Rent increase negotiations

Funny Feeling

Hi i am renting and in my place 2 years. The estate agent has sent me notice of a rent increase, which is 5% due to my last tenancy agreements being 12 months each. The increase will really push me out of the property. I am already struggling as a single parent renting in Dublin, paying creche fees, life etc..

I am mortgage approved but have not been able to find anything in my budget, still holding out hope but it's not looking likely.

I am looking for advice on how to approach the estate agent to say that i can't afford the increase. I am thinking if i do move out the property will be vacant for at least a month so they will lose out on a months rent the difference between the increase and a months rent means they would be at a loss. I am very quite, get on with my neighbours and look after the house.

Would anyone recommend just being upfront and stating the above? I also don't want to sign a new lease, because i might buy a place. All thoughts welcome please.

dennyk

Firstly, you don't have to sign a lease; you have security of tenure under Part 4 of the Residential Tenancies Act. That doesn't prevent them from putting up the rent, however; rent reviews can still be conducted under a Part 4 tenancy.

That said, 5% is an odd increase, and possibly not legal. When did your tenancy actually begin, has the rent been increased previously, and when did you receive notice of this increase? There are very specific rules about rent reviews in rent pressure zones (which includes all of Dublin) and they are different if your tenancy began before December 24th, 2016. If it did, then your landlord cannot review the rent (and tell you about the new rent) until 24 months after your tenancy began, and the rent increase is limited to 2% per year since the tenancy began. (Subsequent rent increases can be conducted every 12 months, but the rent increase cap is still 2% per year.) If your tenancy began after December 24th, 2016, rent reviews can take place starting 12 months after your tenancy began and 12 months after the last rent review, and the rent can be increased by a maximum of 4% per year. You must also be given at least 90 days of notice before the new rent takes effect in either case, and the notice must be in writing (a hard copy, not an email or text message) and must follow a specific format, including listing three comparable properties to demonstrate that your new rent is in line with market rates. If the notice does not follow the required format, it is not valid and your old rental rate continues to apply until 90 days after you have received a valid notice.

If the notice is valid and the new rent amount is legal under the RPZ legislation, then you are unfortunately going to have limited options. In Dublin, unless the estate agent is foolish enough to ignore the law and put up the rent for a new tenant so high that they price themselves out of the market, they'll likely have the place filled in a matter of days, if not hours; certainly not a month. And if they ignore the RPZ legislation applying to new tenants as well, as many landlords do (since there is no easy way for a new tenant to know the previous rent amount), they could potentially make far more money off the property if you were to leave, so you have little or no leverage here. Have a look around on Daft.ie; do you think you can find suitable alternative accommodations for the same price or less as your current rent? If so, then start hunting; you have 90 days to arrange something before the new rent kicks in. If not, you're probably best off staying where you are and figuring out a way to afford the increase, by hook or by crook; honestly, if you're planning to buy a place within the year, staying will probably be cheaper in the long run even with the rent increase, given the expenses involved in moving and securing a new place (deposits, utility connection fees, moving expenses, etc.).

Funny Feeling

The increase follows the rules. They have used the rtb calculator, because I signed 12 months the last time the increaese equates to 5% R x (1 + 0.04 x t/m). Sure they will find someone straight away, but it will take a month because the estate agent is not efficient.

I am a very good tenant pay on time, look after the place, get on well with the neighbours. I know it's capitalism but I just don't understand the greed when they are already getting top dollor with little hassel. Moving with a child is not an easy decision, they need the stability fine if I'm buying a home. Suppose I'm just disappointed in them, stupid i know!!

Ginger83

dennyk wrote: »

Firstly, you don't have to sign a lease; you have security of tenure under Part 4 of the Residential Tenancies Act. That doesn't prevent them from putting up the rent, however; rent reviews can still be conducted under a Part 4 tenancy.

That said, 5% is an odd increase, and possibly not legal. When did your tenancy actually begin, has the rent been increased previously, and when did you receive notice of this increase? There are very specific rules about rent reviews in rent pressure zones (which includes all of Dublin) and they are different if your tenancy began before December 24th, 2016. If it did, then your landlord cannot review the rent (and tell you about the new rent) until 24 months after your tenancy began, and the rent increase is limited to 2% per year since the tenancy began. (Subsequent rent increases can be conducted every 12 months, but the rent increase cap is still 2% per year.) If your tenancy began after December 24th, 2016, rent reviews can take place starting 12 months after your tenancy began and 12 months after the last rent review, and the rent can be increased by a maximum of 4% per year. You must also be given at least 90 days of notice before the new rent takes effect in either case, and the notice must be in writing (a hard copy, not an email or text message) and must follow a specific format, including listing three comparable properties to demonstrate that your new rent is in line with market rates. If the notice does not follow the required format, it is not valid and your old rental rate continues to apply until 90 days after you have received a valid notice.

If the notice is valid and the new rent amount is legal under the RPZ legislation, then you are unfortunately going to have limited options. In Dublin, unless the estate agent is foolish enough to ignore the law and put up the rent for a new tenant so high that they price themselves out of the market, they'll likely have the place filled in a matter of days, if not hours; certainly not a month. And if they ignore the RPZ legislation applying to new tenants as well, as many landlords do (since there is no easy way for a new tenant to know the previous rent amount), they could potentially make far more money off the property if you were to leave, so you have little or no leverage here. Have a look around on Daft.ie; do you think you can find suitable alternative accommodations for the same price or less as your current rent? If so, then start hunting; you have 90 days to arrange something before the new rent kicks in. If not, you're probably best off staying where you are and figuring out a way to afford the increase, by hook or by crook; honestly, if you're planning to buy a place within the year, staying will probably be cheaper in the long run even with the rent increase, given the expenses involved in moving and securing a new place (deposits, utility connection fees, moving expenses, etc.).

What if its not in a RPZ?

GGTrek

It does not matter if the OP is a good tenant anymore. The new legislation creates a perverse incentive to increase rent to the max allowed to avoid passing benefits to new tenants and avoid loosing value on the property. It would actually be very detrimental for the OP to expose her case because it would show that she is on shaky financial ground so rent payments are already at risk. Also if she is on such shaky grounds how can she afford a 10% min deposit for a mortgage which in Dublin means 20k minimum.

dudara

When did your tenancy commence and when was your rent last increased (if ever)?

@GGTrek - if she’s mortgage approved, she surely has the deposit saved already.

The_Conductor

Ginger83 wrote: »

What if its not in a RPZ?

OP said they were in Dublin. All 4 Dublin local authorities are RPZ'ed.
The agent had the cop to use the RTB's online RPZ calculator- so its safe to assume that it is accurate.

OP- the landlord most probably does value having you as a decent tenant- and you could very probably make a reasonable case pointing this out to him/her. They are entitled to their increase- yes- and if they don't apply the increase- a tenant subsequent to you (e.g. if you find a property and purchase it) would be eligible to the more favourable treatment the landlord might show you.

What some people have been doing lately- is doing up an agreement with the landlord- whereby the rent is officially increased by the amount permitted in the RPZ legislation- however, in view of your relationship with the landlord- they in turn offer you a rebate (I've seen two recent cases in this neighbourhood (Lucan) where the tenants have been given an 11 month rent regime- curiously, in both cases its January that they have off).

Just an idea- the landlord might not bite- perhaps they may- nothing ventured, nothing gained. One way or the other- you've nothing to loose.

Note- this increase- could very well be driven by the estate agent rather than the landlord- as the estate agent is probably taking a percentage of the gross rental income (typically 10%)- so this would be a nice little increase for them...........

ted1

Call your landlord, I’d never put a tenant on the street for the sake of a few euro a months.
Say that you are paying 1500 a month, that’s 75 Euro, which is 69 after USC.

A 3% increase (can you manage that ) is 45 Euro , 41 after. USC .
So it’s a difference of only 28 before tax to the landlord

Realistically it would be only empty for a week max so they won’t lose that much rent. But may have to paint and do other fixes.

Ginger83

The_Conductor wrote: »

OP said they were in Dublin. All 4 Dublin local authorities are RPZ'ed.
The agent had the cop to use the RTB's online RPZ calculator- so its safe to assume that it is accurate.

OP- the landlord most probably does value having you as a decent tenant- and you could very probably make a reasonable case pointing this out to him/her. They are entitled to their increase- yes- and if they don't apply the increase- a tenant subsequent to you (e.g. if you find a property and purchase it) would be eligible to the more favourable treatment the landlord might show you.

What some people have been doing lately- is doing up an agreement with the landlord- whereby the rent is officially increased by the amount permitted in the RPZ legislation- however, in view of your relationship with the landlord- they in turn offer you a rebate (I've seen two recent cases in this neighbourhood (Lucan) where the tenants have been given an 11 month rent regime- curiously, in both cases its January that they have off).

Just an idea- the landlord might not bite- perhaps they may- nothing ventured, nothing gained. One way or the other- you've nothing to loose.

Note- this increase- could very well be driven by the estate agent rather than the landlord- as the estate agent is probably taking a percentage of the gross rental income (typically 10%)- so this would be a nice little increase for them...........

Yes i spotted that, just wondered on exact rules outside RPZ.

BrokenArrows

Is your rented accommodation within your price range if it was for sale?

Possibly approach your landlord with an offer to purchase and cut out the estate agent fees. You get a cheaper house and he makes a greater profit.

Estate agent fees could mean 1-3% on the sale price.

Fian

dennyk wrote: »

Firstly, you don't have to sign a lease; you have security of tenure under Part 4 of the Residential Tenancies Act. That doesn't prevent them from putting up the rent, however; rent reviews can still be conducted under a Part 4 tenancy.

That said, 5% is an odd increase, and possibly not legal. When did your tenancy actually begin, has the rent been increased previously, and when did you receive notice of this increase? There are very specific rules about rent reviews in rent pressure zones (which includes all of Dublin) and they are different if your tenancy began before December 24th, 2016. If it did, then your landlord cannot review the rent (and tell you about the new rent) until 24 months after your tenancy began, and the rent increase is limited to 2% per year since the tenancy began. (Subsequent rent increases can be conducted every 12 months, but the rent increase cap is still 2% per year.) If your tenancy began after December 24th, 2016, rent reviews can take place starting 12 months after your tenancy began and 12 months after the last rent review, and the rent can be increased by a maximum of 4% per year. You must also be given at least 90 days of notice before the new rent takes effect in either case, and the notice must be in writing (a hard copy, not an email or text message) and must follow a specific format, including listing three comparable properties to demonstrate that your new rent is in line with market rates. If the notice does not follow the required format, it is not valid and your old rental rate continues to apply until 90 days after you have received a valid notice.

If the notice is valid and the new rent amount is legal under the RPZ legislation, then you are unfortunately going to have limited options. In Dublin, unless the estate agent is foolish enough to ignore the law and put up the rent for a new tenant so high that they price themselves out of the market, they'll likely have the place filled in a matter of days, if not hours; certainly not a month. And if they ignore the RPZ legislation applying to new tenants as well, as many landlords do (since there is no easy way for a new tenant to know the previous rent amount), they could potentially make far more money off the property if you were to leave, so you have little or no leverage here. Have a look around on Daft.ie; do you think you can find suitable alternative accommodations for the same price or less as your current rent? If so, then start hunting; you have 90 days to arrange something before the new rent kicks in. If not, you're probably best off staying where you are and figuring out a way to afford the increase, by hook or by crook; honestly, if you're planning to buy a place within the year, staying will probably be cheaper in the long run even with the rent increase, given the expenses involved in moving and securing a new place (deposits, utility connection fees, moving expenses, etc.).

some of this is incorrect. the first rent review is after 24 months from the start of teh lease, or from previous review, for the first review after 31/12/2016, assuming tenancy began before that date. If there has been a review since it is every 12 months.

5% is not an odd figure at all - under the formula if you were now to conduct a rent review 12 months after the commencement of a lease you would increase by 5% - 4% per annum over 15 months, being 12 months before review and 3 months notice period.

Any rent increase will require 90 dyas written notice. You can appeal it to RTB anytime during those 90 days.

subsequent rent reviews are 4% per annum, not 2%. The only time 2% per annum is relevant is in the case of the first review of a tenancy which was in existence prior to 31/12/2016.

Edit: The landlord would suffer loss if didn't increase to maximum permitted, because that reduction would not just follow over teh course of your further period in the house but all subsequent periods. So the loss over teh first 12 few months might not be more than a vacant month (and in dublin a vacant month is frankly unlikely) but over the next 10 years it would more than outweigh it - the reduction would give rise to a permanent reduction in the rent cap for as long as teh RPZ rules coninue in existence. Which in turn would feed into the market value of the premises. RPZ rules make it irrational not to increase by the maximum amount assuming market rates continue to be greater than the capped value.

Ray Palmer

Funny Feeling wrote: »

I am looking for advice on how to approach the estate agent to say that i can't afford the increase. I am thinking if i do move out the property will be vacant for at least a month so they will lose out on a months rent the difference between the increase and a months rent means they would be at a loss. I am very quite, get on with my neighbours and look after the house.

Why would it be vacant for a month? You can rent a property in Dublin in a few hours. People will agree to take property that needs to be cleaned and repainted before it is done along with offering to do it themselves.

Millions of people are as good as a tenant as you are which is only the normal expected behaviour such as not making noise and keeping the property.

Sorry to sound harsh but people put value on details that actually have no value.

muminpajamas

I think the only way out of this situation is to buy and get rid of your landlord forever. Have you considered a one bedroom?

Funny Feeling

Thanks all for responses.

To answer the question on my deposit. I have saved every spare cent to save for a deposit, belive me I live off very little and buy next to nothing for myself. It has been my mission over a number of years. I have put aside a small amount each month and have managed to save enough. When my rent is increased I risk chipping away at my deposit, which would mean less opportunity to buy. It's a catch 22.

I have decided to accept the increase and not sign a new lease. Hopefully I will buy something soon.

Jack_92

Fian wrote: »

Any rent increase will require 90 dyas written notice. You can appeal it to RTB anytime during those 90 days.

My lease renewal is due in a month. I have been living here for two years and signed initial 12 months contract which was renewed 12 months later without rent increase. Recently I was asked whether I would like to renew it. I assume they will want to increase my rent (which, in my opinion is already high). Would the above mentioned rent increase 90 days written notice still apply?

dennyk

Jack_92 wrote: »

My lease renewal is due in a month. I have been living here for two years and signed initial 12 months contract which was renewed 12 months later without rent increase. Recently I was asked whether I would like to renew it. I assume they will want to increase my rent (which, in my opinion is already high). Would the above mentioned rent increase 90 days written notice still apply?

Yes, the notice period still applies, as do the notice format requirements (listing three comparable properties to demonstrate market rent, etc.), and RPZ restrictions also still apply if you are in an RPZ.

Also, keep in mind you are not obligated to sign a new lease at all; you are currently under a Part 4 tenancy which lasts for four years from the date your tenancy began. Your landlord can only end your tenancy for certain allowable reasons; basically, if he is selling the property, moving in himself or an immediate family member, or performing extensive renovations that require vacant possession to complete. Even if you do not sign a new lease, your landlord cannot simply terminate your tenancy just because he wants to bring in another tenant. Note that you should notify your landlord before the end of your lease that you plan to remain in the property under Part 4; failure to do so doesn't invalidate your Part 4 rights, but you could be responsible for any costs the landlord incurs as a result of your lack of notice (e.g. listing fees if he listed the property for rent believing you were leaving at the end of your term).

If you do plan to stay in this property for another year, you could consider signing a new lease, as that would give you more security; a landlord cannot terminate a fixed term lease for any reason except a breach of the lease agreement (or failing to pay rent, damaging the property, anti-social behaviour, etc.). However, a lease also obligates you to remain through the term, unless you go through the process of finding a new tenant to assign or sublet to and the landlord refuses permission (which lets you out of your lease early).