Landlords charging management fees to tenants to get around rent cap

Samuel T. Cogley

Diemos wrote: »

Do you think I am a tenant because I disagree with you? :rolleyes:

A tad narcissistic there :pac: I think you're someone who want's their cake and to eat it too as I said, there was no other reference to you personally, that generally ends up with cards.

I'm personally a LL and quite pro-tenant so I assume there is an entire spectrum of people out there ranging form homeless people to people who own 15+ houses, leasing out none of them to large LLs renting their own homes with a myriad of views.

One who wants the prices to go down with the market but not up I categorise as above. Would you be as willing to see a fixed 4% reduction with new entrants forced to find three ads and rent at that, once the market starts to cool?

handlemaster

Its the norm in other european countries to pay the management fees also the taxes

The_Conductor

handlemaster wrote: »

Its the norm in other european countries to pay the management fees also the taxes

Council taxes and local taxes which are used by local authorities/county councils to provide services and amenities that the tenants avail of in their localities- are the responsibility for tenants in any other country I've rented in (Denmark, Germany, France, The UK, Portugal- they're countries I've worked in and rented in).

The Irish LPT- isn't even tax deductible for landlords- i.e. its structured in a bizarre manner- that only suits the government- actually, come to think of it- the whole sector is setup this way.

Strictly speaking- what you're saying is accurate and normal. If you were in Germany, France- or even in the UK- the tenant, unless its stated otherwise, pays the local property tax- alongside charges for any usage based facilities (such as refuse collection).

People like to say the Irish system suits Ireland- well, yes, it suits tenants and local authorities- and indeed the government- and its toxic for landlords to lobby for or against, well pretty much anything, thats the state of play.

The Irish system is uniquely onerous- and has taxation features that would be laughed out of commercial court- if a different business type were exposed to equivalent rules. For starters- Local Property Tax- should be tax deductible for landlords- in a manner akin to any other business. Who pays it could then be debated in a reasoned manner- further down the road- but for starters- it has to be made tax deductible- akin to the manner it is dealt with for any other business.

Samuel T. Cogley

I think LPT is deducible now or at least will be, court case IIRC.

steddyeddy

An increase in fees asked for following a 4% rent cap? I think the RTB would look on in tenant's favour if they didn't pay.

The_Conductor

Samuel T. Cogley wrote: »

I think LPT is deducible now or at least will be, court case IIRC.

Its allowed for in tax law- but was never implemented- i.e. it was intended to be commenced in the Finance Bill (back in 2011)- but was never commenced. To this day- it is not tax deductible.

The_Conductor

steddyeddy wrote: »

An increase in fees asked for following a 4% rent cap? I think the RTB would look on in tenant's favour if they didn't pay.

Specific fees related to services provided under a user pays principle (such as refuse) even if they were previously supplied as part of management charges- have to be charged to tenants (under the EU Waste Framework Directive). Other fees- regardless of the increased cost of provision- would technically remain subject to the 4% cap (but *not* refuse collection). If additional services- such as enhanced management services- were supplied to tenants- technically, the user pays principle would apply.

It is arguable- that any user needs services- could be reassessed with a new tenant.

Technically- the way the 4% rule is phrased in the RTA- it is arguable that it is contrary to other legislation- including, but not limited to, the aforementioned EU Waste Framework Directive).

4ensic15

Samuel T. Cogley wrote: »

I think LPT is deducible now or at least will be, court case IIRC.

The court case was about the NPPR!

Samuel T. Cogley

4ensic15 wrote: »

The court case was about the NPPR!

Ah yes Thanks!

steddyeddy

The_Conductor wrote: »

Specific fees related to services provided under a user pays principle (such as refuse) even if they were previously supplied as part of management charges- have to be charged to tenants (under the EU Waste Framework Directive). Other fees- regardless of the increased cost of provision- would technically remain subject to the 4% cap (but *not* refuse collection). If additional services- such as enhanced management services- were supplied to tenants- technically, the user pays principle would apply.

It is arguable- that any user needs services- could be reassessed with a new tenant.

Technically- the way the 4% rule is phrased in the RTA- it is arguable that it is contrary to other legislation- including, but not limited to, the aforementioned EU Waste Framework Directive).

It's arguable, but it's a weak argument in the context of increased fees following a 4% increase cap.

steddyeddy

steddyeddy wrote: »

It's arguable, but it's a weak argument in the context of increased fees following a 4% increase cap.

The cap is on rent, it's a pretty weak argument claiming that other costs can't be added or increased.

steddyeddy

Annalee Agreeable Mandolin wrote: »

The cap is on rent, it's a pretty weak argument claiming that other costs can't be added or increased.

Depends what they are. Judging from some of the posts on the forum I suspect some LLs are using it to circumvent the 4% cap. I advised my clients to get proof of cost of increase when I looked after vunerable students accom in UCD.

The_Conductor

Annalee Agreeable Mandolin wrote: »

The cap is on rent, it's a pretty weak argument claiming that other costs can't be added or increased.

Particularly when some of them are being rammed down the throat of the government by the EU- such as the EU Waste Framework Directive. The polluter pays principle- is compelling- yet, it probably costs, or will cost, the average tenant over a hundred quid a month (and who among us imagines our refuse bill will actually fall when the formal regime comes in in September- no matter how diligently we recycle our waste).

As for other bills- car parking etc- when we have precedent set with the polluter pays principle- it would be hard to argue that a user pays principle isn't fair and reasonable for other users of services- which would include local property tax.

Just looking at an owners 1998 apartment lease here in front of me- it states any tenant of 3 years + tenure must be appointed to the Management Company, and must discharge the service charges accruing to the owner of the lease. Wonder what would happen if any of the 72 people holding this lease choose to challenge it.

The law is an ass- certainly- however, I'm not sure if you have ever tried to get 50+ people to agree to change a legal lease- to their detriment. It aint going to happen. Breach of the lease (which is universal, thanks to the amended Residential Tenancies Act)- is actually deemed a civil matter against the Minister- not the Management Company. Lol- love to see that one goes.

The legal situation out there- is a complete and utter haemes. Good luck to anyone who wants to challenge it- it really is the case that you might solve one problem and cause a dozen new ones.

Many people may not fully appreciate that a lot of the terms and conditions landlords try to apply to tenants- are not of their own volition- they may very well be leasehold conditions associated with the property- and by god- there most certainly is not a standard lease, with standard conditions- that applies to all apartments (or other property types) in the country...........

mdebets

Annalee Agreeable Mandolin wrote: »

The cap is on rent, it's a pretty weak argument claiming that other costs can't be added or increased.

But I think (IANAL) that you could make a good argument that the additional costs the were already included in the old rent, so you have to reduce the old rent by the additional costs, which makes the total the same as before.
Example:
The old rent was 100€. The landlord want's now to increase the rent to 104€ and add new other cost as 20€, bringing the total to 124€. But if it could be argued that the new costs were already part of the old rent, the actual rent (which would be the basis for the rent increase cap of 4%) would be 80€, so the new rent + cost would be 80€ (old rent) + 3.20€ (4% increase) + 20€ (new costs), bringing it up to 103.20€, less than the landlord would be able to charge if he didn't do the split.

steddyeddy

mdebets wrote: »

But I think (IANAL) that you could make a good argument that the additional costs the were already included in the old rent, so you have to reduce the old rent by the additional costs, which makes the total the same as before.
Example:
The old rent was 100€. The landlord want's now to increase the rent to 104€ and add new other cost as 20€, bringing the total to 124€. But if it could be argued that the new costs were already part of the old rent, the actual rent (which would be the basis for the rent increase cap of 4%) would be 80€, so the new rent + cost would be 80€ (old rent) + 3.20€ (4% increase) + 20€ (new costs), bringing it up to 103.20€, less than the landlord would be able to charge if he didn't do the split.

Indeed. Always seek proof of cost increases.

la_rose

Have just stumbled across this thread - I'm a very occasional Boards.ie user and rare poster but this discussion caught my eye. Unfortunately we have found ourselves in the exact position the title suggests....a property was advertised for X amount and on viewing I asked about what bills/fees needed to be paid. We were advised that it was gas, electricity etc (all standard). The agent has now gotten in touch offering us the property but with a "maintenance fee" of over 10% extra of the advertised rent, to be paid per month. This is not paid by other tenants in the apartment complex as we know a few others living there. Seems like a definite effort to get around the 4% RPZ cap

Samuel T. Cogley

la_rose wrote: »

Have just stumbled across this thread - I'm a very occasional Boards.ie user and rare poster but this discussion caught my eye. Unfortunately we have found ourselves in the exact position the title suggests....a property was advertised for X amount and on viewing I asked about what bills/fees needed to be paid. We were advised that it was gas, electricity etc (all standard). The agent has now gotten in touch offering us the property but with a "maintenance fee" of over 10% extra of the advertised rent, to be paid per month. This is not paid by other tenants in the apartment complex as we know a few others living there. Seems like a definite effort to get around the 4% RPZ cap

I'm not sure why a LL would be so blatant tbh.

It would be much easier to charge you the new rent and simply not say anything about the previous rent - how are you going to know except in very rare circumstances. What's more likely IMHO is that the LL is simply making you pay the fee in case it goes up beyond 4%, a perfectly sound move from a business perspective and probably legal - although who knows.

It's only problematic (again IMHO) where this is something that's done to an existing tenancy. You know exactly what you're getting into from day 1 here.

jimmycrackcorm

Samuel T. Cogley wrote:

It would be much easier to charge you the new rent and simply not say anything about the previous rent - how are you going to know except in very rare circumstances. What's more likely IMHO is that the LL is simply making you pay the fee in case it goes up beyond 4%, a perfectly sound move from a business perspective and probably legal - although who knows.

The all seeing rtb would know. Still I don't know how the 10pc maintenance fee could be justified. You have to actually get something in return.

GGTrek

jimmycrackcorm wrote: »

Samuel T. Cogley wrote:

It would be much easier to charge you the new rent and simply not say anything about the previous rent - how are you going to know except in very rare circumstances. What's more likely IMHO is that the LL is simply making you pay the fee in case it goes up beyond 4%, a perfectly sound move from a business perspective and probably legal - although who knows.

The all seeing rtb would know. Still I don't know how the 10pc maintenance fee could be justified. You have to actually get something in return.

Just a few points to consider:

1) If the 10% is the agent management fee it violates the Auctioneers and House Agents Act, 1973, section 2. "" 2.—(1) Subject to subsection (2) of this section, any provision (whether express or implied) in an agreement entered into after the commencement of this Act and relating to the sale, lease or letting of property (not being personal chattels), whereby the purchaser, lessee or tenant is required to pay or bear the cost of auctioneers' or house agents' fees or expenses in respect of the sale, lease or letting, shall be void, and any moneys paid under or on foot of such a provision shall be recoverable as a simple contract debt in a court of competent jurisdiction.
(2) Nothing in subsection (1) of this section shall affect the liability of a person to pay fees or expenses to an auctioneer or house agent in respect of the acquisition of any property in a case where the auctioneer or house agent had been retained by the person to acquire such property and does not also act, in relation to such acquisition, on behalf of the person from whom the property is acquired."

2) The landlord has to provide a statement to a new tenant about either the old rent or why the new rent is the market rent (for example refurbishment or outside rent pressure zone or more than two years or new build, ...), so it is not blatant it is a landlord obligation and if this statement is missing for a new tenant, guess what: big issue for landlord (and easy to prove), section 33 of RTA 2016:
"33. Section 12 of the Act of 2004 is amended in subsection (1) by substituting “complaint,” for “complaint.” in paragraph (h)(iii) and inserting the following paragraph after paragraph (h):
“(i) in the case of a tenancy of a dwelling in a rent pressure zone (within the meaning given in section 19(7)), where the tenancy commences on or after the commencement of section 33 of the Planning and Development (Housing) and Residential Tenancies Act 2016, furnish the tenant, in writing, with the following information at the commencement of the tenancy:
(i) the amount of rent that was last set under a tenancy for the dwelling;
(ii) the date the rent was last set under a tenancy for the dwelling;
(iii) a statement as to how the rent set under the tenancy of the dwelling has been calculated having regard to section 19(4).”.

Having said this, once formal requirements are complied with, the RTB has absolutely no way to prove which rent was charged before since their rent database is so outdated and missing so much data to be laughable. The person that register the tenancy can put absolutely any data in it as long as the name of tenants, star date of tenancy and PPS numbers of tenants are right.

However if real expenses were included in previous rent and they are not included in new rent, the tenant would have a very hard time proving that they should be provided for free like before. Since this would go against Section 16(a)(ii) of the RTA 2004-2016: "(a) pay to the landlord or his or her authorised agent (or any other person where required to do so by any enactment)—
(i) the rent provided for under the tenancy concerned on the date it falls due for payment, and
(ii) where the lease or tenancy agreement provides that any charges or taxes are payable by the tenant, pay those charges or taxes in accordance with the lease or tenancy agreement (unless provision to that effect in the lease or tenancy agreement is unlawful or contravenes any other enactment),"

As I said in my first post in this thread and I hope the socialists in this forum stop saying that they are entitled to get everything they can for free: there are no free lunches! Rent caps will move the new leases to appear much more like the leases on the continent, where variable expenses are paid by tenant and they are outside any rent cap scheme. Socialists cannot think they can have their cake and eat it too!

The_Conductor

Unless of course, the auctioneer/estate agent sourced the property on behalf of the tenant.......? (once again, just playing devils advocate)

There are certain fees- including refuse, for example, which historically, may have been included in rent- but from 1st September- it is now obligatory to charge for separately, on a polluter pays principle (thanks to the EU Waste Management Directive)- which are assessed independently of the 4% p.a. rent increase limit.

The 4% limit- while it is on a statutory basis- is subject to the likes of EU Directives.

There are also new data protection provisions which are increasingly affecting management companies- with knock-on effects for tenants and landlords- the implementation of which can be quite expensive- and is also dealt with separately to the 4%.

The 1st July SI- which imposes new obligations on landlords and management companies- mostly in relation to safety equipment- but also holding fire drills etc (its quite broad)- must also be adhered to by tenants- from the 6 examples reported on thus far- tenants in all 5 developments have refused to engage in these processes- despite advance notice- and it has already affected fire safety certificates in two developments- which imposes significant costs and expenses on management companies- the two of whom I am aware of (both in Cork curiously- it beggars belief that other cities haven't encountered similar)- are attempting to pursue these costs from all non-compliant residents (both owners and tenants) in the developments concerned.

In some ways- its a case of be careful what you wish for- you just might get it...........

pedrohbaron

la_rose wrote: »

Have just stumbled across this thread - I'm a very occasional Boards.ie user and rare poster but this discussion caught my eye. Unfortunately we have found ourselves in the exact position the title suggests....a property was advertised for X amount and on viewing I asked about what bills/fees needed to be paid. We were advised that it was gas, electricity etc (all standard). The agent has now gotten in touch offering us the property but with a "maintenance fee" of over 10% extra of the advertised rent, to be paid per month. This is not paid by other tenants in the apartment complex as we know a few others living there. Seems like a definite effort to get around the 4% RPZ cap

Just wonder where is this complex? Is the entire complex owned by just one LL?

la_rose

Thanks for pointing me towards the relevant legislation - will check it all out. The property is in Dublin 3 and it's my understanding that the estate agent manages all apartments in the (small) complex on behalf of a management company. We are currently negotiating with them to see if we can find a happy medium that suits both sides