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Leasing fixed term lease and the consequences
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08-02-2019 11:44am#1Hi there,
I am in the process of trying to find tenants to assign to my fixed term lease so that I can get out of it.
We have to leave the lease unfortunately but we would obviously rather go about it the right way.
However let’s say I don’t get any tenants (may of them think the rent is a bit pricey which it probably is), and I want to leave. I know it is wrong to leave the fixed term lease, but we have to no matter what way we do.
I know the landlord is entitled to keep the deposit. PTRB said the landlord cannot claim for the remaining months rent, you are only liable for rent while you are leaving there.
Has anyone had any experiences of what the repercussions are for just leaving a fixed term lease?
Thanks0
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In this market I dont know why a landlord would bother with the hassle of having a dispute over this. With a reasonable notice (1 month) he or she should be able to find a long list of prospective tenants to fill the vacancy.
Everyone is then happy.
Seems a non issue to me.0 -
AFAIK if you can get a replacement tenant the landlord cannot unreasonably refuse him/her. Ideally if there is no gap in the tenancy you should get your deposit back assuming no damages. However if you cannot get another tenant and leave with, for example, three months left on the fixed term lease, then you are liable for the three months since this is what you signed up for. The landlord must make reasonable efforts to try to get a replacement if you haven't managed to come up with one.
If I were you and if you have a good relationship with the landlord, I'd talk to him/her asap. You may get a sympathetic ear depending on your circumstances and find that you will not be pursued as this is of course at the landlord's discretion.
Good luck.0 -
Hi there,
I am in the process of trying to find tenants to assign to my fixed term lease so that I can get out of it.
We have to leave the lease unfortunately but we would obviously rather go about it the right way.
However let’s say I don’t get any tenants (may of them think the rent is a bit pricey which it probably is), and I want to leave. I know it is wrong to leave the fixed term lease, but we have to no matter what way we do.
I know the landlord is entitled to keep the deposit. PTRB said the landlord cannot claim for the remaining months rent, you are only liable for rent while you are leaving there.
Has anyone had any experiences of what the repercussions are for just leaving a fixed term lease?
Thanks
A Landlord cannot unreasonably refuse to reassign a lease, this means they are somewhat bound to that in the snese if they decine, you're off the hook for a fixed term contract. Someone being reassigned to would have to be as good or better a potential tenant than you, but its up to the landord, if they refuse which they are entitled to, then you can tender your right to terminate the tenancy, at more or less no loss other than to submit the correct notification relevant to the duration of your stay so far, the specific section of the act can be found yourself, I cant recal it offhand.
I cant see why a landlord would want to agree to reassign, but they might. Im not 100% sure what rights that would confer on the new tenants, but its not necessarily to the landlords advantage. It really depends on the location and the amount of time left on the lease and the landlords opinion on it.
You could start by requesting from the landlord to reassign your lease to someone else, if they decline, that saves you looking in the first place as you can submit notification as above (but get correct section of the act), if the agree, they might add conditions, ie subject to them vetting the tenant, so they could still decline if you found someone.
I doubt the PRTB sic RTB said that, you signed a fixed term lease, a contract, you are bound to it (but can get out of it too), if you just walked away and didnt do things correctly you would be bound to pay the balance of the duration of the fixed term. Any gaps within reassignment you'd be due to pay. I think they would have to show they made reasonable efforts to get someone else for the duration and that may limit or mitigate you having to pay the balance, but if for example they readvertised and got no one and you could not get anyone, then you would be due to pay for the balance of the tenancy.
Id suggest, approach the landlord first, you may get their agreement to mutually end the tenancy.In this market I dont know why a landlord would bother with the hassle of having a dispute over this. With a reasonable notice (1 month) he or she should be able to find a long list of prospective tenants to fill the vacancy.
Everyone is then happy.
Seems a non issue to me.
I think this is a good example of why a fixed term is not a good idea, without knowing the full details (location, property type), you are speculating as to what the outcome of a tenant search would be. What you deem to be reasonable notice, isnt what the OP has signed up to, they signed for a fixed term, they havent said if its 11 months, 23 or 3 left, a month doesnt even cover the Part4 obligations of a tenant in some cases, any less than 6 months and your advice would have a tenant fall foul even under part 4. Lot of speculating, you dont know what the responses would be, you have no idea if that suits the landlord? seems like a non issue to you, because you are looking at it from your own perspective.0 -
A Landlord cannot unreasonably refuse to reassign a lease, this means they are somewhat bound to that in the snese if they decine, you're off the hook for a fixed term contract. Someone being reassigned to would have to be as good or better a potential tenant than you, but its up to the landord, if they refuse which they are entitled to, then you can tender your right to terminate the tenancy, at more or less no loss other than to submit the correct notification relevant to the duration of your stay so far, the specific section of the act can be found yourself, I cant recal it offhand.
I cant see why a landlord would want to agree to reassign, but they might. Im not 100% sure what rights that would confer on the new tenants, but its not necessarily to the landlords advantage. It really depends on the location and the amount of time left on the lease and the landlords opinion on it.
You could start by requesting from the landlord to reassign your lease to someone else, if they decline, that saves you looking in the first place as you can submit notification as above (but get correct section of the act), if the agree, they might add conditions, ie subject to them vetting the tenant, so they could still decline if you found someone.
I doubt the PRTB sic RTB said that, you signed a fixed term lease, a contract, you are bound to it (but can get out of it too), if you just walked away and didnt do things correctly you would be bound to pay the balance of the duration of the fixed term. Any gaps within reassignment you'd be due to pay. I think they would have to show they made reasonable efforts to get someone else for the duration and that may limit or mitigate you having to pay the balance, but if for example they readvertised and got no one and you could not get anyone, then you would be due to pay for the balance of the tenancy.
Id suggest, approach the landlord first, you may get their agreement to mutually end the tenancy.
I think this is a good example of why a fixed term is not a good idea, without knowing the full details (location, property type), you are speculating as to what the outcome of a tenant search would be. What you deem to be reasonable notice, isnt what the OP has signed up to, they signed for a fixed term, they havent said if its 11 months, 23 or 3 left, a month doesnt even cover the Part4 obligations of a tenant in some cases, any less than 6 months and your advice would have a tenant fall foul even under part 4. Lot of speculating, you dont know what the responses would be, you have no idea if that suits the landlord? seems like a non issue to you, because you are looking at it from your own perspective.
If the tenant cannot find someone to pay the same amount (they have indicated it’s a bit pricey and others mightn’t pay) the. The landlord would be under no obligation to accept a lesser amount. Perhaps it might be an idea if the tenant could reassign the ,ease for remainder of contract and pay the landlord the difference or a compromise. Just saying.0 -
joeguevara wrote: »If the tenant cannot find someone to pay the same amount (they have indicated it’s a bit pricey and others mightn’t pay) the. The landlord would be under no obligation to accept a lesser amount. Perhaps it might be an idea if the tenant could reassign the ,ease for remainder of contract and pay the landlord the difference or a compromise. Just saying.
That might not be in the landlords interest (to take a reduced rent), it might seriously hamper them in the future. In that case the landlord would be entitled to have the tenant pay for the contract they signed up to, I cant see why they (the landlord) would agree to something more complicated and for less unless the landlord was paid upfront, Im not saying the OP would but from the landlords perspective there is nothing to say the tenant would continue to pay, even if they did, Id say it is messy. It depends on location and property type, but again that would seem to mean the landlord taking a reduction in rent officially, and then paid some other amount too, sounds messy.
If the rent seems/ed pricey to the OP, you'd wonder why they paid it and is that the reason they are moving, in which case reassignment might be difficult. I dont understand the interest in fixed term leases from either side, but I guess they may suit some instances.0 -
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That might not be in the landlords interest (to take a reduced rent), it might seriously hamper them in the future. In that case the landlord would be entitled to have the tenant pay for the contract they signed up to, I cant see why they (the landlord) would agree to something more complicated and for less unless the landlord was paid upfront, Im not saying the OP would but from the landlords perspective there is nothing to say the tenant would continue to pay, even if they did, Id say it is messy. It depends on location and property type, but again that would seem to mean the landlord taking a reduction in rent officially, and then paid some other amount too, sounds messy.
If the rent seems/ed pricey to the OP, you'd wonder why they paid it and is that the reason they are moving, in which case reassignment might be difficult. I dont understand the interest in fixed term leases from either side, but I guess they may suit some instances.
That was my point about reduced rent, it was in response to a previous poster who said a landlord can’t refuse to reassign a lease.
It is strange that fixed term leases can be forgotten about by tenant in favour if part IV if they stay longer than 6 months but on the other hand landlords have to accept a reassigned ,ease. One of many reasons why landlords feel they get fcuked over by tenants. I Gabe an option of subsidizing a reassigned lease if new tenant didn’t want to pay full price.0 -
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They can, but the consequence is that the tenant can then serve a notice of termination of the tenancy. This applies even where the landlord's refusal is reasonable.
It is never reasonable for a landlord to refuse to assign a tenancy agreement where the assignment is less than the original rent being paid. Please same my post above where I alluded to the original tenant paying the difference to allow an asssignment.
Listen I know that in this thread there will be landlord bashing. I just wanted to give my experience. I own an apartment in D1. I have had a tenant living there for 7 years. They pay rent which is 700 less than the mortgage. Each month I make up the shortfall. They are great tenants and never give me hassle. Similarly I am not going to pretend any different but I am a good landlord and haven’t raised rent in 7 years
Now if they left my apartment I can’t up rent only 2% market rate. Similarly I could pretend (which I’m not going to do) to move in and refurb just so I raise rent. Can I ask the posters who are anti landlords why am I a CNUT for doing nothing and similarly when can I raise rent (IF EVER)
Also my mortgage is more than I pay rent, because I’m a landlord PRICK, my mortgage is 1500. I allow my tenants to pay 1000. I lose 500 a month because I want the tenants to survive. I lose 10k a year. Why do I have to pAy tax on a loss but every other company only pays it on profit?0 -
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joeguevara wrote: »Now if they left my apartment I can’t up rent only 2% market rate. Similarly I could pretend (which I’m not going to do) to move in and refurb just so I raise rent. Can I ask the posters who are anti landlords why am I a CNUT for doing nothing and similarly when can I raise rent (IF EVER)
Also my mortgage is more than I pay rent, because I’m a landlord PRICK,
Seems like you are spoiling for a fight where none exists0 -
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Check the rules for calculating the rent increase in a rent pressure zone.joeguevara wrote: »It is never reasonable for a landlord to refuse to assign a tenancy agreement where the assignment is less than the original rent being paid. Please same my post above where I alluded to the original tenant paying the difference to allow an asssignment.
Listen I know that in this thread there will be landlord bashing. I just wanted to give my experience. I own an apartment in D1. I have had a tenant living there for 7 years. They pay rent which is 700 less than the mortgage. Each month I make up the shortfall. They are great tenants and never give me hassle. Similarly I am not going to pretend any different but I am a good landlord and haven’t raised rent in 7 years
Now if they left my apartment I can’t up rent only 2% market rate. Similarly I could pretend (which I’m not going to do) to move in and refurb just so I raise rent. Can I ask the posters who are anti landlords why am I a CNUT for doing nothing and similarly when can I raise rent (IF EVER)
Also my mortgage is more than I pay rent, because I’m a landlord PRICK, my mortgage is 1500. I allow my tenants to pay 1000. I lose 500 a month because I want the tenants to survive. I lose 10k a year. Why do I have to pAy tax on a loss but every other company only pays it on profit?
https://onestopshop.rtb.ie/during-a-tenancy/rent-review-in-a-rent-pressure-zone-rpz/how-is-the-rent-calculated/
and some worked examples
https://www.irishlandlord.com/tips-advice_item/calculating-rent-rent-pressure-zone-examples/
The RPZ limit is an annual limit. If the rent has not been increased in a number of years the permissible increase can be compounded using the formula when an increase is eventually made.
While your cash flow on the property is negative it is incorrect to say that you are making a loss.
Property is not a get rich quick scheme but needs to be viewed as a long term investment. When the mortgage is fully paid off you will have acquired a valuable assert at a far lower cost to yourself than if you had paid the full mortgage out of your own pocket. In effect the rental income is subsidising your acquisition of a valuable capital assert.
Somewhere along the line inflation / rent increases (if applied) will result in the nett rental income exceeding the mortgage payment and result in a positive cash flow and you will have a nett monthly income from rent.
Property, like any other start up business, requires up front investment and it can take a number of years for a start up business to start paying its way with a regular positive cash flow.0 -
joeguevara wrote: »It is never reasonable for a landlord to refuse to assign a tenancy agreement where the assignment is less than the original rent being paid. Please same my post above where I alluded to the original tenant paying the difference to allow an asssignment.
Listen I know that in this thread there will be landlord bashing. I just wanted to give my experience. I own an apartment in D1. I have had a tenant living there for 7 years. They pay rent which is 700 less than the mortgage. Each month I make up the shortfall. They are great tenants and never give me hassle. Similarly I am not going to pretend any different but I am a good landlord and haven’t raised rent in 7 years
Now if they left my apartment I can’t up rent only 2% market rate. Similarly I could pretend (which I’m not going to do) to move in and refurb just so I raise rent. Can I ask the posters who are anti landlords why am I a CNUT for doing nothing and similarly when can I raise rent (IF EVER)
Also my mortgage is more than I pay rent, because I’m a landlord PRICK, my mortgage is 1500. I allow my tenants to pay 1000. I lose 500 a month because I want the tenants to survive. I lose 10k a year. Why do I have to pAy tax on a loss but every other company only pays it on profit?
As you're a landlord Im suprised you'd say that (and if you are renting yourself too, surely you can see both sides? and if you're not, Im not sure why its a question, I can only conclude its you thats trying to get out of a fixed term or why advocate so vociferously for it?), the letter of the law states that a landlord may not unreasonably refuse reassignment, which suggests fairly openly that they may reasonably refuse reassignment.
I believe in reference to what you have said (as a former landlord myself and you as a current one) and for anyone that is not even a landlord, it seems clear that, it would be reasonable to refuse to reassign if a landlord already had a contract for x, lets say 1000 and a tenant on a fixed term said they wanted to leave and reassign a new tenant for y, lets say 800, the landlord would be well within their rights to refuse and of course the landlord could also refuse with any reason or none, it would just mean that with a refusal that might be considered unreasonable, the tenant has a get out clause (which the landlord doesnt).
The thing is, I dont consider that a refusal of reassignment for say a drop in rent, using my example (or any where there would be a loss compared to the existing rent level) would be considered unreasonable, for many reasons, for start its not a falling market, the landlord may be tied to a new reduced rent you are suggesting and future increases, getting rent off someone (a former tenant) to make up the full amount who is not around, may be difficult, impossible and even just inconvenient, what then if the remainder of the term is greater than 5 months? does the reassigned tenant then have rights to have only increase along the RPZ's rules? that would be an exceptionally unfair position to be in for the landlord to accept when the RPZ dont allow increases greater than 2%? per annum on tenants (or whatever it is, I dont need to know the actual rate anymore myself) but you're suggesting that the landlord should suffer a reduced rent themselves?
Paying the difference by a former tenant has more implications and sounds worse for the landlord, who could more simply say that they refuse reassignment based on not receiving the same rent, in fact its better for a landlord to not outright refuse reassignment until they see who the existing tenant turns up in terms of prospective tenants, and so long as its within the fixed term, they might be best advised to not even begin their search for new tenants until the existing tenant has exhausted all efforts because, the existing tenant is in a contract and if they cant find anyone, they'd still be liable to pay the balance until a tenant who could pay the same level of rent was found, in that intervening time the landlord would suffer less of a loss and they should reasonably expect not to suffer a loss as they signed a fixed term contract, just the same as a tenant would expect.
As for your tenants paying less than the actual mortgage, well I suppose thats the risk, you could be taking in market rate and paying the shortfall, but more importantly you say you havent had increases for several years! Are your tenants paying market rate? Im sure you are a decent and nice person, and a good landlord to have, but being a good landlord isnt necessarily about being nice, not mean or unreasonable either, but if you let for under market rate, you might find it difficult to move someone on or increase to a market rate, and if you needed to sell, you might also have hamstrung yourself as a new buyer who if they were an investor would be tied to your rent levels too, potentially reducing the interest level in your property. Good tenants are worth their weight in gold, but even before all this RPZ stuff came in, I added €1 to the rent when I did not want to increase, just so that it was there, an increase and the idea of it.
Im not sure what your paragraph starting with "now if they left the apratment" means, but you can raise the rent in accordance with the RPZ, who says you're a cnut for doing nothing? what do you mean nothing? no improvements? You can raise rent in accordance with RPZ rules or you could carry out an actual renovation???
You dont lose value from the rent compared to the mortgage, you lose value from the received rent compared to the market rate, if you are not taking in the market rate you need to up that, regardless of how nice the tenants are, the tenant is reasonably obliged to pay market rate, but that has now been set by yourself as you have not made increases? you seem to be complaining about it when earlier you said you didnt raise rent because your tenants were nice trouble free.
Im not sure where you are getting losing 10k per annum from, first you say they are paying 700 less than the mortgage costs you, next you say they are paying 1000 and it costs you 500 extra per month, which is it? neither add up to 10k, besides any extra it costs you above market rate (which you seem not to be charging) is your cost, but you could probably write it off against taxes paid, Id suggest you get an accountant, they can be quite inexpensive and worth the money.
Next to that is, landlords pay tax on income not profit, in a manner I believe its like income tax, in the PAYE system you get your pay, your tax (and USI from various levels) is calculated and then they deduct your tax credits and allowances and whats left is your actual tax deducted.
I guess Revenue does this because for a few reasons, I speculate, it is more profitable, as a landlord you are more likely (should be) to charge market rate and therefore collect more tax and hence less likely make agreements with tenants, as the more you charge, the more you get, as someone said to me regarding the effective 50% rate of tax, half of something is better than all of nothing, in other words, every euro extra you charge the tenant, 50c goes to revenue and 50c goes to you.
Thats just the system, and if you dont like it theres not much you can do other than suck it up or get out, but you should be charging market rate, you cant complain about paying taxes (we all hate them) and not do landlording correctly, unfortunately like you, I was a nice landlord and I learned the hard way it can go wrong being nice, it was a shock to me that tax is on income not profit (I should have looked into it more), but its still possible to make money in the longterm I think so long as a tenant doesnt decide to mess you about and not pay rent.
My advice, hire an accountant, might cost you 400-500 for an annual tax return, write half that off as tax (if youre on the higher rate) and offset some of your losses/capital expenditures against your costs, you might reduce your tax to a smaller bill.0 -
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Where are you getting this letter of the law? It is not even correct in English. It is certainly not part of the Residential Tenancies Acts. Why are you making things up?
186.—(1) This section has effect—
(a) despite the fact that the tenancy concerned is one for a fixed period, and
(b) despite anything to the contrary in the lease or tenancy agreement concerned.
(2) If a landlord of a dwelling refuses his or her consent to an assignment or sub-letting of the tenancy concerned by the tenant, the tenant may serve a notice of termination in respect of the tenancy and terminate it accordingly.
(8) The landlord may not unreasonably refuse to accede to such a request; if the request is acceded to— (etc)
The Act0 -
186.—(1) This section has effect—
(a) despite the fact that the tenancy concerned is one for a fixed period, and
(b) despite anything to the contrary in the lease or tenancy agreement concerned.
(2) If a landlord of a dwelling refuses his or her consent to an assignment or sub-letting of the tenancy concerned by the tenant, the tenant may serve a notice of termination in respect of the tenancy and terminate it accordingly.
(8) The landlord may not unreasonably refuse to accede to such a request; if the request is acceded to— (etc)
The Act
Section 186 is the relevant provision for the termination of a fixed term tenancy where consent to assignment or subletting is withheld.
Section 186 does not mention reasonability. The effect of this is that a tenant, having been refused consent to assign or sublet, may then serve a notice of termination. This is so even if the refusal was reasonable.
The subsection 8 that you have quoted here is from s 50 which refers to the entitlement of multiple occupants to benefit from a Part 4 tenancy. That subsection provides that a landlord may not unreasonably refuse to accede to a request by a licensee of the tenant or tenants to alllow him or her to become a tenant of the dwelling. It has nothing at all to do with assignment.0 -
Section 186 is the relevant provision for the termination of a fixed term tenancy where consent to assignment or subletting is withheld.
Section 186 does not mention reasonability. The effect of this is that a tenant, having been refused consent to assign or sublet, may then serve a notice of termination. This is so even if the refusal was reasonable.
The subsection 8 that you have quoted here is from s 50 which refers to the entitlement of multiple occupants to benefit from a Part 4 tenancy. That subsection provides that a landlord may not unreasonably refuse to accede to a request by a licensee of the tenant or tenants to alllow him or her to become a tenant of the dwelling. It has nothing at all to do with assignment.
Fair enough, my interpretation is based on how the rtb would treat it, which would generally be against the landlord, I cannot see a tenant arguing the case for refusal to reassign, as once they have that, they are off the hook and can tender a notification to terminate the tenancy, which is why a landlord should not refuse outright because from that time forward, the tenant is not liable, if the tenant takes 2 months to get someone to replace them and the landlord has said the tenant can do so but they want to vet any new person too, then the landlord is better covered for loss of rental income, and why shouldnt they be, they should have the protection offered by a fixed term lease (a contract between them and the tenant) as much as a tenant.
Anyway, the OPs post was about thinking they were not liable for the balance of the rent in a fixed term and simply seemed to think they could walk away.
Stating they wanted to go about it the right way, then saying its happening no matter what, then saying the PRTB(sic) told them they dont have to pay for the balance of the fixed term (either incorrect/poor advice or misinterpreted by the OP I consider).
Anyway, Im just giving my experience from dealing with these matters, Im not in that anymore, interesting to see what opinions people have and how it has gotten worse for all involved.Hi there,
I am in the process of trying to find tenants to assign to my fixed term lease so that I can get out of it.
We have to leave the lease unfortunately but we would obviously rather go about it the right way.
However let’s say I don’t get any tenants (may of them think the rent is a bit pricey which it probably is), and I want to leave. I know it is wrong to leave the fixed term lease, but we have to no matter what way we do.
I know the landlord is entitled to keep the deposit. PTRB said the landlord cannot claim for the remaining months rent, you are only liable for rent while you are leaving there.
Has anyone had any experiences of what the repercussions are for just leaving a fixed term lease?
Thanks0 -
186.—(1) This section has effect—
(a) despite the fact that the tenancy concerned is one for a fixed period, and
(b) despite anything to the contrary in the lease or tenancy agreement concerned.
(2) If a landlord of a dwelling refuses his or her consent to an assignment or sub-letting of the tenancy concerned by the tenant, the tenant may serve a notice of termination in respect of the tenancy and terminate it accordingly.
(8) The landlord may not unreasonably refuse to accede to such a request; if the request is acceded to— (etc)
The Act
Rubbish. You have take a piece of one section and a piece of another section and run them together as one. You (1), (2), (3) are from section 186. Your (8) is from Section 50 which deals with licencees seeking to become tenants.
Your post is misleading and dishonest. Who do you think you are fooling?0
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