared, through tax returns and other ways, so the previous rent is a known quantity.

emeldc

Paulw wrote: »

The law is there to stop this.

Don't forget that rent is declared, through tax returns and other ways, so the previous rent is a known quantity.

Yes, but by who? the Revenue?
Who will tap the LL to inform him that he has increased the rent by more than 4%?

athtrasna

emeldc wrote: »

I've heard this said time and time again yet no one explains how it works.
If the tenant leaves of their own accord presumably they are happy out and wont be informing big brother what they were paying in rent.
How will big brother know what rent was being charged prior to the tenant leaving.
As long as the new rent is at market value why should it raise any red flags with anyone.
I understand that a tenant can't be put out just so the rent can be increased, that's fair, but if he leaves of his own free will, I fail to see what's to stop the LL putting the rent up to market value.

The previous rent is registered with the RTB. The new tenancy has to be registered with the RTB.

daithi7

[quote="Paulw;102352480" The law is fairly clear on what refurbishment is required, and it can't be just minor.[/quote]

Perhaps it can't just be minor, but my understanding it's far from clear what refurbishment is actually required. Maybe I'm wrong, but that's certainly my understanding from observations to date.

E.g. say you paint the place, change the curtins , and a few fixtures and fittings& get side be furniture like you have to do after most long term tenancies?

2. How about a new boiler say?

3. Converting a reception room, study into another bedroom?

I'm not sure where on this scale the refurbishment becomes' eligible ' to charge higher rents under this dumb new legislation.

emeldc

athtrasna wrote: »

The previous rent is registered with the RTB. The new tenancy has to be registered with the RTB.

So it's the RTB that will police and enforce this?

I have a tenant for 3 years. They know what the starting rent was, they have no idea what it is now.

jack_pearse

What if the property is sold on...what the new landlord be forced to charge the same rent for new tenants?

The_Conductor

daithi7 wrote: »

Perhaps it can't just be minor, but my understanding it's far from clear what refurbishment is actually required. Maybe I'm wrong, but that's certainly my understanding from observations to date.

E.g. say you paint the place, change the curtins , and a few fixtures and fittings& get side be furniture like you have to do after most long term tenancies?

2. How about a new boiler say?

3. Converting a reception room, study into another bedroom?

I'm not sure where on this scale the refurbishment becomes' eligible ' to charge higher rents under this dumb new legislation.

It is 'renovation' as opposed to 'refurbishment'. It is stated that to qualify it has to be on a scale that requires planning permission- i.e. even your repurposing of rooms etc- would not normally qualify- unless it required planning permission.

Note- its probable that many smaller jobs- including attic conversions etc- that people would have done under the radar in the past- will all mysteriously result in people seeking the appropriate planning permission etc- where in the past no-one bothered.

Also- apartments or dwellings on long term leases (which normally involve a management company) will now almost without exception be excluded from renovations- it is probable that freehold properties will be the only properties included...........?

testaccount123

emeldc wrote: »

So it's the RTB that will police and enforce this?

I have a tenant for 3 years. They know what the starting rent was, they have no idea what it is now.

You'll need to re-register the tenancy after year 4 with the RTB and disclose the rent. After which it will be trivial to work out what the maximum it should be given max 4% per year increases.

newacc2015

BBMcQ wrote: »

They were obviously happy with the previous rent and it was perhaps enough to pay the mortgage etc. I don't buy this "the landlord is taking an investment risk so should be able to charge max rents". All property will be worth more than you bought it for after 30 years. For decades it was intended as a low risk, low payoff investment until we all went made in the noughties. The landlord isn't buggered, they just don't have the opportunity to pillage some new tenant.

OP would have let this property previously in the middle of the recession. Unemployment was huge, there a lot of vacant property and he properly let it for a fraction of what he would get today. If I was him, I would not be "happy" with that. He had no choice but to let it at a low rent in the middle of the recession.

I think it is quite funny the fact you say he should be happy with the rent and yet you acknowledge it probably doesnt even cover his mortgage... Who would be happy with the rent on a loss making property when you can increase the rent to reduce those losses? But the landlord, tries covers his losses like any other businessman he is suddenly greedy?

I would love for you to speak to a Landlord who lost his properties to the banks and tell them it was a low risk investment. Or speak to any landlord about 'how low risk' the industry is. How can you say it is low risk industry when every year the tax code and rules governing it change. There was massive changes to the rules of being a landlord at christmas and then a month later AAA-PBP tried changing the laws massively again. The fact you can't even see the rules coming a month down the line makes it a high risk industry.

If people are outraged with private sector landlords, then call your TDs and demand more social housing. Don't endorse rules and regs, you know are fundamentally wrong and will only make the rental crisis worse in a few years. But you condone it, as it is easy to think all Landlords are greedy, yet you have no issue with any other business increasing their prices while operating a profit...

Paulw

jack_pearse wrote: »

What if the property is sold on...what the new landlord be forced to charge the same rent for new tenants?

It doesn't matter if the property is sold. All that matters is the rent rate and the increase. If the property was rented within the previous 2 years then the new rent can't be more than 4% greater than the last rent.

emeldc

Paulw wrote: »

It doesn't matter if the property is sold. All that matters is the rent rate and the increase. If the property was rented within the previous 2 years then the new rent can't be more than 4% greater than the last rent.

I see a revolution looming.
Who would buy an investment property with those rules. You could have two apartments exactly the same, side by side, with vastly different resale values because of their differing rent yields. Mr nice LL gets screwed again. Someone will surely test this. It's bonkers.

Paulw

emeldc wrote: »

I see a revolution looming.
Who would buy an investment property with those rules.

Yep, if buying for investment, it would be crazy. As for revolution, I don't think that there are enough landlords for that. Many are unhappy, but they are living with it. Some are struggling, and having to sell up. No investment is ever fully secure. The govt rushed to stop rent increases, but didn't consider the landlords.

The_Conductor

If you're buying an investment property- you compete with first-time-buyers and come hell or high water only buy new properties, which don't have any pre-existing strictures associated with them. It also drives up prices for First-time-buyers, however, law of unintended consequences and all that..........

ImARebel

thanks for confirming everyone. Feeling slightly hard done by as we're only barely covering costs it would have been nice to get ahead for a bit. They are getting the apartment for a basement price, lol

FrStone

newacc2015 wrote: »

I think it is quite funny the fact you say he should be happy with the rent and yet you acknowledge it probably doesnt even cover his mortgage... Who would be happy with the rent on a loss making property when you can increase the rent to reduce those losses? But the landlord, tries covers his losses like any other businessman he is suddenly greedy?

Anyone with a basic backing in business should know that in a functioning rental market, the rent paid should not cover mortgage repayments. Sure that's basically arbitrage..

No body sound expect for someone else to be paying for the equity in their investment.

The cost of the upkeep and running of the property, mortgage interest, local property tax and a small profit should be the amount of the rent in a functioning market.

It's madness that someone can buy a house and have a mortgage or €1,000 and charge €1,500 in rent. Until the market is more normal it is essential these rules are introduced