Property in an RPZ Below Market Rate

ThehPatroniser

Here's an interesting one:

My brother and his wife have spent four years in South Africa (no kids). Now he has got a job in Paris which means that they'll be living there.

He never paid much attention to the rent of his house here in Ireland. The tenants were pretty good -they are there for two years. Paid on the nail and there were never any other problems. The fact is that my brother never increased the rent in two years: he was just happy with the hassle free rent, and never bothered with a rent increase.

When he came home for a recent visit he discovered that the property is in a Rent Pressure Zone and he went ballistic as the houses in the area are making fifty per cent more than he's getting.

He got on to the tenants and told them that he needed an extra €1,000 and that if her didn't get the increase he would need the house back for his personal use (home visits once every few weeks).

The tenants have accused him of trying to get around "rent pressure zone" rules and say that wanting a place for occasional visits is not what the RTB need to allow a Notice of Termination. The RTB don't really give advice but are hinting that a landlord who has looked for a 50% rent increase can't then turn around and look for his house back.

The family solicitor seems to know nothing about RTB. He says it takes months to go through all the levels if you get an awkward tenant and worse the landlord has to pay his own solicitor even if the landlord wins. He says RTB are always on the lookout for "stunts" to avoid the rent Pressure Rules and that there's a danger that the Notice might not be valid. To be honest we cannot get a straight answer out of him.

I have a friend who is an experienced landlord and he says that a landlord just signs a form to say that he wants the place back and there's nothing the tenant can do about it. The landlord then has to sit on the place for 6 months and once the 6 months is up then the landlord can rent the place for whatever he wants and the tenant has no comeback. But that will mena no rent for 6 months and that's a big loss.

My bother is very disappointed in the tenants. They have had the place a a real cheap rent for more than two years, and now the reward he gets for having been easygoing about the rent is that they seem to think they should only pay about €100 .

As far as I can see the government seems to think that all landlords are fat men on horses with top hats and a posh accent, and all tenants are like Bob Cratchet in Dickens story - poor starving ejits without a two bob to rub together. In fact my brother is a hardworking guy and is paying a mortgage and the tenants have a job and just milking a technicality.

The tenants are offering to "do a deal" but in my view this is blackmail.

Is there any way around all these technicalities?

Is needing a place for occasional weekends enough to get it back?

beauf

You might be better starting a new thread your question has nothing to do with this one "RTB adjudication"

Its got nothing to do with the tenants. its the Govt trying to give security of tenure to tenants. Both LL and Tenants are bound by the RPZ rules.

https://www.rtb.ie/rent-pressure-zones/rent-pressure-zones

ThehPatroniser

Thanks.

Not sure HOW to start a new thread but will try

HP

dudara

Your brother's approach was poorly thought through and I sincerely hope he hasn't done any of this in writing. I also don't see why your brother should be disappointed with the tenants; the person he should be disappointed with is himself as his lack of attention has landed himself in this spot.

With a two year tenancy, the first thing your brother should do is go to the rent increase calculator and work out how much he is legally entitled to. Will that be enough for him?

Your brother is entitled to terminate the tenancy (with appropriate notice) in certain circumstances as outlined here. There's even a sample notice of termination provided.

However, I'm not sure if wanting the place for occasional weekend visits constitutes a valid definition here - I wouldn't think so, but you'll definitely need to get an opinion on that. Also note, that your brother may be obliged to offer the property again to the original tenants should he change his mind about living there. So might kaput his 6 month scheme too.

Graham

Even if your brother got the house back he is restricted to the RPZ limits for the next tenancy unless he take it off the market for a couple of years.

There are exceptions to the limits for houses that have undergone significant work if your brother is prepared to invest more into the property. There's quite a few threads on the subject.

Mod Note anything resembling illegal actions to get around the RPZ rules will be met with a swift carding.

beauf

ThehPatroniser wrote: »

...The tenants were pretty good -they are there for two years. Paid on the nail and there were never any other problems. The fact is that my brother never increased the rent in two years: he was just happy with the hassle free rent, and never bothered with a rent increase....

I don't think he has a hope of getting the tenants out. Even if he had, he might end up replacing good tenants with bad ones, would wipe out any gains he might make. Don't see how its worth it. Unless its rent is incredibly low in the first place. Considering he not going to bother to look after it.

ThehPatroniser

dudara wrote: »

Your brother's approach was poorly thought through and I sincerely hope he hasn't done any of this in writing. I also don't see why your brother should be disappointed with the tenants; the person he should be disappointed with is himself as his lack of attention has landed himself in this spot.

With a two year tenancy, the first thing your brother should do is go to the rent increase calculator and work out how much he is legally entitled to. Will that be enough for him?

Your brother is entitled to terminate the tenancy (with appropriate notice) in certain circumstances as outlined . There's even a sample notice of termination provided.

However, I'm not sure if wanting the place for occasional weekend visits constitutes a valid definition here - I wouldn't think so, but you'll definitely need to get an opinion on that. Also note, that your brother may be obliged to offer the property again to the original tenants should he change his mind about living there. So might kaput his 6 month scheme too.

It was all done by e-mail unfortunately. BUT he did emphasize that without the extra money he would be stuck for a place when he visits

Graham

OP, I have moved your post to a separate thread.

Mooooo

He needs to be careful. Increase at the allowed amounts. There isn't much he can do but if the tenants dig in it could take 18 months to get them out even if they paid no rent

sweetie

Am I allowed say your brother's a greedy, ignorant bully? He should have been aware of the rent and raised it in line with the law and now he's trying to bully these tenants into making up for his mistake by bending the rules. This is coming from someone who is renting a house to very good tenants at least 20 - 25% below market rates.

mel123

I'm not usually anti landlord but in this case I just don't see how you/your brother think it's ok to demand an extra 1000€ a month from tenants which isn't allowed in a rent pressure zone?!?
If he has an investement property that's his fault not to be keeping himself in the loop on what going on in Ireland.
The tenants are refusing to pay so the general gist of what your saying is he thinks it's ok to force the tenants out, leave it sit for 6 months on the pretence that he needs it, and then let it out again at the higher rent.
It's people like him who give landlords a bad name

Browney7

By law he'd need to leave it vacant for two years to revert to market rents and who knows what will happen in two years.

If he didn't know what other houses in the area were renting for would he be happy with the rent as it is? - obviously not that simple but there are behavioural things at play here. Also, the fact that he's abroad and being caused no problems to date is definitely worth something to him.

In two years time he can invoke the "any reason to terminate" at the four year stage if it still exists. If he proceeds to remove tenants they will contest - and why wouldn't they? He may win or lose but it's likely the tenants won't leave without a fight and will cause him difficulties in contesting when he's not in the country so will need an agent he can trust to handle it

Graham

Mod Note Please keep it civil and don't get personal.

Fol20

He can legally take back his place if he intends to live in it. You need to provide them with a signed declaration and if it is let out again within 6months. The previous tenants get first options.

If the property has been not let in the past 2 years. You can charge whatever you want. The only other option to charge market rates is my doing substantial work to the place that will increase letting and sale value(this is vague and hasn't been disputed yet)

If I was in your situation. I wouldn't be doing any of the above. They have your intentions in writing and it might be better to retreat with your tale between your legs and increase it using the rpz calculator which might just be 2pc x2 and avoid and solicitors which the tenants may have ammo for now. Any time you text or email, remember that this can and will be used against you so you need to be careful.

If he is not up to speed with the laws in Ireland, although costly. It is better to hand it to a professional until he returns.legally since he isn't residing in the country, the tenants should be withholding 20pc to pay tax also. But we won't even go into that side.

ThehPatroniser

sweetie wrote: »

Am I allowed say your brother's a greedy, ignorant bully? He should have been aware of the rent and raised it in line with the law and now he's trying to bully these tenants into making up for his mistake by bending the rules. This is coming from someone who is renting a house to very good tenants at least 20 - 25% below market rates.

I am very surprised with this type of reaction. My brother's just an ordinary guy who is working abroad. He pays his taxes but it seems that the government expects him to subsidize very comfortable tenants at HIS expense.

What is the point in having private property if the government can tell you what to do with your own property. I have every sympathy if people are being exploited but that's not what's happening here. Its the landlord that's being exploited. I think we have huge hangups from our landlord past when we irish were staving etc: its time to move on.

Browney7

ThehPatroniser wrote: »

I am very surprised with this type of reaction. My brother's just an ordinary guy who is working abroad. He pays his taxes but it seems that the government expects him to subsidize very comfortable tenants at HIS expense.

What is the point in having private property if the government can tell you what to do with your own property. I have every sympathy if people are being exploited but that's not what's happening here. Its the landlord that's being exploited. I think we have huge hangups from our landlord past when we irish were staving etc: its time to move on.

Why not sell the place and reinvest somewhere else? Probably has a cheap tracker does he? Does he ever plan on living in Ireland again?

Lumen

ThehPatroniser wrote: »

I am very surprised with this type of reaction. My brother's just an ordinary guy who is working abroad. He pays his taxes but it seems that the government expects him to subsidize very comfortable tenants at HIS expense.

That's one interpretation. Another is that the gains that your brother is unable to realize have only come about as a result of government policy to stoke up property prices due to the bad debts held by State-owned banks.

It's not like he's added any value or made any smart decisions in this period of rent rises. By your own admission he's hardly been paying attention to the market at all.

Complaints that the government won't allow the free market to operate ignore the fact that it's not (and possibly never has been) a free market because government controls supply of the underlying resource (zoned land).

wordofwarning

Fol20 wrote: »

He can legally take back his place if he intends to live in it. You need to provide them with a signed declaration and if it is let out again within 6months. The previous tenants get first options.

If he is not living there, the RTB will probably see it as an illegal eviction. He appears to have tenants, who are more than eager to get onto the RTB about an issue. So I think trying this approach will be disaster.

Fol20 wrote: »

If the property has been not let in the past 2 years. You can charge whatever you want. The only other option to charge market rates is my doing substantial work to the place that will increase letting and sale value(this is vague and hasn't been disputed yet)

AFAIK the rule is that property has to be a let registered with the RTB. So if you have short term lets or Airbnb the place, you are eating into the 2 year rule with an increased rent

The problem is OPs brother can't just evict the tenants because he feels like it.

Your brother might just be better off selling the property since he can't easily increase the rent. I don't know how he sees as an investment, if he didnt even bother once a year to go onto daft.ie to see what the market rent for a similar property is. Then adjust his property rent accordingly. It has taken him 9 months to realise that there is a law preventing him charging whatever he wants for the property. So he isn't even following what is happening in an industry where he has an investment of hundreds of thousands.

How can you say owning this property is an investment if you can't spend 5 mins a year to see whether the returns on it are good or bad? IMO your brother should sell up and choose an investment which suits his passive, hands off approach eg a S&P500 index fund

IMO your brother should sell and cut his losses

ThehPatroniser

I would still be very interested to know if there has ever been a court case in the RTB on whether a landlord can simply get his property back once he won't be renting it again during the six months. In other words, has the RTB Court ever decided how often a landlord has to stay in the property or is that up to the landlord. There are loads of cases on the RTB webpages but I cannot see a single case where the tenants have had the Termination stopped because of a row over what the landlord wants the place back for? I strongly suspect that the tenants are just bluffing about going to the RTB

dudara

ThehPatroniser wrote: »

I am very surprised with this type of reaction. My brother's just an ordinary guy who is working abroad. He pays his taxes but it seems that the government expects him to subsidize very comfortable tenants at HIS expense.

But is he really subsidising them? I would argue not. If he was happy with the rent received up until now, then he's obviously accepting of that rent level covering his expenses. As a landlord, it was his duty to manage the rent level to cover his costs. He really should have been doing that.

He had a good relationship with his tenants, which is a valuable asset in its own right. Now he wants more rent, but he's lost the good relationship.

Your brother is not in a very strong position here right now, and it seems like he has tenants who have some idea of tenancy law. He needs to do everything by the book from now on. It's the only way to be both fair to himself and to the tenants.

EDIT: Given that your brother has riled up the tenants, I would also remind to make sure that his tax affairs are up to date, especially as he is a landlord living abroad.

ThehPatroniser

dudara wrote: »

But is he really subsidising them? I would argue not. If he was happy with the rent received up until now, then he's obviously accepting of that rent level covering his expenses. As a landlord, it was his duty to manage the rent level to cover his costs. He really should have been doing that.

He had a good relationship with his tenants, which is a valuable asset in its own right. Now he wants more rent, but he's lost the good relationship.

Your brother is not in a very strong position here right now, and it seems like he has tenants who have some idea of tenancy law. He needs to do everything by the book from now on. It's the only way to be both fair to himself and to the tenants.

With all due respect, the tenants knew that they were on to a good thing, and they sat back and let it happen. Then when asked to bring things back up to date they start getting interested in technicalities.

Browney7

wordofwarning wrote: »

If he is not living there, the RTB will probably see it as an illegal eviction. He appears to have tenants, who are more than eager to get onto the RTB about an issue. So I think trying this approach will be disaster.



AFAIK the rule is that property has to be a let registered with the RTB. So if you have short term lets or Airbnb the place, you are eating into the 2 year rule with an increased rent

The problem is OPs brother can't just evict the tenants because he feels like it.

Your brother might just be better off selling the property since he can't easily increase the rent. I don't know how he sees as an investment, if he didnt even bother once a year to go onto daft.ie to see what the market rent for a similar property is. Then adjust his property rent accordingly. It has taken him 9 months to realise that there is a law preventing him charging whatever he wants for the property. So he isn't even following what is happening in an industry where he has an investment of hundreds of thousands.

How can you say owning this property is an investment if you can't spend 5 mins a year to see whether the returns on it are good or bad? IMO your brother should sell up and choose an investment which suits his passive, hands off approach eg a S&P500 index fund

IMO your brother should sell and cut his losses

In fairness - I don't think this is entirely fair. If he set the rent at market rent two years ago he would have been unable to increase it due to the two year rule and so now is his first opportunity to review.

Lumen

ThehPatroniser wrote: »

With all due respect, the tenants knew that they were on to a good thing, and they sat back and let it happen. Then when asked to bring things back up to date they start getting interested in technicalities.

You expect tenants to ask for a rent increase?

Scraggs

ThehPatroniser wrote: »

I strongly suspect that the tenants are just bluffing about going to the RTB

I wouldn't be confident they are bluffing at all. The tenants have nothing to lose and everything to gain especially with a paper trail.

amcalester

If rents had fallen would your brother have volunteered to reduce their rent?

Doubt he would have, it sucks but your brother needs to pay more attention to his obligations and rights.

ThehPatroniser

The general feeling I get from the responses is that people feel that you can't try to catch up where there has been low rent unless your paperwork is right. I am worried that the fact that Bro looked for a big enough increase or else he would need the place back will rebound on him because even though he will need the place occasionally, the fact that he mentioned the rent increase at all might be viewed with cynicism. If the tenants are not bluffing then this could go either way in RTB Court. I think it's a pity that the rules are not clearer. Nowhere does it say how you will need to use the place if you take it back. It would have made a lot of sense if all this was written down in the law that rules all this. Lawyers NEVER seem to give you a straight answer. Its always: "You could be in trouble over the fact that you sought a big rent increase". I will post any information I get here because I think that there a lot of hardworking property owners suffering big losses due tenants who are taking advantage over the lack of clarity. The tenants don't even have to pay a lawyer. The can go in themselves and then appeal if they lose.

Hitman3000

ThehPatroniser wrote: »

dudara wrote: »

But is he really subsidising them? I would argue not. If he was happy with the rent received up until now, then he's obviously accepting of that rent level covering his expenses. As a landlord, it was his duty to manage the rent level to cover his costs. He really should have been doing that.

He had a good relationship with his tenants, which is a valuable asset in its own right. Now he wants more rent, but he's lost the good relationship.

Your brother is not in a very strong position here right now, and it seems like he has tenants who have some idea of tenancy law. He needs to do everything by the book from now on. It's the only way to be both fair to himself and to the tenants.

With all due respect, the tenants knew that they were on to a good thing, and they sat back and let it happen. Then when asked to bring things back up to date they start getting interested in technicalities.

Sorry did your brother expect his tenants to keep abreast of the rental market and increase their rent accordingly? Your brother is having a laugh seeking a 1000 euro a month increase.

gizmo81

ThehPatroniser wrote: »

The general feeling I get from the responses is that people feel that you can't try to catch up where there has been low rent unless your paperwork is right. I am worried that the fact that Bro looked for a big enough increase or else he would need the place back will rebound on him because even though he will need the place occasionally, the fact that he mentioned the rent increase at all might be viewed with cynicism. If the tenants are not bluffing then this could go either way in RTB Court. I think it's a pity that the rules are not clearer. Nowhere does it say how you will need to use the place if you take it back. It would have made a lot of sense if all this was written down in the law that rules all this. Lawyers NEVER seem to give you a straight answer. Its always: "You could be in trouble over the fact that you sought a big rent increase". I will post any information I get here because I think that there a lot of hardworking property owners suffering big losses due tenants who are taking advantage over the lack of clarity. The tenants don't even have to pay a lawyer. The can go in themselves and then appeal if they lose.

Your brother tried to break the law with an illegal rent increase.

Your brother doesn't need a lawyer at the RTB but someone who has read the RTA might be a start.

Lumen

ThehPatroniser wrote: »

I am worried that the fact that Bro looked for a big enough increase or else he would need the place back will rebound on him because even though he will need the place occasionally

Is it actually true though?

If the place is renting at 2k/mo right now, that's 24k/year gross rent.

Is he going to forgo that for occasional trips back home? That's sixty nights in the Shelbourne, i.e. every weekend for 30 weeks of the year.

edit: as a member the Shelbourne is actually only 350/night, so that's 34 weekends a year.

beauf

ThehPatroniser wrote: »

I am very surprised with this type of reaction. My brother's just an ordinary guy who is working abroad. He pays his taxes but it seems that the government expects him to subsidize very comfortable tenants at HIS expense.

What is the point in having private property if the government can tell you what to do with your own property. I have every sympathy if people are being exploited but that's not what's happening here. Its the landlord that's being exploited. I think we have huge hangups from our landlord past when we irish were staving etc: its time to move on.

I think its you are who are fixated on the past.

There is a housing crisis NOW not in the past. So ensure tenure, LL can increase the rent but only slowly. The Govt is basically ignoring the housing crisis, and penalizing LL's especially those with low rent, to appease renters, (and stop them becoming homeless) while avoiding the actually problems with both housing stock and the rental system is broken for LL's. Its why they are leaving the market.

If you have good tenants you are very lucky. Make the most of it, by increasing the rent with in the RPZ allowed amount.

ThehPatroniser

Lumen wrote: »

Is it actually true though?

If the place is renting at 2k/mo right now, that's 24k/year gross rent.

Is he going to forgo that for occasional trips back home? That's sixty nights in the Shelbourne, i.e. every weekend for 30 weeks of the year.

edit: as a member the Shelbourne is actually only 350/night, so that's 34 weekends a year.

This is an interesting point. Does the RTB take into account the fact that the landlord could get by using some other means such as a hotel if the use of the property is occasional only? If so we are bunched because Lumen is correct: if we kept the tenants, the rent would cover hotel accommodation. This is DEEPLY depressing.