New Tenant and Rent Increase

Sean Fantastic

Hi,

Just looking for some clarity on rent increases. I own a property in a very sought after area in Dublin which has been rented out continually for the last 5 years by a person on their own.

He has been an excellent tenant and has used one of the 3 bedrooms as an office and the other was just a spare. Because they were on their own and really looked after the place I never bothered increasing the rent (except in one case where I put it up 50e per month).

Anyway, the upshot is that the rent is now way off current market rates. It would need an increase of about 63% to normalise it but I was happy with it being the way that it was due to reduced wear and tear and excellence of the tenant.

However, the tenant has now informed me that he is moving to his own place at the end of next month and wishes to move out although his lease is officially up at the end of June. This is absolutely no problem.

My question is this, am I now at liberty to adjust the rent to it's true level for the next tenant? I intend to advertise the place this week and I want to be sure that I'm not doing anything wrong.

Any advice greatly appreciated.

ED E

4%. No more.

Quandary

And here we have a first hand example of a seemingly fair and decent landlord getting shafted by the new regulations. Joke.

Best of luck with it OP.

Sean Fantastic

4%? Are you kidding? I understood that 4% was the limit for existing tenants which I can understand. If I was to advertise my property at the existing rent + 4%, it would cause a riot with people trying to get it. So, that's not an option.

Toots

AFAIK the only way you'd get around the 4% cap would be if there were significant renovations done to it. However I'm not sure what counts as significant. It's definitely more than painting the whole place anyway.

InTheTrees

Sean Fantastic wrote: »

4%? Are you kidding? I understood that 4% was the limit for existing tenants which I can understand. If I was to advertise my property at the existing rent + 4%, it would cause a riot with people trying to get it. So, that's not an option.

I cant believe 4%

I mean I totally understand tennants rights and all that. I am a renter myself. But this seems like a way to stop owners from renting out their property, is that a good idea?

InTheTrees

There must be a time limit to the 4%.

If you leave it empty for a year can you then set a realistic rent? Six months?

CIARAN_BOYLE

Sean Fantastic wrote: »

4%? Are you kidding? I understood that 4% was the limit for existing tenants which I can understand. If I was to advertise my property at the existing rent + 4%, it would cause a riot with people trying to get it. So, that's not an option.

That's the problem with the new legislation.

A buddy of mine is a tennant in a similar situation. Whoever gets the property when he moves out will be so lucky. He is actually thinking of keeping the property for 12 months that he is abroad because it's so much below current market rates.

Could you rent it out to multiple people under separate leases, no one person would be renting the house so it wouldn't be comparable and you are around the 4% rule.

Baby01032012

Sean Fantastic wrote: »

4%? Are you kidding? I understood that 4% was the limit for existing tenants which I can understand. If I was to advertise my property at the existing rent + 4%, it would cause a riot with people trying to get it. So, that's not an option.

I feel your pain. In same situation. Choice is sell or substantially refurbish to justify the market rent. Otherwise you're breaking law. 4% applies retrospectively to existing and new tenancies. Can't be more than 4% of last tenancy rent. Unless you leave it empty for 2 years.

Something else to consider. I would argue that he was renting a room as the whole apt was not for residential use. And if now renting whole apt market rent applies. However this could be seen as bending the law.

Fian

ED E wrote: »

4%. No more.

To be precise - you can add 2% per annum since the rent was last fixed - so 10% increase total if it has been 5 years.

After that you can increase by 4% per annum.

MarkHall

There is a calculator on the problem website that let's you know how much you can increase it by.
Based on the time since the last rental increase.
The 4%. Is calculated over time rather than just a flat 4%. So if you have a tenant for 6 months. You can't do anther 4% increase after they leave.

I recently rented my place out. Was getting a tad lower than market price.
The letting agent got someone to agree to at least25% more than I was asking. But without knowing the way it'll be enforced or what the plentys are I wasn't comfortable taking that.
The calculator let me find out that I could increase by a certain amount. And I halved that.

https://www.rtb.ie
Are worth a look to see what you can do.

JeffKenna

Rent out 3 rooms in the house as opposed to the whole house?

MintyMagnum

Something else to consider. I would argue that he was renting a room as the whole apt was not for residential use. And if now renting whole apt market rent applies. However this could be seen as bending the law.[/quote]

Possible to rent 3rooms out separately?

Sean Fantastic

That's lame and incredibly unfair. I guess there are some options though. At the moment that whole house is rented out but to only 1 person who doesn't use most of it. Could it be rented out now at higher price but with a different utilisation?

There's also parking with it, could that be rented out seperately?

Or what about if instead of renting the whole house I just rented the rooms out individually?

dudara

Use the calculator to determine the allowed rent increase, based on the point of the last rent review. It will be more than 4% but not the 63% you're hoping for.

Graham

Baby01032012 wrote: »

Something else to consider. I would argue that he was renting a room as the whole apt was not for residential use. And if now renting whole apt market rent applies. However this could be seen as bending the law.

Assuming the previous tenancy had been registered with the RTB it wouldn't take long to discredit any attempt to retrospectively reclassify the previous tenancy.

Mrs OBumble

Like all laws, you need to weigh up the likelihood of getting caught and the consequence of it.

Also factor in that if you advertise a property at a too low rent level, you are more likely to get low quality tenants because good ones will assume theres a problem and not bother looking at it.


Re time limits ...i believe its two years. So you could put the property on Air BNB for two years ...

alias no.9

CIARAN_BOYLE wrote: »

That's the problem with the new legislation.

A buddy of mine is a tennant in a similar situation. Whoever gets the property when he moves out will be so lucky. He is actually thinking of keeping the property for 12 months that he is abroad because it's so much below current market rates.

Could you rent it out to multiple people under separate leases, no one person would be renting the house so it wouldn't be comparable and you are around the 4% rule.

There's a massive shortage in supply and the effect of the supposed rent control measures is to make actions like this seem reasoned and measured, though they will only serve to exacerbate the shortage in supply, it's seriously ****ed up.

The PRTB has a database of all registered rents. Rental properties require a BER which includes the floor area of the property. An index of €/Sq.M should be relatively easy to compile. Where an existing property is below the median on a €/Sq.M basis, allow them to move to the median for new tenancies only but retain the 4% max increase for existing tenants. Where a property is in the top quartile on a €/Sq.M, a blanket prohibition on rent increases should be applied either for existing tenants or new tenancies, with the second quartile tightening to maybe 2% max increase on new or existing tenancies.

76544567

Similar situation myself op
Three properties all roughly 50% below market rate.
Totally shafted by the new rules.
I've decided I'm selling two.
The other i will do airbnb for a couple of years and then sell if the landscape requires it then.

bucketybuck

If I could ask, say the OP lists the apartment at or even below market rate, who would actually know that the difference between old and new rents was more than 4%?

How would the new tenants know what the old agreement was?

Michael D Not Higgins

MOD: OK, one quick warning before this goes any further, anymore suggestions of "bending the law" or the likes will be actioned.

The_Conductor

Toots wrote: »

AFAIK the only way you'd get around the 4% cap would be if there were significant renovations done to it. However I'm not sure what counts as significant. It's definitely more than painting the whole place anyway.

Works that involve planning permission and/or require the use of a C2 registered contractor- and if a tenancy is being ended for the purpose of carrying out such works (not happening in this case)- a copy of the bill of works from the nominated contractor has to be supplied to the tenant. Its specifically been stated that a new bathroom or kitchen *does not* qualify. Once the work is structural in nature- you're probably fine.

Unfortunately in the OP's case- it really is an instance of 'no good deed going unpunished'.

GhostyMcGhost

bucketybuck wrote: »

If I could ask, say the OP lists the apartment at or even below market rate, who would actually know that the difference between old and new rents was more than 4%?

How would the new tenants know what the old agreement was?

Tenants might not know.

The PRTB have the tenancy records and can easily compare

The PRTB will be the ones that will take action. Not sure what, how and when or even if they do but that's how it's supposed to work

Supercell

Could the OP AirBnB the place for a year or whatever the legislation says is the timeframe that has to pass before they can re-let it at market rates? Genuine question.

aloooof

Supercell wrote: »

Could the OP AirBnB the place for a year or whatever the legislation says is the timeframe that has to pass before they can re-let it at market rates? Genuine question.

My understanding is that you'd require planning permission to classify it as a B&B if you want to AirBnB it for 12 months of the year.

The_Conductor

GhostyMcGhost wrote: »

Tenants might not know.

The PRTB have the tenancy records and can easily compare

The PRTB will be the ones that will take action. Not sure what, how and when or even if they do but that's how it's supposed to work

Its relatively easy for the RTB to do a dump from their database- push the allowable increases against the last notified rent for any given property- and redflag any in breach of the rules....... Hell I could write the script to do it for every single notified property lease in the country in less than 5 minutes.

Note- in cases where the property was last rented before rent controls came in- and no subsequent change of tenant occurred- the RTB may not have been notified of changes in the rent in the intervening period of time- thus their records could very well be out of date. This is a concern- and it would be perfectly reasonable for a landlord to argue this case- worse case scenario is they are behind on their RTB notifications- not in breach of rent control obligations.........

I.e. if a landlord has had the same tenant for a number of years- and registered the tenancy at the outset- but hasn't notified the RTB of rent increases that occurred in the intervening period of time- the RTB wouldn't have any record of them.

This was recognised by tenancy advocacy groups at the outset of rent controls- however, there hasn't been any clarity issued by the Minister thus far (but it has come up in 2 recent PQs in the Dáil).

The_Conductor

aloooof wrote: »

My understanding is that you'd require planning permission to classify it as a B&B if you want to AirBnB it for 12 months of the year.

That applies to Dublin City Council areas. DCC is the only local authority to have clarified requirements in this respect (thus far) and it relates to two specific high profile cases (one in the Temple Bar, one in Rathmines).

I suspect its a non-runner- but I don't think its been definitively knocked on the head (yet).

Samuel T. Cogley

OP, various 'ways around it' will be forwarded, and no doubt have been forwarded. Whether they have been the subject of an RTB decision or whether an RTB decision will go your way is debatable. The RTB is very pro-tenant and renting the rooms individually could easily be the found to be a lease (Chapter 6 IIRC).

Could you AirB&B the rooms?

quadrifoglio verde

I'd rent out the two rooms at just below market rate and use the other room once a month for myself.
There is nothing to stop a landlord keeping a room for himself and using it the odd time. If new tenants get a bit of a discount compared to elsewhere in the area as well as a 3 bed house that is mainly occupied by 2 they'll be happy, provided it's all agreed at the start.

Samuel T. Cogley

quadrifoglio verde wrote: »

I'd rent out the two rooms at just below market rate and use the other room once a month for myself.
There is nothing to stop a landlord keeping a room for himself and using it the odd time. If new tenants get a bit of a discount compared to elsewhere in the area as well as a 3 bed house that is mainly occupied by 2 they'll be happy, provided it's all agreed at the start.

It would have to be used more than the 'odd time'. There's about 6 threads on this a week for the last 6 weeks or so, take your pick of the ones with the myriad of reasons why this won't necessarily defeat the RTA.

punisher5112

Renovate a bathroom or kitchen or new windows if needed then rent out. Have work carried out by professional and receipts.