Renting to the Council

Brian201888

Parents are looking into this for a investment property and seem to think the council will guarantee them 80% of the market value even with the new Dublin rent caps. Would I be right in saying if they have been renting below market value to current tenants at let's say €1000 then the council wouldn't be legally able to increase this by more than 4%?

murphaph

Tell your parents to forget about the council. 80% is a joke. If they don't want to have to maintain interiors (the council will not do structural work on the 80% deal either, only essentially interior repairs and maintenance) then they could consider commercial property with full repairing and insuring leases (FRI). I have experience of RAS and will be withdrawing the only property I have in it as soon as the contract is up. The council were never nice to deal with and you'll find they try to state what the market rate is and then proceed to pull some figure out of the air with no reference to ads on daft or anything else. My advice is to invest in something else for the moment-the state is making it harder and harder for small time landlords to stay in the residential game. It could get much worse (not allowed even to remove tenants to sell up, for example)

The_Conductor

I'd have to concur with Murphaph.
The 'market rent' the council will come up with- is the current rent + whatever the allowable increase is (can be up to 10% depending on when the last review was carried out- there is a formula for working this out). So- if your parents haven't increased the rent in the last few years- they could potentially increase it by 10%- which is the 'market rate' and the council would pay you a maximum of this 'market rate'..........

I've some colleagues and friends who have had good experiences with letting to councils under RAS- however they weren't particularly pushed at trying to get a reasonable rent rate- and were willing to agree to manage the rental- aka- the council got a cheap rental, with no obligations on their part. In some cases it worked out ok- but the landlord ended up with less than half what they might have gotten on the open market. In one case I know of- where the tenant trashed the place- the council baulked at making good the damage- and the landlord was seriously out of pocket.

All-in-all- if you can't find tenants and there is a massive oversupply of property in the area- its not a bad scheme- however, if you can rent on the open market at all- you'd be nuts to consider RAS- as you're effectively subsidising the council and taking all the risk- for only a small portion of any potential gain.............

It suits councils- its not great for landlords, in the current climate.........
Also- contrary to what they may tell you- they will try and get you to deal with the tenants- wholly aside to what they may agree with you...........

murphaph

I'm sure the OP is talking about long term leasing rather than RAS but they'll be up against the same mindset of "we're doing you a favour here" which yeah, might apply in some rural areas but not in any of the cities and larger towns IMO.

I'd fully expect the council to try to base rent increases on the RTA 4% rules, even though it doesn't apply to long term leasing like this. If I was going down that route I'd have something absolutely watertight covering reviews built into the contract. You're already down the price of a luxury holiday a year on an average Dublin house with the lost 20%.