Rent increase query

Cherry Blossom

Hi, my landlord has told me today that he wants to increase the rent. He says the rent no longer covers the mortgage on the property. I’m here just over a year. RTB registered tenancy and on HAP. Has anyone any links to where I can read what my rights are. My guess is that he will sell if he can’t cover the mortgage. Just want to be aware of all the facts. Thanks In advance.

kippy

https://www.boards.ie/discussion/2058349938/rent-increase-query

Here is a good starting point:

https://www.citizensinformation.ie/en/housing/renting-a-home/tenants-rights-and-responsibilities/tenants-rights-and-obligations/

And here - with some useful contact numbers where you can provide your exact circumstances and get some guidance as well as a list of FAQ's including rent increases:

https://threshold.ie/get-help/

Donald Trump

There is no god given right for rent to cover a mortgage.

If he is subject to restrictions on raising the rent, moaning about the mortgage doesn't give him immunity to those restrictions. He can sell, but he has to give you the minimum notice ….. and he has to actually sell

Cherry Blossom

Thank you both. I’ll call and ask for advice tomorrow. I’ve a notion he might sell if he doesn’t cover the mortgage. My place is the only rental he owns so he may not be too versed in the way things are done and proper procedure.

Ginger83

https://www.boards.ie/discussion/2058349938/rent-increase-query

If the landlord wants to sell you are entitled to six months notice. You can drag it out through the rtb but once the decision is made to sell the clock starts

3DataModem

"He says the rent no longer covers the mortgage on the property."
- Just a heads up to you OP, stating this is generally a pretty clear indication that your landlord is very amateurish OR just a bad landlord. A landlords costs (mortgage, tax, insurance, etc) are so individual to them that they should have no bearing on the rent. Tell him "extend the term, lower your payment, drop the rent?" (just kidding).

Cherry Blossom

Thanks guys, yes my flat is the only property he owns that he rents out.

https://www.boards.ie/discussion/comment/122088101#Comment_122088101

And a pretty clear indication that the op will be on the lookout for a new, and most likely more expensive place to live in the near future.

At the moment all the op has is an indication that a rent increase is coming, with no basis to assume that it will be anything other than lawful. So maybe the op can let us know when he/she receives the notice.

You call him amateurish/a bad landlord, it’s not clear why you would assume that. It’s no secret that LLs are selling because property prices are high, mortgage rates/costs have risen and legislation is restrictive, giving your tenant the heads up that he/LL doesn’t want to have to pay his own money into the mortgage when this an opportune time to sell is hardly bad behaviour, at least the the op can now keep an eye out for another property if one become available.

timmyntc

https://www.boards.ie/discussion/comment/122088399#Comment_122088399

A rental investment does not need to cover the mortgage to be profitable, only the mortgage interest payments.

If the rent has been covering the mortgage before now, it means the OPs landlord was getting a free house paid for by the OP. No other investment comes close to that level of return. It is pure price gouging.

Professional landlords (as opposed to amateurs) will seek a rental yield that covers the cost of capital (interest on mortgage) + some extra % for risk and effort involved. They would not seek or hope to achieve the entire capital repayments being covered by rent.

OP your landlord is a cowboy

Donald Trump

https://www.boards.ie/discussion/comment/122088399#Comment_122088399

You call him amateurish/a bad landlord, it’s not clear why you would assume that.

Possibly because he is whinging about the rent not covering his mortgage ………… I know plenty of amateur entitled-types feel that they deserves someone to pay them enough to pay all their expenses, taxes, interest and mortgage capital repayments and to have spending money left over as well.

ballyharpat

OP, wait for the landlord to come back to you with their proposal for a rent increase, if you are in an RTB, the most it can be increased is 2% per year. If it is not in an RTB, they cannot increase the rent until you have been in the property 2 years, then they can bring it to market level, if they choose.

The landlords bills are not your problem any more than your bills are their problem, but since they have only one property, the relationship between landlord and tenant can be different, oftentimes much better than with a professional landlord.

There is lots of bad advice given above , ignore that, as you could see if you read their other posts, they are completely anti-landlord- all landlords bad, all tenants good. They seem to have a serious chip on their shoulder and get joy from seeing landlords in such dire straits that they need to sell their property. This has absolutely no benefit to tenants, and definitely is of no benefit to you. If it were me, I would see what the landlord says, then keep the lines of communication open and friendly, going in with your chest out, as has been suggested above, will definitely make the landlord want to sell and be done with it, especially if he is paying extra money to cover the mortgage.

Personally, I would not be buying any property that did not cover the mortgage and expenses from the rent, considering that I would have had to put in a deposit and risk losing the property and the risk of bad tenants, which could costs me many nights of lost sleep and tens of thousands of euro in lost rent and repairs.

Ye are both human, and both adults, hope it works out well for both of you.

https://www.boards.ie/discussion/comment/122088593#Comment_122088593

The op hasn’t received the rental increase yet, and you have no idea of the LLs financial situation, yet there you go, jumping to conclusions.

shimadzu

Unfortunately increased costs will generally be passed onto the end user. The important question for you is when was the rent last increased. The landlord can increase the rent at up to 2% per year since the last increase. So that could be anywhere between 2-16%. Have a look on the RTB website there is a guide as to how the rent review should be performed.

magicbastarder

the OP could potentially ask that if their rent is index linked to interest rates; i.e. how much the LL is paying in repayments; will the landlord drop the rent if interest rates fall?

(not seriously suggesting this per se, just pointing out that with the information we have at hand, the LL has effectively told them the rent is linked to interest rates).

Ginger83

OP you say that you receive hap.

I wonder could you consider approaching your local authority about purchasing it?

Kaisr Sose

https://www.boards.ie/discussion/comment/122088593#Comment_122088593

This is not addressed at the OP

From the limited information provided and the opinion of the OP, its a major stretch for to say/state the landlord is a cowboy.

For a start you don't know what the current rent is, or when it was last reviewed. Any landlord, good or as you may say, 'cowboy', has a right to review rents within the existing legislation, which is very restrictive on what is allowed. It is also interesting that landlords generally get labelled 'cowboys' or 'gougers' when they try increase their rent within permitted limits.

For the record, the so called professional (institutional) landlords you refer to are in most cases charging massive rents, way higher than most as you call them 'bad' or 'amateur' landlords. These 'professionals' will also seek to review rents within the legislation, which in your eyes /logic will immediately make them 'cowboys'.

What they are charging has nothing to do with the cost of capital or the risk. It is pure capitalism, where they charge the highest price the market will accept.

Finally no other business, as property letting is, has more restrictions on its operation. It's not wrong to want to make a profit or even cover cost (capital cost excluded). Many are not. This is a key reason many private landlords, who have been nothing other than good, fair and professional in their dealings with tenants, are selling up.

The effect of this is fewer rental properties and higher rents charged by the institutional landlords.

timmyntc

https://www.boards.ie/discussion/comment/122089366#Comment_122089366

The opinion that the received rent from an asset must cover the mortgage payments entirely or else you need to up the rent charged is pure cowboy logic. The tenant in this instance is giving the landlord a house for free - landlord only has to stump up enough deposit to get a mortgage, then the tenant pays the rest of the way.

It is completely unrealistic view of an investment. You are still making profit so long as your received rent covers mortgage interest (not full mortgage payment) and any depreciation of the asset (house prices are still rising so depreciation is negligible)

o1s1n

https://www.boards.ie/discussion/comment/122089384#Comment_122089384

How is the tenant giving the landlord a house for free though? The tenant is paying to live in the property. The landlord, as part of the deal, looks after the upkeep on the property, management fees and all the rest. Where is the 'free' in any of the above?

The received rent doesn't 'have to' cover the mortgage on the asset, of course not. However if it doesn't, then it's can start to become disadvantageous to the landlord and it might be better for them to sell. That's fairly simple logic.

I do agree though that landlords shouldn't be, by default, passing on mortgage interest increases on their property to tenants. That's hugely unfair and punishing to tenants.

Kaisr Sose

@timmyntc

Your view is over simplistic. I will leave it at that.

https://www.boards.ie/discussion/comment/122089384#Comment_122089384

Oh dear.

If the LL can’t afford now to pay the mortgage, he is most likely going to sell. What the profits on investment are in the long term, doesn’t matter so much in the short term if you fall into arrears.

Clearly you have more information about the LLs finances than the rest of us.

Cherry Blossom

Thanks for all the input. I’m in the flat less than 24 months. From talking to local people though. A lot of properties are being sold from under tenants at this time. Or when the time comes to review rent landlords are coming up with astronomical increases and the tenant still has to find somewhere else which is not easy at the moment either. My landlord is a reasonable enough man. There is nothing similar on the market for similar rents locally. I don’t really know what’s to be done. Need a long think anyway and try and figure something out. I don’t live in a rent controlled area.

GBX

The landlord would still need to give you official notice of a rent increase for it to be valid. Telling you he wants to increase it is not a valid increase notification.

Cherry Blossom

Yes I understand that. I have to be there 24 months and he has to give 90 days proper notice.

Kaisr Sose

https://www.boards.ie/discussion/comment/122089520#Comment_122089520

I was going to ask if you were in a rent control area. As you are, it changes things more towards the landlord and what the increase can be. It needs to be given in writing. Are you able to get your HAP increased?

Hopefully you can work something out. Best of luck.

GBX

https://www.boards.ie/discussion/comment/122089565#Comment_122089565

Post #21, the OP says they are not in a controlled area.

Iscreamkone

The LL wants more money to pay increased expenses on his side. This may or may not be legal - the legality won’t affect the tenant much in my opinion.

Your choice (tenant) is to pay the increase or not.
If you do not wish to pay you’ll end up looking for a new place to live. The landlord will sell up. Are you likely to get somewhere cheaper than the proposed rental increase at your current property?
Get all the information and make the least worst decision for you.

Remember you can haggle with your current landlord. You won’t have that option in the open market.

timmyntc

https://www.boards.ie/discussion/comment/122089459#Comment_122089459

Not that it's any help to OP here, but:

If the landlord cannot afford the mortgage payments without having the tenant cover them entirely, they should not be a landlord.

Right now the OP is close to paying an entire mortgage on a property (HAP covering some) but their landlord is benefiting from the ownership with almost nothing put into it themselves except the deposit for mortgage.

OP make sure your landlord gives you proper written notice of everything from rent increase to any possible eviction in future if it arises. If proper notice isn't given then their request is invalid, and you would have a strong case at the RTB. Don't be afraid to stand up for your rights

Liam O

Is he going to pass on any reductions in the mortgage if (and this is quite likely) interest rates fall in the next year or 2? If he's locked into a high fixed rate for the next few years then OP is paying for the LL's speculation on interest rates not falling.

Though if it's a modest rise you might be better off coming to some sort of an agreement if you are in a good living situation bar that.

Donald Trump

https://www.boards.ie/discussion/comment/122088951#Comment_122088951

What is the bad advice? Or are you just continuing to project a victim mentality for no reason?

no need for the hysteric dramatics about "landlords in such dire straights that they need to sell the property". The OP only said the landlord was moaning that (due to the landlords own bad management) the rent no longer covers their interest an capital repayments. One shouldn't be in any business if they don't have the financial capacity, or planning wherewithal, to be able to ride out minor bumps. There are a lot of the entitled handout brigade out there though that they are too special for normal common sense to apply to them. They have to be able to manage their cashflow

Donald Trump

https://www.boards.ie/discussion/comment/122089459#Comment_122089459

Clearly you have more information about the LLs finances than the rest of us.

The irony of saying that when the OP never gave any indication that "the LL can’t afford now to pay the mortgage". It only said the landlord complained that the rent was no longer covering the mortgage repayments - not that the landlord can't afford it

Kaisr Sose

https://www.boards.ie/discussion/comment/122089573#Comment_122089573

I know that ..thanks

Kaisr Sose

https://www.boards.ie/discussion/comment/122089806#Comment_122089806

How do you know what portion of the mortgage (interest /capital) the tenant is paying ?

Mrs OBumble

OP consider your goals carefully: the politics of good vs amateur landlords, and vocering mortgages vs alternative investments are not relevant to whether you can find an alternative place to live.

Personally I have accepted an over-whats-allowed rent increase, to avoid giving the LL ideas of selling. I 100% believe it was worth it.

timmyntc

https://www.boards.ie/discussion/comment/122089915#Comment_122089915

Post #1

He says the rent no longer covers the mortgage on the property

spaceHopper

https://www.boards.ie/discussion/comment/122089520#Comment_122089520

You won't be the first HAP tenant to get a rent increase, can you check with them what happens when the rent goes up?

Surely they will pay some of it?

https://www.boards.ie/discussion/comment/122089806#Comment_122089806

Again, you are just making up your own narrative to fit the thread.
If you have some insight into the LL’s finances that goes beyond what the op has posted, please share it with us.
The op has asked for advice on where to look for info if the LL increases the rent, then along you come and make all kinds of assertions which have to basis. We don’t know how long the LL has the house, whether it is in negative/positive equity, how much the mortgage has gone up, what his circumstances are etc etc, but you seem to know his financial position. That is impressive.

Kaisr Sose

https://www.boards.ie/discussion/comment/122089991#Comment_122089991

Thats the OP's comment. Maybe the LL meant the interest only? My point stands that you don't know, and neither by the way do I.

The LL will have other costs too and maybe they just dont have a profit anymore and kept going as long as they could making a loss. Again, the OP, you or anyone else does not know the LL actual financial position.

It's not wrong to want to make a profit on an investment in property. The professional / institutional LL definately are.

Cherry Blossom

https://www.boards.ie/discussion/comment/122089967#Comment_122089967

Yes, coming to some sort of agreement with this in mind is what I’m thinking about.

Fol20

https://www.boards.ie/discussion/comment/122088101#Comment_122088101

sorry but this wrong. If costs have gone up such as mortgage and labour costs. This will directly have a bearing on the feasibility of rent.

In a normal setup, with costs going up, rent would typically go up(as long as the market allows it) however with the rules. It’s artificially blocking it.

Rows Grower

https://www.boards.ie/discussion/comment/122088838#Comment_122088838

Imagine if a landlord said that about a HAP tenant that was tearing the hole out of the system at the landlords direct expense.

There's a big subliminal hang up in Ireland about the title of landlord, it's an outdated word no longer applicable to the general population.

Most landlords these days are ordinary working people with 1 or 2 houses rented and they probably follow more savvy shopping and spending habits than their tenants because they have to.

There's never been any support, recognition or discussion about the accidental landlords who were spawned by the crash of the Celtic Tiger and who are still working all hours to supplement the crowd that think because 25 euro a week is stopped out of their free money that they are the victims.

The powers that be want small "landlords" out of the big picture and they will achieve their objective because the horse has already bolted.

The vulture funds were well christened by the people who created them.

timmyntc

https://www.boards.ie/discussion/comment/122095121#Comment_122095121

Most landlords these days are ordinary working people with 1 or 2 houses rented

People renting out 1 or 2 houses are not ordinary. They are already within the top 5% wealth in the state.

Vulture funds and REITs are not the same thing - institutional landlords are very rarely ever vulture funds, vulture funds buy distressed assets and attempt to squeeze any money out of them, they do not buy Irish rental property.

And accidental landlords have the option of selling, very very few would still be in negative equity after all this time. Its incredibly rare.

@timmyntc

Have you data @timmyntc to back up that statement that people with one or two rentals are amongst the wealthiest 5% in the State?

Kaisr Sose

https://www.boards.ie/discussion/comment/122095155#Comment_122095155

Your anti landlord, but clueless about the rental sector postings continue.

How can you say 'Someone that owns 1 or 2 houses is in the top 5% wealth in the state ? Is that just based on made up on the spot percentages?

What is the amount of unencumbered wealth /asset and income that gets you into top 5%?

Not all properties are worth many hundreds of thousands and not all properties that are let out are mortgage free (as evidenced by your responses to OP).

Vulture funds are investing in residential property. Institutional Landlords can be Vulture Funds. Where is the source of your statement to the contary?

@timmyntc

https://www.boards.ie/discussion/comment/122095268#Comment_122095268

Rough calculation, but if his/her assertion were true, every LL with 1-2 properties would be worth just shy of €1m net. If you excluded the value of LLs primary residence and the population who don’t own rental properties from the equation, the percentage would be vastly different, so I’m going to call BS on @timmyntc statement.

Donald Trump

https://www.boards.ie/discussion/comment/122095121#Comment_122095121

I actually don't understand why people referring to it as a "title" at all. It's a person who owns a house they aren't living in and so rent out. There is some victim mentality among some that they are some sort of persecuted "group". Owning a house is not exactly a unique achievement (albeit it is unfortunately out of reach of many younger people at the minute).

I would lump the entitled brigades all in together in the same group. Whether that is the "foreva home" brigade or the "What do you mean my rent shouldn't be high enough to pay my interest and capital repayments and tax and have drinking money left over as well. And why shouldn't I be allowed to turf out my perfectly compliant tenant on a whim if I want to. They shouldn't have any rights" brigade.

In the same way that not all those availing of social schemes are in the former, not all those that rent out houses are in the latter. That fact shouldn't prevent anyone from criticising the ones that fall into those groups.

Donald Trump

https://www.boards.ie/discussion/comment/122095280#Comment_122095280

Well you can call whatever you like based on nothing more than your "beliefs" or what suits you if you want.

The figure I can find is that more than about 750k wealth put you into the top 10% in 2018. So timmyntc probably isn't wildly far off in reality. It doesn't state his claim verbatim, but based on your own figure of a million quid, it's probably ballpark even if not exact.

https://www.cso.ie/en/releasesandpublications/ep/p-hfcs/householdfinanceandconsumptionsurvey2018/wealth/

Feel free to provide an alternate source.

C3PO

https://www.boards.ie/discussion/comment/122096836#Comment_122096836

https://www.irishtimes.com/business/economy/wealthiest-10-of-irish-households-have-net-wealth-in-excess-of-788-000-1.4882978

This would seem to suggest that he’s out by some significant degree!

Kaisr Sose

https://www.boards.ie/discussion/comment/122098372#Comment_122098372

Of course he is out by a large amount just because he counts no. of properties and not the value of them, mortgagd or owned out right. It was a baseless generalisation on Timmy's behalf.

Donald Trump

https://www.boards.ie/discussion/comment/122098372#Comment_122098372

Not sure if you are following the thread.

One poster said those with 1 or 2 houses rented are in the top 5%. Another poster gave a ballpark figure for wealth for such a person as being "€1m net" and saying that would be way off. I posted that based off that figure, the original poster would be in the right ballpark.

You link shows that 788k would get you into the top 10%. So even if there was nobody in the country with wealth between 788k and 1m, the original claim of 5% could only be off by 5%.

Donald Trump

https://www.boards.ie/discussion/comment/122098405#Comment_122098405

Take it up with @Dav010 for making said baseless generalisation then. I only used his claim of 1m.

Kaisr Sose

I believe It was Timmy that introduced the top 5% claim and Dav010 did not agree with it either.