Substantial Refurbishment Criteria

jamesthepeach

No such thing as short term.
Im probably going to go with short term or sell anyway. The less I have to do with conventional renting the better at this stage.

mrslancaster

something i just read on rtb raises another question for me...

if setting rent for a new tenancy in rpz the LL has to give written details of last rent & calculations which can't be more than the permitted %.

how does that work IF substantial changes have happened? what written details need to be provided then as probably the 4% will not apply especially if the last rent was way below market value..

tbh my head is melted with these changes

gizmo81

The RTB told me you have to give invoices of work carried out. I've emailed them to clarify this. On the phone it was just a throw away comment.

mrslancaster wrote: »

something i just read on rtb raises another question...

if setting rent for a new tenancy in rpz the LL has to give written details of last rent & calculations which can't be more than the permitted %.

how does that work IF substantial changes have happened? what written details need to be provided then as probably the 4% will not apply especially if the last rent was way below market value..

tbh my head is melted with these changes

jamesthepeach

I wouldnt be giving written details of any work I get carried out to anyone. Especially a tenant.

Baby01032012

OK...so i emailed the RTB today in relation Section 34 (5) which covers circumstances where you can raise rent to market rate above the 4% cap...one of these circumstances is substantial refurbishment. I listed in detail all of the works i intended to carry out. And asked if collectively they would meet the criteria of substantial refurbishment,
I received this response (extract)
"A landlord will need to determine for himself if the works he carried out on the rental property are substantial.
If the refurbishments carried out add letting value to the rental property then the landlord can put the house back on the market at current market rent.

If a dispute were to arise you will need proof of the works carried out ie receipts etc."
 
I believe the works will add letting value and i will have receipts from the contractors for all the work done. Ive had to give notice to the tenants in order to carry out the work. Ive been advised the work will take 4-5 weeks. On the basis of the RTB response id be confident i can increase the letting value and will rely on above should there be a dispute in relation to the rent charged.

Claw Hammer

Baby01032012 wrote: »

OK...so i emailed the RTB today in relation Section 34 (5) which covers circumstances where you can raise rent to market rate above the 4% cap...one of these circumstances is substantial refurbishment. I listed in detail all of the works i intended to carry out. And asked if collectively they would meet the criteria of substantial refurbishment,
I received this response (extract)
"A landlord will need to determine for himself if the works he carried out on the rental property are substantial.
If the refurbishments carried out add letting value to the rental property then the landlord can put the house back on the market at current market rent.

If a dispute were to arise you will need proof of the works carried out ie receipts etc."
 
I believe the works will add letting value and i will have receipts from the contractors for all the work done. Ive had to give notice to the tenants in order to carry out the work. Ive been advised the work will take 4-5 weeks. On the basis of the RTB response id be confident i can increase the letting value and will rely on above should there be a dispute in relation to the rent charged.

The RTB haven't given you any comfort at all in relation to your question. You have to decide for yourself whether the refurbishments add letting value to the house. Only if a tenant complains will the board make a ruling. You could well be forced to pay back the excess rent to a complaining tenant.

Baby01032012

Im well aware of the consequences..maybe having a letting agent put a letting value on it before and after might give additional support that there had been an increase in rental value should in the unlikely event it go to dispute in the future.

PhoenixParker

Get an estate agent in to estimate a current rental value for the house in its current condition. Get the same estate agent back post works.

Claw Hammer

Baby01032012 wrote: »

Im well aware of the consequences..maybe having a letting agent put a letting value on it before and after might give additional support that there had been an increase in rental value should in the unlikely event it go to dispute in the future.

A letting agent could produce a report with photographs as the place now stands. Post works it would have to be shown that the higher rent was due to the works and not market movement. The works also have to be enhancing, not repairing, works.

davindub

Baby01032012 wrote: »

Im well aware of the consequences..maybe having a letting agent put a letting value on it before and after might give additional support that there had been an increase in rental value should in the unlikely event it go to dispute in the future.

Careful, the criteria for increasing rent beyond the 4% is actually "material change in nature" rather than "substantial renovation".

It might be a situation where you get a professional opinion with indemnity insurance to back it up.

PhoenixParker

davindub wrote: »

Careful, the criteria for increasing rent beyond the 4% is actually "material change in nature" rather than "substantial renovation".

It might be a situation where you get a professional opinion with indemnity insurance to back it up.

Material change only applies if you're kicking out your tenants to carry out the works. If the property is vacant for other reasons then the criteria is substantial refurbishment.

davindub

PhoenixParker wrote: »

Material change only applies if you're kicking out your tenants to carry out the works. If the property is vacant for other reasons then the criteria is substantial refurbishment.

No you have that mixed up.

"Substantial refurbishment" = reason to terminate. Section 34 RTB act.

"Substantial change in nature" = 2016 amendment with RPZ rules. I can't remember the section.

Vacant is only relevant if for 2 years.

Baby01032012

Section 34. Subsection (5) Subsection (4) does not apply—
(a)   where a dwelling has not at any time been the subject of a tenancy during the period of 2 years prior to the date the area is prescribed under section 24A as a rent pressure zone or deemed to be so prescribed;
(b)  (b) if, in the period since the rent was last set under a tenancy for the dwelling— (i) a substantial change in the nature of the accommodation provided under the tenancy occurs, and (ii) the rent under the tenancy, were it to be set immediately after that change, would, by virtue of that change, be different to what was the market rent for the tenancy at the time the rent was last set under a tenancy for the dwelling.
 Below is what i quoted to the RTB in email:

A ‘substantial refurbishment’ must be a significant change to the dwelling resulting in increased market value of the tenancy. Therefore this would involve significant alterations or improvements which add to the letting value of the property - usually involving major building works or works requiring planning permission. For example, simple repainting or replacement of white goods would not be sufficient.

davindub

Baby01032012 wrote: »

A ‘substantial refurbishment’ must be a significant change to the dwelling resulting in increased market value of the tenancy. Therefore this would involve significant alterations or improvements which add to the letting value of the property - usually involving major building works or works requiring planning permission. For example, simple repainting or replacement of white goods would not be sufficient.

It might be a significant change to the property, but the term is significant change in nature. The reasons for that exact term and not just "change" or "refurbishment" will be debated if it ever comes up, and it is likely to do so at some stage.

That is my opinion on it. Obviously you have a contrasting opinion but it you are the one with all the risk, and there are no HC comments to explain further to prove either of us wrong, hence the recommendation to get some cover!

Baby01032012

Thanks davindub...i see what you are saying now....i overlooked the change in nature...that does put a different spin on it...and makes it substantially more difficult to meet that criteria

jamesthepeach

€8000 is substantial in anyone's language.
I build a €20k extension without planning permission. That's substantial without needing planning permission.

If I were you I would take them on. Sure they don't even know what they mean themselves.

The way it's going now either landlords will spend absolutely nothing, because they will never make back further investment with 4%.
Or they will just change to short term let's.
None of this is good for anyone concerned.

4ensic15

jamesthepeach wrote: »

If I were you I would take them on. Sure they don't even know what they mean themselves.

.

How do you take them on? They have no facilities for inspecting properties to decide what is substantial refurbishment. The people who answer the phone or email queries are not decision makers or qualified or empowered to interpret the legislation. It is something that will have to await a hearing where evidence can be presented and a decision made. The only option is a court challenge based on constitutionality. What landlord wants to be the test case? The costs of the case would dwarf the expected higher rent.

jamesthepeach

4ensic15 wrote: »

How do you take them on? They have no facilities for inspecting properties to decide what is substantial refurbishment. The people who answer the phone or email queries are not decision makers or qualified or empowered to interpret the legislation. It is something that will have to await a hearing where evidence can be presented and a decision made. The only option is a court challenge based on constitutionality. What landlord wants to be the test case? The costs of the case would dwarf the expected higher rent.

I mean treat your 8k as substantial and let them challenge it if they want.
Nobody can say 8k is not substantial, especially if you can only recover less than 50 a month out of it with e rent increase.
These rules are made up and then they figure out what they actually mean afterwards.
It's a farce.
That's why so many landlords are leaving the business now.
That and the fact that the sale price are high enough now to let people out who have been stuck for years.

The_Conductor

Its not the cost though- its the nature of the refurbishment.
As for getting professional indemnity on this- I honestly think the lack of any defined criteria make this nigh impossible.

The RTB have randomly booted a ball out a window, in the dark, onto a busy road- and told landlords go find it- and if a car hits it before you do, or a car hits you while you're hunting for the ball- we'll find against you..........

While I accept fully it would be impossible to allow for every possible scenario- the alternate and surreal situation- where they haven't defined a single scenario- is nutty.

Essentially- its run with it- take your chances, and if its disputed, we'll probably find against you- but hey, lots of other landlords will get away with it, because their tenants won't bother disputing it...........

Honestly- if this was in a court of law- the RTB would be found to be bringing the process into disrepute and their representative jailed for contempt of court, if they refused or were unable to purge their contempt.

4ensic15

jamesthepeach wrote: »

I mean treat your 8k as substantial and let them challenge it if they want.
.

That is exactly what the o/p is trying to avoid. he does wor, ups the rent and is then challenged by the tenant. The RTB is only then going to decide if the refurbishment meets their criteria. If they go against him he will have to give back the excess. It will cost a lot of money to even make a good srgument to the RTB. I was in a hearing which cost the landlord €4,500 in professional expenses.

jamesthepeach

I was in a situation myself where I spent about €8000 doing up an apartment. I let it at 50% below market rate to tenants I knew thinking I'll up to market rate when they leave as they were supposed to be leaving in a year or two.

Roll on the new rules and I'm trapped with afantasticaly decorated high end apartment let at 50% below the one next door which is falling apart. I can't out up the rent to recover my costs. The guy with one falling apart next door is allowed to increase his rent more than I am and he's already getting 50% more than I am.

Then I'm told that I didn't to the refurbishment after the rule change so it doesn't count.

I had only two options then.
Go airbnb or sell it.
I was originally going to do airbnb but tested the water with it for sale and got an offer I couldn't believe so took it.

I have another apartment in the same sort of trap and am trying out airbnb with it for the moment. I've been living in it for a little while and have just started airbnb via an agent. If that doesn't work out I'll sell it too.

Claw Hammer

[QUOTE=jamesthepeach;103762114

Roll on the new rules and I'm trapped with afantasticaly decorated high end apartment let at 50% below the one next door which is falling apart. .[/QUOTE]

Why don't you take them on?

jamesthepeach

Because I spent the money last last year before their new rules. If I had spent it after I would have put up the rent and took them on.
But as it is I can't put up the rent so I'm out.

Actually I probably wouldn't have taken them. I did offer the ipoa a substantial sum to take them on and offered to help in the fund raising for it. They never bothered to respond to me though.

4ensic15

It is a bit hypocritical suggesting other people do something you wouldn't do yourself. It is easy to see how landlords have been cornered. Each thinking for himself.

mrslancaster

https://www.rtb.ie/dispute-resolution/dispute-resolution/dispute-resolution-process-faqs

just reading this section of the rtb website.

under the question "my landlord wants to increase my rent, can he do this?", the rtb say the LL cannot review within 24 months of commencement of tenancy except in limited circumstances such as a complete refurbishment of the property which affects the market rent of the property.

so does complete refurbishment qualify as per their own website?

4ensic15

mrslancaster wrote: »

https://www.rtb.ie/dispute-resolution/dispute-resolution/dispute-resolution-process-faqs

just reading this section of the rtb website.

under the question "my landlord wants to increase my rent, can he do this?", the rtb say the LL cannot review within 24 months of commencement of tenancy except in limited circumstances such as a complete refurbishment of the property which affects the market rent of the property.

so does complete refurbishment qualify as per their own website?

Of course it does. The difficulty is defining "complete refurbishment".

gizmo81

Can I ask about the concept of 'Market Value'?

Market rent is defined as a rent that a willing Tenant not already in occupation would give and a willing Landlord would take for the dwelling, having regard to other terms of the tenancy and the letting values of dwellings of a similar size, type and character to the dwelling and situated in a comparable area to that in which it is situated.

As we are in a rental crisis wouldn't it be fair to say there is a line of 'willing tenants' with blank cheques in hand?

If this comes up at a rent review dispute how do you argue it and is 'market rent' within the 4% RPZ?

Does RPZ not not nullify Market Rent?

mrslancaster

ah right, see it now - thanks 4ensic15, ☺

jamesthepeach

gizmo81 wrote: »

Can I ask about the concept of 'Market Value'?

Market rent is defined as a rent that a willing Tenant not already in occupation would give and a willing Landlord would take for the dwelling, having regard to other terms of the tenancy and the letting values of dwellings of a similar size, type and character to the dwelling and situated in a comparable area to that in which it is situated.

As we are in a rental crisis wouldn't it be fair to say there is a line of 'willing tenants' with blank cheques in hand?

If this comes up at a rent review dispute how do you argue it and is 'market rent' within the 4% RPZ?

Does RPZ not not nullify Market Rent?

There is no such thing as market rent in an rpz.

4ensic15

gizmo81 wrote: »

Does RPZ not not nullify Market Rent?

A triple negative is too much at this time of night!