Rent rooms vs whole house

amascid

Hello
My young family have outgrown our small 3 bed semi detached house in Dublin. I also use the house to work from home. I work in IT so I don't need much space except enough for my laptop however I'm still feeling squeezed..

Selling is not an option we want to consider as we like the neighborhood and will extend in a few years once we have enough savings. We were thinking about renting our home out and finding another larger house to rent close by.

I'm thinking of keeping a room in my current house with a desk/bed where I could work from during the daytime and rent out the other rooms. Are there any benefit in renting out a couple of rooms in the house versus the whole house? The most obvious benefit to me is that I can keep an eye on the house and ensure that it will be well maintained. If we decide to move back in - in the future is it easier to evict rent a room tenants?

Ms Doubtfire1

Renting out a room vs a whole house leaves you with pretty much all control. if you work there you can keep an eye on things as well. Many LL have horrendous experiences with renters, but it's not everyone. In your case I would most certainly go for only renting the rooms - income is taxfree up to a certain level and the tenants (=licensees) have no real protection from the overprotective Tenancy board. I think you have to give licensees 7 days notice or maybe less I am not sure.but with your plans - don't let out the whole house you'd be in all kinds of trouble in a years time

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Fian

If you live there and rent out rooms only then your "tenants" will most likely not be tenants but will in fact be licencees. This will mean that they will not acquire rights under Part IV of the residential tenancies act - meaning you will be able to ask them to leave if you don't get on with them. It will generally put you in a much stronger position from a legal point of view. Of course it may reduce teh rent you can charge.

If you are in a rent pressure zone and if you do establish a tenancy rather than a licence (and bear in mind you might do so without intending to) then bear in mind that your rent will be fixed at a maximum 4% per annum increase from teh first rent you set (or any subsequent rent you set) so do not let it out at significantly below market value.

Fian

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Licencees are not getting exclusive possession = not a tenancy.

I agree though the tax relief only applies if it is your primary residence.

Not black and white though - possible that the RTB or courts would decide a tenancy has been created and that in fact they do have exclusive possession.

mortimer33

Fian wrote: »

If you live there and rent out rooms only then your "tenants" will most likely not be tenants but will in fact be licencees. This will mean that they will not acquire rights under Part IV of the residential tenancies act - meaning you will be able to ask them to leave if you don't get on with them. It will generally put you in a much stronger position from a legal point of view. Of course it may reduce teh rent you can charge.

If you are in a rent pressure zone and if you do establish a tenancy rather than a licence (and bear in mind you might do so without intending to) then bear in mind that your rent will be fixed at a maximum 4% per annum increase from teh first rent you set (or any subsequent rent you set) so do not let it out at significantly below market value.

Thanks for your reply. I won't be living there although I will be having breakfast/lunch there and spending about 9 hours a day in the house.. does this mean that the people I get to rent the rooms will have full tenancy rights and I will have to register with the PRTB?

mortimer33

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Rent a room only applies if you also live in the property, i.e., it is your home.

Just using it in the daytime for an office doesnt constitute living in it so I cant see how that would work - either for tax or tenancy purposes.

I wasn't expecting to get any tax benefit from it..

Claw Hammer

The RTB situation would depend on the RTB holding a bedroom to be a dwelling. They have done so in the past so you would most likely be caught. The way around it would be to make it B & B. Provide breakfast and cleaning services and rent by the week with rights to move lodgers around at any time. Keep a reasonably high turnover of occupants and you would be fine.

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Claw Hammer

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That is only on a room in the house in which you live.

pilly

The main thing to consider is how can you afford to rent a bigger house? You do know renting your own place will cost you at least 50% in tax? So cost is going to be a major factor for you.

Let's say you get 1200 for your place, net income 600, you then have to pay 1400 rent elsewhere so it costs you 800.

Samuel T. Cogley

If you're not worried about tax treatment, AirBnB especially if you're going to be there everyday anyway.

Bear in mind income will be taxed at around 50%.

Mrs OBumble

pilly wrote: »

The main thing to consider is how can you afford to rent a bigger house? You do know renting your own place will cost you at least 50% in tax? So cost is going to be a major factor for you.

Let's say you get 1200 for your place, net income 600, you then have to pay 1400 rent elsewhere so it costs you 800.

This is the most important factor. You could claim some expenses against your income (maintenance, heat-light-water, advertising, and 75% of your interest payments). But really they are small beer, you pay roughly 50% in tax if you are in the top tax bracket.

After that, do you mind the tenants getting tenancy rights?

If yes, then the AirBnB or regular BnB option is safest, but far more work for you: you'd need to hire a cleaner in between lets, and to organise your work day around meeting people.

The rent individual rooms option is more legally uncertain in terms of whether they get tenancy rights: many of us would say that as you are in the house for a substantial time each day, they really are licensees. (The fact that you are working vs sleeping is a red-herring: you are there the same way that many a night-shift worker would be, IMHO). But we aren't the RTB, and it's hard to see how they'd call it. They may say that people are tenants.

That said, them having or not having tenancy rights isn't necessarily such a big issue: if you need the house back for yourselves or for substantial renovation, they you can issue notice to tenants. And tenants are no more or less likely than licensees to kick up a fuss and overhold.

And the fact that your arrangement would be in place from the very start reduces your risk: the type of people who don't pay and then overhold are far less likely to move into a place where they have to see the landlord's face every day.

ED E

Why not just rent a co-working space? Sounds like the far more logical solution. Cost you less and leaves you with zero obligations/pitfalls.

Lantus

Licensee approach is sound. You can rent two bedrooms and keep the third.

I would keep a bed in there so can claim you sleep there and that you need to work and travel at night and sleep / work at day. You control the narrative.
Just remember these people are not your friends. Renting rooms is a business not a buddy scheme.

Good house rules. Collect rent in cash once a week.and stay aloof from your room renters.

The advantage is you can remove a licensee if they cause bother without notice.

Samuel T. Cogley

Lantus wrote: »

Licensee approach is sound. You can rent two bedrooms and keep the third.

I would keep a bed in there so can claim you sleep there and that you need to work and travel at night and sleep / work at day. You control the narrative.
Just remember these people are not your friends. Renting rooms is a business not a buddy scheme.

Good house rules. Collect rent in cash once a week.and stay aloof from your room renters.

The advantage is you can remove a licensee if they cause bother without notice.

This nonsense again. This must be the third time this week alone. The determination of whether it's a tenancy or a license turns on the facts in each case. 4ensic15 even went to the trouble of linking an RTB decision on point. If the OP is genuinely working there, and genuinely sleeping there then that's one thing. Claiming it and lying is quite another.

You are also required to give licensees reasonable notice, again this turns on the facts of a particular situation but to suggest that it's not required is simply wrong.

Mrs OBumble

ED E wrote: »

Why not just rent a co-working space? Sounds like the far more logical solution. Cost you less and leaves you with zero obligations/pitfalls.

Two words: planning permission!

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He is in the house for 9 or 10 hours a day, eating meals there etc. Of course that will constitute as living there. Just sleeping there 2 or 3 nights a week would be considered living there and make the people renting rooms licensees so how would you think spending up to 10 hours a day 5 days a week wouldn't?

The house didn't have to be your primary residence to render the others living there licensees. Becuse this is a rule for availing of the rent a room scheme people appear to assume it's the same rule for deciding if people are licensees or tenants but it's not.

Michael D Not Higgins

I'm in my workplace for 9 hours a day and also eat meals there. I don't live there. The RTB won't see it as living there either.

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Michael D Not Higgins wrote: »

I'm in my workplace for 9 hours a day and also eat meals there. I don't live there. The RTB won't see it as living there either.

You can't compare it to your work place of work owned by your employer, he owns the house and uses it all week. How can a person renting a room claim they have exclusive use or that they don't share the house with their LL when he is there using all the facilities for the week, sharing the bills etc. Im sure he will sleep there also some of the time which will even further strengthen his case.

He is using the house much more than would be required to render the room renters licensees imo.

Claw Hammer

Lilly Green Beard wrote: »

You can't compare it to your work place of work owned by your employer, he owns the house and uses it all week. How can a person renting a room claim they have exclusive use or that they don't share the house with their LL when he is there using all the facilities for the week, sharing the bills etc. Im sure he will sleep there also some of the time which will even further strengthen his case.

He is using the house much more than would be required to render the room renters licensees imo.

He is using the house for work purposes, not residential purposes. The exclusion from the Act only applies where the Landlord ordinarily resides in the dwelling. Working in is not residing in. A few sleepovers do not qualify as residing. These artificial scenarios trying to avoid the residential tenancies act are all doomed. They are obviously being proposed and promoted by people who have no experience whatsoever in this area.

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Seve OB

pilly wrote: »

The main thing to consider is how can you afford to rent a bigger house? You do know renting your own place will cost you at least 50% in tax? So cost is going to be a major factor for you.

Let's say you get 1200 for your place, net income 600, you then have to pay 1400 rent elsewhere so it costs you 800.

how do you know what the OP can or can't afford?
how do you know what their tax position is? it might not cost them 50% in tax, they may actually end up paying feck all tax for all you know

Claw Hammer

Claw Hammer wrote: »

He is using the house for work purposes, not residential purposes. The exclusion from the Act only applies where the Landlord ordinarily resides in the dwelling. Working in is not residing in. A few sleepovers do not qualify as residing. These artificial scenarios trying to avoid the residential tenancies act are all doomed. They are obviously being proposed and promoted by people who have no experience whatsoever in this area.

Your and others interpretation is simply not compatible with what a tenancy is imo.

A tenant is entitled to things like peaceful enjoyment, exclusive use of the house, his LL has to seek permission and can only enter the property with explicit permission etc.

In the ops case he can enter the house when he wants, use the facilities and spend the full day there and essentially do as he pleases in the house so how can you say the others can claim tenants rights when a number of the key rights can't be upheld.

Even if (and its a massive if) rights could be attained by the others living there if the op was just using it as his home office they wouldn't be worth the paper they are written on because as stated above they have no power to stop him entering or doing as he wants in the house so he could at anytime start sleeping full time in the house (or his wife or son/daughter) and that would extinguish any tenancy immediately.

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Claw Hammer

Lilly Green Beard wrote: »

In the ops case he can enter the house when he wants, use the facilities and spend the full day there and essentially do as he pleases in the house so how can you say the others can claim tenants rights when a number of the key rights can't be upheld.

The landlord wont have agreed that he can go into bedrooms when the residents are not there. A bedroom can be a dwelling. That dispose of your untested theory.

pilly

Seve OB wrote: »

how do you know what the OP can or can't afford?
how do you know what their tax position is? it might not cost them 50% in tax, they may actually end up paying feck all tax for all you know

I don't know what OP can afford, hence my question marks.

What I do know as a LL there's no getting away with paying tax.

I'm merely pointing out the pitfalls. What exactly is the point of your post?

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There wouldn't be a lease, why would their be. Op would just rent the rooms to seperate people, word of mouth agreements etc no need for any specifics aside from "I work from home".

Claw Hammer wrote: »

The landlord wont have agreed that he can go into bedrooms when the residents are not there. A bedroom can be a dwelling. That dispose of your untested theory.

Would he have agreed he can go in the rooms if he lived there 100% of the time? It wouldn't be stated but technically he could and this is no different. They are licensees or not there is no middle ground. Of course in practice people don't enter the rooms of those in their house.

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