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To HAP or not to HAP?

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  • 04-12-2017 11:03am
    #1
    Gautama
    Registered Users Posts: 635 ✭✭✭


    I live in Cork and have a rental property in Dublin (it used to be my home). It's been rented out for the last five years to the same tenants, a family of three, from the area. They've always paid their rent and have never asked for anything. When I moved out of the house I'd intended using a letting agency as I live so far from the property, but these tenants presented themselves and have been ideal in all regards. I gave them a favourable rate and haven't increased the rent once. There are few house available in Dublin for less than €1,000 per month, I'd say? For the last five years good tenants rather than good rent has been my priority.

    Their employment has been precarious over the five years. When employed they've paid the rent themselves; when not employed they've received Local Authority (LA) assistance. Anytime they've been late with the rent, it's only been for a few days and have contacted me in advance.

    Recently they've suggested HAP, but want me to concur. I suppose I've taken the view "leave well enough alone", but now I'm thinking of what the pros could be, and the cons. My own financial situation is becoming squeezed by young children getting older.

    They way I see it, the advantages to me are:
    • Tax free rental income for three years.
    • I can increase the rent by the RPZ amount (4%?). I would have been unable to increase the rent in the past without squeezing them, but now that the LA is paying for it it's not a concern.
    • The above two points can be done with the same tenants.
    The disadvantages are:
    • My fear of not "leaving well enough alone".
    • My concern that the LA inspection may demand silly fixes (I've no problem fixing genuine problems). I'm hoping as that there is no change in tenants the inspection will be a formality.

    Are there any pros and cons I'm missing? Are their any landlords out there that have had been in similar circumstances?

    Thanks.


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    #2
    wowy
    Registered Users Posts: 709 ✭✭✭wowy


    Gautama wrote: »

    They way I see it, the advantages to me are:
    • Tax free rental income for three years.
    • I can increase the rent by the RPZ amount (4%?). I would have been unable to increase the rent in the past without squeezing them, but now that the LA is paying for it it's not a concern.
    • The above two points can be done with the same tenants.
    The disadvantages are:
    • My fear of not "leaving well enough alone".
    • My concern that the LA inspection may demand silly fixes (I've no problem fixing genuine problems). I'm hoping as that there is no change in tenants the inspection will be a formality.

    Are there any pros and cons I'm missing? Are their any landlords out there that have had been in similar circumstances?

    Thanks.

    ??

    You get 100% mortgage interest relief if you have the tenants under HAP for at least 3 years, but other than that it's taxed as per usual.


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    #3
    Gautama
    Registered Users Posts: 635 ✭✭✭Gautama


    Oh, I thought I heard that on a TV show last week. Now that I look at the website, it just appears to be 100% tax relief on mortgage interest.
    Hmmmm. Must double check that on the player.


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    #4
    La Haine
    Registered Users Posts: 244 ✭✭La Haine


    Gautama wrote: »
    Oh, I thought I heard that on a TV show last week. Now that I look at the website, it just appears to be 100% tax relief on mortgage interest.
    Hmmmm. Must double check that on the player.

    I'm renting out my property to SDCCC under a 10 year agreement. I get 80% market rate with as a trade-off of having no landlord obligations.

    From 1 January 2017, you can deduct 80% of the interest paid on your mortgage on a rental property. For earlier years, the figure is 75% of the interest paid.

    In certain situations, you may be able to claim 100% mortgage interest relief. To qualify you must: Rent out your property for three years to tenants receiving certain social housing supports.....


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    #5
    the_syco
    Registered Users Posts: 37,301 ✭✭✭✭the_syco


    Gautama wrote: »
    My concern that the LA inspection may demand silly fixes (I've no problem fixing genuine problems). I'm hoping as that there is no change in tenants the inspection will be a formality.
    IMO, if you like the tenants, do HAP, but if the government doesn't want you to do HAP (for the above reasons), don't do HAP.

    How old are the kids? They may make use of the house if they goto college in Dublin.


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    #6
    Gautama
    Registered Users Posts: 635 ✭✭✭Gautama


    Aged 3 and 4.


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    #7
    spaceHopper
    Registered Users Posts: 3,991 ✭✭✭spaceHopper


    Look to see if you can realign the rent to the market rate, the RTB website might have a calculator, if you haven't increased the rent in a few years you may be able to go up more than 4%.

    I don't see why you can't say yes to HPA but only for the current tenants and in the current condition. If there is a check list get the tenants to run through it. You are more or less obliged to accept HAP, you can't discriminate but if the house fails the meet the standards then you should be able to say you can't able to accept HAP aka make it clear, the house is take as is no big spend of changed to meet HAP requirements. Also check is HAP paid in advance or arrears.


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    #8
    the_syco
    Registered Users Posts: 37,301 ✭✭✭✭the_syco


    spaceHopper wrote: »
    Also check is HAP paid in advance or arrears.
    It's paid in arrears.


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    #9
    Ashbx
    Registered Users Posts: 750 ✭✭✭Ashbx


    I thought landlords couldn't discriminate against HAP so yes you would have to accept it.

    Also, as you have tenants there already for the last 5 years, you cant evict them because they are on HAP payments now, so it looks like you are stuck with this tenant and have to accept HAP.

    If they are good tenants, being on HAP wont change that either.


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    #10
    the_syco
    Registered Users Posts: 37,301 ✭✭✭✭the_syco


    Ashbx wrote: »
    I thought landlords couldn't discriminate against HAP so yes you would have to accept it.
    Technically you can't, but if HAP needs you to update your house, and you don't update the house, the tenants don't get HAP.


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    #11
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    the_syco wrote: »
    Technically you can't, but if HAP needs you to update your house, and you don't update the house, the tenants don't get HAP.

    However, then you have tenants insitu- and no rent coming in.........
    HAP is setup to push all the risk onto the landlord- and none on the local authority.

    Also- some of the old schemes were managed partially or wholly by the local authority- as-in, the local authority dealt with any issues the tenant might encounter- insulating the landlord from the day-to-day running of the property. HAP is not like this- the landlord is fully responsible for the tenancy..........

    Its a mess of a scheme- if it were to be truly suitable for the likes of what the OP is suggesting- he/she would be handing it over to the local authority and letting them run it- however, thats not the case...........


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    #12
    KaiLee
    Registered Users Posts: 23 ✭KaiLee


    Ive seen many landlords just increase the rent to the max allowed for the household without any difficulties. Stating this is the current rent. I think LA are just glad you offer your home to them and ease the housing need. Not saying this is the right way to go but have seen it win over a few LL for that reason.


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