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Rent to a friend @ reduced price

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  • 02-10-2022 11:39am
    #1
    TerryOC
    Registered Users Posts: 43 ✭


    I have an apt. Tenant (with me 9.5 years, no issues either side) moving to a bigger house as family getting bigger. A friend of mine needs a place now and I'm wondering are there any complications if I charge a bit less than "market price". Say I'm getting €1300 pm now, and will issue a new agreement for €1000.



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    #2
    JeffKenna
    Registered Users Posts: 4,561 ✭✭✭JeffKenna


    The €1,000 will be your base for all future rent increases from now on even when your friend moves out.



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    #3
    Mr.Crinklewood
    Registered Users Posts: 12,459 ✭✭✭✭Mr.Crinklewood


    https://www.boards.ie/discussion/comment/119691633#Comment_119691633

    Could OP charge the going rate of €1,300, then get his friend to charge €300 for cooking / cleaning services?



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    #4
    GalwayGaillimh
    Registered Users Posts: 669 ✭✭✭GalwayGaillimh


    https://www.boards.ie/discussion/comment/119691633#Comment_119691633

    No good deed goes unpunished

    Si Deus Nobiscum Qui Contra Nos



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    #5
    tvjunki
    Registered Users Posts: 602 ✭✭✭tvjunki


    Your friend will no longer be a friend when you decide to sell or move in a family member. I would rethink this one if I was you. Don’t rent to friends.

    Charge the market rent. You will devalue your house if you want to sell.

    We kept the rent low on a 2 bed at €900 per month for the last 6 years when the going rate is now €1750. We had to sell to a home owners as landlords would not touch it. House now sale agreed.



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    #6
    Del2005
    Registered Users Posts: 18,987 ✭✭✭✭Del2005


    There could also be tax implications for renting below market rate, you are gifting them money and the gift limit is low.



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    #7
    TerryOC
    Registered Users Posts: 43 ✭TerryOC


    I was wondering if I could set up a "caretaker" agreement, where he is minding the apartment for me. I've seen articles where people can live in a premises at low rent while the owners decide whether to sell, renovate etc. I think this agreement wouldn't need to be registered with RTB.



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    #8
    DFB-D
    Registered Users Posts: 341 ✭✭DFB-D


    https://www.boards.ie/discussion/comment/119694699#Comment_119694699

    I don't think there is much point doing this, if it is in essence a tenancy agreement but called caretakers agreement, it won't really be any better than just not registering the tenancy.

    I think just registering the tenancy with a lease amount for the full payment, but agree afterwards to leave the amount short by x amount for x period would be the closest legally, but I'm not an expert so maybe organise a quick chat with a solicitor.



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    #9
    TerryOC
    Registered Users Posts: 43 ✭TerryOC


    Thanks all for your comments, I think it's best maybe to follow the last comment. Keep it all straightforward & by the book. After being a landlord for 9.5 years, relatively hassle free, I don't want to create problems, even though the person is a friend. Might also think of selling up and be done with it.



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    #10
    spaceHopper
    Registered Users Posts: 3,991 ✭✭✭spaceHopper


    What I've heard of been done is you draw up a lease for the market rate. You register that with the RTB, you give a side letter to the tenant that they have to pay less. You declare that to revenue.

    The problem is that your friend gets mates rates and then they move out. Next tenant gets the same discount, you can't re align the rent to the market rate between tenancies so a stranger gets mates rates too. You are locked in. It's apartment, so you can't make it 25% bigger or change the BER so the only way to go back to market rates would be to have it empty for two years. Or use it yourself to two years. If you let it cash in hand and there was any paper trail, think TV license, a utility.... you'd be fooked.

    Given it's empty now what about selling and investing in something else?



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    #11
    TerryOC
    Registered Users Posts: 43 ✭TerryOC


    Investing in what?



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    #12
    Del2005
    Registered Users Posts: 18,987 ✭✭✭✭Del2005


    https://www.boards.ie/discussion/comment/119696668#Comment_119696668

    A REIT



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    #13
    Graces7
    Registered Users Posts: 32,634 ✭✭✭✭Graces7


    it is setting a precedent that you may well regret if a change of tenant occurs?



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    #14
    pc7
    Moderators, Entertainment Moderators, Society & Culture Moderators Posts: 14,117 Mod ✭✭✭✭pc7


    Honestly don't do it, friends and money rarely mix well. There was a thread here recently where they did just that, the 'friend' didn't pay, wouldn't let them back in and left the place in bits. Its just not a good idea.



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    #15
    POBox19
    Registered Users Posts: 685 ✭✭✭POBox19


    You could give your friend €300 a month instead. How does that sound, the same difference?



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    #16
    TerryOC
    Registered Users Posts: 43 ✭TerryOC


    Yes, that's a good idea. Just do a refund maybe. I'll also have a look at the REIT path. Thanks for the contributions. I can understand having a landlord / tenant relationship with a friend isn't ideal. Having a lump of money sitting in the bank with inflation on the rise isn't very attractive to me.



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    #17
    Dial Hard
    Registered Users Posts: 13,698 ✭✭✭✭Dial Hard


    You'll hear dire warnings about all the ways this could go wrong - they won't pay you, won't move out when the time comes, etc etc, but I rented off a good friend at a discounted rate for 9 years with absolutely zero issue. She put the house on the market earlier this year and while I was absolutely gutted, I moved out on the date agreed with no argument because I can't imagine screwing over a lifelong friend over a place to live. Back at home with the folks since.

    I will say that the tenancy was never registered (which meant I didn't get as much notice about the sale as I was technically entitled to) and I have no idea whether she ever declared any of the money to Revenue, but it was a win-win scenario for both of us for a long time.



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    #18
    HBC08
    Registered Users Posts: 3,449 ✭✭✭HBC08


    https://www.boards.ie/discussion/comment/119691633#Comment_119691633

    Only if in RPZ surely?



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    #19
    TerryOC
    Registered Users Posts: 43 ✭TerryOC


    Well, it is in a RPZ. But I thought if my friend moved out, say after a year, I would be able to start a new agreement with a new tenant regardless of the previous rent i.e. back to current market rent.



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    #20
    pc7
    Moderators, Entertainment Moderators, Society & Culture Moderators Posts: 14,117 Mod ✭✭✭✭pc7


    If Sinn Fein get in there is a good chance or rent freezes too. If you can increase BER by 3 categories I think it is you can also increase rent in RPZ



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    #21
    DownByTheGarden
    Registered Users Posts: 1,786 ✭✭✭DownByTheGarden


    I believe when you rent now you are stuck at that rent. Even if its a very good friend, relationships can turn sour and you can get fked over. And it sticks now with rental legislation. Keep everything at market rate. You can buy them a few pints to make up for the difference.

    Also there might be tax implications for you both if you are renting below market rate. The whole thing is a minefield.



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    #22
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    https://www.boards.ie/discussion/2058265711/rent-to-a-friend-reduced-price

    Dont do it.. you want to give your friend 3600 euro per year. Thats what your saying..



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    #23
    Mic 1972
    Registered Users Posts: 3,213 ✭✭✭Mic 1972


    https://www.boards.ie/discussion/2058265711/rent-to-a-friend-reduced-price

    you can still do a lease contract for 1300 and then accept only 1000 per month. If you are friends this should not be a problem. I would rather rent out to a friend than taking my chances with strangers



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    #24
    MakersMark
    Registered Users Posts: 640 ✭✭✭MakersMark


    Sell up now its empty.


    When the IRA party gets in anyone with a second home is going to be fleeced.



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    #25
    TerryOC
    Registered Users Posts: 43 ✭TerryOC


    What if I give him a contract to rent the apartment but specify it is one bedroom being rented. I am going to use the 2nd bedroom myseld for storage, my model railway or whatever. So, it's market rate for a one bedroom in that area.



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    #26
    Still stihl waters 3
    Registered Users Posts: 984 ✭✭✭Still stihl waters 3


    Just give your friend 300 cash back every months



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    #27
    ballyharpat
    Registered Users Posts: 1,804 ✭✭✭ballyharpat


    https://www.boards.ie/discussion/comment/119753032#Comment_119753032

    Could you rent it out them as a room in your own house, so you would be 'living' in the other room? So you could be under the rent a room scheme then?



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    #28
    DFB-D
    Registered Users Posts: 341 ✭✭DFB-D


    https://www.boards.ie/discussion/comment/119753032#Comment_119753032

    I think your own opinion would be as valid as anyone else's here, unless you get legal advice.

    Sounds OK though.



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    #29
    mrslancaster
    Registered Users Posts: 1,811 ✭✭✭mrslancaster


    https://www.boards.ie/discussion/comment/119753068#Comment_119753068

    If you decide to do this stick to 250pm or a quarterly 750 - you can gift 3k pa to anyone tax free. Rental income would still be on the 1300pm so taxes due on that. You'd need to do the calculations first.

    Post edited by mrslancaster on


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    #30
    cnocbui
    Registered Users Posts: 20,049 ✭✭✭✭cnocbui


    https://www.boards.ie/discussion/2058265711/rent-to-a-friend-reduced-price

    Do this and they will be an ex-friend.



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    #31
    Del2005
    Registered Users Posts: 18,987 ✭✭✭✭Del2005


    https://www.boards.ie/discussion/comment/119753068#Comment_119753068

    Revenue tax on the rental income so they are loosing ~€600 if they are taxed at the marginal rate if they do that.

    Everything you are doing to help a friend can have serious cash and tax implications for you. Just sell it now at the top of the market, there's a reason why thousands of other landlords are selling up when rents are massive.



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