Below Market Value Rent - any options other than sell?

RonnieL

Hello,

I'm an accidental landlord - bought at the height of the boom, wasn't worth selling due to negative equity when I got married and had kids, so I held on to it. I'm currently in this situation basically: https://ipoa.ie/im-in-a-rent-pressure-zone/ - never really increased the rent, and now it's empty I'm finding I basically can't (RTB calculator allows for a 30 euro increase). Anyway, I understand I can't increase the rent beyond what the calculator says, so I'm thinking I'll sell it. Before pulling the trigger on that, I'm wondering if there are any other options? The place is in a Galway suburb - I just did some googling, and it seems Galway county council have a lease plan, where they take it long term. Does anyone know if they might potentially pay something closer to market rate?

Thanks,

Ronan

Ray Palmer

what type of property is it?

RonnieL

https://www.boards.ie/discussion/comment/118085182#Comment_118085182

A 2 bed apartment. Since posting earlier I chanced calling the council, and they were very helpful. There's a fair bit of documentation, but it seems their long term lease plan might be an option. If they want it, they'll pay 80% of market rate, on a minimum 10 year lease. I'm going to have a proper read of the terms and conditions this evening and make a call.

pjdarcy

Exemptions to Rent Pressure Zones :

There are exemptions to Rent Pressure Zones.

Exemption 1: The initial setting of the rent on a dwelling which had not been rented for a period of two years prior to the immediate tenancy commencement date. (If no tenancy has been in a property for two years immediately preceding, it can be rented out at market rent).

Exemption 2: A ‘substantial change’ in the nature of the accommodation has been defined in the legislation and will only be deemed to have taken place where specific criteria is met.

With regard to Exemption 2 above, here are some guidelines about what constitutes a substantial change

https://www.ipav.ie/sites/default/files/rtb_guidelines_for_good_practice_on_the_substantial_change_exemption_in_.pdf

RonnieL

Thanks - I'd seen those alright. Neither really apply in my case (although I already replaced the boiler for a more efficient one, with extra zones, it wouldn't have bumped the BER rating significantly enough).

Claw Hammer

You Could notify the RTB that the property is no longer let, then rented out as student digs, giving meals for 2 years. That would break the rent cap. Then go back to letting at full market rent.

bullpost

https://www.boards.ie/discussion/comment/118085249#Comment_118085249

Beware. I know someone who entered into similar arrangement, though it was sometime ago and not in Galway. Twice tenants wrecked the house and council were not liable. They ended up footing the bill themselves and it was considerable. You definitely need to check small print.

Thestart

https://www.boards.ie/discussion/comment/118085249#Comment_118085249

Is the 80% what your market rate is at the moment or the general market rate? I thought it would be 80% of the rate you are getting now!!

RonnieL

https://www.boards.ie/discussion/comment/118087138#Comment_118087138

No, it's 80% of the market rate, which is reasonable since they pay even when it's empty (not that it will be, it seems there's a massive shortage in the area).

Thestart

https://www.boards.ie/discussion/comment/118089020#Comment_118089020

That’s great to know if your rent is very low.

icylava

https://www.boards.ie/discussion/comment/118085997#Comment_118085997

I’m not immediately clear exactly how significant the BER rating change needs to be in order to qualify for the exemption?

For example, if the improvement is about a BER rating increase of 2 ratings, for a C3 rating property, is the minimum target rating C1 or B3 ?

icylava

https://www.boards.ie/discussion/comment/118085330#Comment_118085330

Thanks for sharing the link! I am still not clear on specific items laid out by RTB..

For example, in the exemption form, they are asking for 3 or more items to be done - given a particular property, the most likely option combination for a landlord would be 1) layout changes 2) additional room 3) energy rating increase. Does additional room sorta means layout changes already?

And probably for most landlords, the easiest is to to add an additional room via attic conversion - does this mean internal layout change as well?

dennyk

The RTB has the details on the "substantial change" exemption here:

https://www.rtb.ie/during-a-tenancy/rent-review-in-a-rent-pressure-zone-rpz/exemptions-to-the-rent-pressure-zone-rental-cap

To rely on BER improvements alone for an exemption, the BER must be improved by seven ratings. To rely on BER improvements in combination with at least two other substantial changes (a permanent change to the internal layout of the property and/or an increase in the number of rooms and/or adapting the property for someone with disabilities), it must be improved by two or three BER ratings, depending on the initial BER.

To rely on building an extension alone, the extension must add floor space equal to 25% of the previous floor area. Plopping a little kitchen alcove or mudroom in your garden probably wouldn't cut it on its own (unless you've a very tiny cottage or bungalow). An attic conversion probably would, if done properly.

Planning permission (if applicable) and all other relevant documents relating to the changes in question (BER reports, letters of certification from the architect or engineer, etc.) must be submitted to the RTB for any such changes.

redarmyblues

Kind of a neat summary of the rental shortage being caused in large part by the private renters having to compete with the state for accommodation in a rigged game.