Reletting apartment

digitaldr

I was letting out an apartment in Dublin and never increased the rent over the course of the 3 year tenancy. Tenants moved out some time ago and we are now living in the apartment ourselves while we get extensive renovation work done to a house we bought back in February. It's looking like the work is going to take longer than anticipated so will probably be in the apartment for about 1 year all told. My question is what can I rent the apartment for when we move out? Does the usual formula apply? I will be clarifying with the rtb but just thought I'd put it out here first.

dudara

How long will it be since the last tenants left and you renting it again?

IIRC, if you leave it two years without renting, you can reset rent to market levels. Otherwise, you will be bound by the RPZ rules, and you can use the RTB calculator to figure out the maximum new allowable rent

digitaldr

Tenants were in for 3 years and it we will be in for 1 year before we rent it again so it looks like the RTB calculator will apply.

Caranica

Depends on how extensive your renovations are?

ConnyMcDavid

dudara wrote: »

How long will it be since the last tenants left and you renting it again?

IIRC, if you leave it two years without renting, you can reset rent to market levels. Otherwise, you will be bound by the RPZ rules, and you can use the RTB calculator to figure out the maximum new allowable rent

Could they airbnb it for a year, then rent it at market rate?

dudara

Caranica wrote: »

Depends on how extensive your renovations are?

The renovations are on their house, not the apartment unfortunately.

digitaldr

Wouldn't have the time to manage airbnbing it and soon I'd say the government won't allow it!

3DataModem

digitaldr wrote: »

Wouldn't have the time to manage airbnbing it and soon I'd say the government won't allow it!

Consider using someone like airsorted to manage your Airbnb for a year, then once the two years are complete you can reset the rent.

Also there are other short term letting options out there.

The_Conductor

I really hate saying this- but the safest thing to do is to keep it vacant for the second year.

3DataModem

The_Conductor wrote: »

I really hate saying this- but the safest thing to do is to keep it vacant for the second year.

Short term letting better... you get income but it is not “rented” from the RTB perspective.

Baby01032012

Short term letting or keeping it empty for another year to reset to market value. All depends on how much below market rent it was. I guess after 4 years the rent differential would be quiet substantial.

davindub

3DataModem wrote: »

The_Conductor wrote: »

I really hate saying this- but the safest thing to do is to keep it vacant for the second year.

Short term letting better... you get income but it is not “rented” from the RTB perspective.

Short term lets are still Rtb.

Holiday accommodation is not but is a breach of planning permission.

mdebets

dudara wrote: »

How long will it be since the last tenants left and you renting it again?

IIRC, if you leave it two years without renting, you can reset rent to market levels. Otherwise, you will be bound by the RPZ rules, and you can use the RTB calculator to figure out the maximum new allowable rent

This is not true, there is no time limit for a reset of the rent to market level.
For an explanation, see this post in another thread on boards:
https://www.boards.ie/vbulletin/showpost.php?p=108196992&postcount=6

Baby01032012

Depends how you define short term lettings, generally they don’t come under RTA if they are of a duration of less than 6 months.

Baby01032012

mdebets wrote: »

This is not true, there is no time limit for a reset of the rent to market level.
For an explanation, see this post in another thread on boards:
https://www.boards.ie/vbulletin/showpost.php?p=108196992&postcount=6

Because Fian says so doesn’t mean it’s not true either. This is where RTB intern and law differ. Most landlords go by the interpretation and until it is challenged by way of a case I don’t see the interpretation changing.

The_Conductor

mdebets wrote: »

This is not true, there is no time limit for a reset of the rent to market level.
For an explanation, see this post in another thread on boards:
https://www.boards.ie/vbulletin/showpost.php?p=108196992&postcount=6

Providing the property in question has not been subject to a tenancy for the two years preceding letting it- any previous rent level no longer applies- and an owner can set the rent level as they choose (subject to prevailing market rates).

This is also partially why I said it was best to leave it vacant altogether for the second year- rather than allow a situation develop whereby it might be suggested a tenancy had ensued............

I also think it is a very bad idea to have airbnb or similar as a fallback situation- particularly in DCC and Galway City Council's functional areas- you will be taken to task- and according to the Minister- as local authorities have dragged their heels on introducing local bylaws- he is going to deal with on a national level.

OP- use it as a holiday home for year two- a getaway for weekends and/or holidays- before reletting it formally at the start of year 3- is my advice.

PhoenixParker

How much would the rent differential have to be to make back the money lost on not renting it for a whole year?

My bet is that idea does not stack up in the slightest.

You're talking about forgoing over ten thousands euros for an extra few hundred euro a month.

The payback period is likely to be 4 or 5 years at a minimum.

The_Conductor

PhoenixParker wrote: »

How much would the rent differential have to be to make back the money lost on not renting it for a whole year?

My bet is that idea does not stack up in the slightest.

You're talking about forgoing over ten thousands euros for an extra few hundred euro a month.

The payback period is likely to be 4 or 5 years at a minimum.

If the going rate is 1,500 and the OP is getting 1,000- the payback would 2 years.

Also- the fact of the matter is- the OP is stuck on an artificially low RPZ rate- a rate that has a maximum increase of 4% per annum associated with it. The former tenants may have been lovely- and the OP was fully happy to accept a lower than market rate from them. However- the OP has no relationship with a future incoming tenant. Why should the future incoming tenant benefit from the goodwill associated with the older tenant. If the incoming tenant is a good tenant- then the OP is free not to increase the rent for them (however, then they end up back where they are again- unless of course- rent inflation slows (or even reverses).

The number of rental units in the market- is falling- notwithstanding the Housing Associations and the REITs operating in the market place. The ESRI are now predicting 19k completions for 2018 and a whopping 24,800 for 2019. Supplyside issues- are beginning to unwind (albeit a lot of the new properties are not where people actually want to live!)

I'd suggest the better course of action- is to try to quench the rent level associated with the property- as it is foreseeable that within 3-4 years- rents could very well go into reverse- possibly sharply (as a lot of today's renters manage to enter the market to buy themselves).

davindub

Baby01032012 wrote: »

Depends how you define short term lettings, generally they don’t come under RTA if they are of a duration of less than 6 months.

They do come under the RTA, so are subject to the rent calculation etc.

Part 4 does not apply until 6 months into the tenancy.

digitaldr

Thanks for all the advice - plenty of food for thought. I have a few months to decide what I'm going to do.

Just a few observations:

My particular situation doesn't seem to be covered on the rtb website although on the face of it looks like the standard formula would apply. I suppose I could always try to argue the toss with them but chances of success would be slim.

I did have good, trouble free tenants so didn't raise their rent.

According to the calculator the max rent I could charge would be about 300 below market so wouldn't be worth leaving the place empty. Besides which for security (and moral) reasons not something I would want to do anyway. Although it does seem perverse that in some circumstances the legislation might make this a viable option.

I'm still not clear whether or not short term renting is covered by the RTB. I took a look at airsorted but doesn't cover my area of Dublin. I have never used a letting agency and, touch wood, have always had good tenants. The same can't be said for friends and family who have used agents!

If I decided to say f**k it, I'll just put it up at market rent I wonder would it automatically be flagged on the RTB system - knowing Ireland I'd say probably not! So it would probably be up to the tenants to flag it - unlikley in the present climate. Someone at work suggested asking the tenants to pay the rtb rate into my account andtake a bit more in cash to top up to nearly the market rate - a recipe for disaster I'd say. Having said all that I'm usually strictly by the book so I'd say I'll just end up charging the RTB max recommended rent.

3DataModem

digitaldr wrote: »

I'm usually strictly by the book so I'd say I'll just end up charging the RTB max recommended rent.

Good plan. Best of luck. The extra 300 is not 300 anyway due to tax, so seems not worth the hassle, and you are 'doing your bit' to keep rents down.

spaceHopper

By the end of the year it will be at least 4 years since you painted it. How is the kitchen. Could you do a small refurb which by now will be due soon and re rent it at the market rate. Over time you'll make the money back. Or you could let it to a corporate/company.

digitaldr

I've been chipping away at the painting myself over the part few months - almost finished. The kitchen is very durable and still looks great. Refurbs have to be pretty substantial to justify a rent increase and the place is actually fine anyway.

I might take a look at corporate letting.