Letting someone stay in your house rent free

mickrourke · 28-10-2014 8:42am #1

Hi,
I have a little query I am not too sure about and I was wondering if someone could help me with. I have 2 houses, one in County Clare which I use as a holiday house. I have registered this house as a 2nd house, pay tax on it etc, but I have never rented it out to anyone, only let friends and family stay for a while.
Someone wants me to stay there for quite a while and this makes sense to me to have someone in over the winter to keep the place lived in, heating on etc.
So this person gets social welfare, medical card, etc, and wants a lease, proof they are staying there, etc.
As I have never rented before does this person become a tenant even if no money changes hands or is this going to cause me a world of pain now even if I am not receiving rent.(We had agreed the person would pay the services bill for water and electricity when they arrive as they are still in my name).
So will I have to register with PTRB, get BER, landlord insurance etc... or is the fact that no rent is changing hands, it really is a favour as houses can go to ruin when not lived in and I can't get down there to maintain it regularly. Is there something else I can do, sign, with the individual that is not a lease and specifies them as a guest and not a tenant?
Any advice gratefully appreciated, Mick.

ongarite · 28-10-2014 8:48am

Could be wrong but to me sounds like your friend will be trying to claim for rent allowance from the state?
Why would they ask for lease on a house they will pay nothing for.
Do you intend to give them a 6 month lease? What happens if they refuse to leave after the lease ends?
By giving your friend a lease on your free house you are giving them all the power so to speak.

athtrasna · 28-10-2014 8:49am

Sounds suspicious to me. Are they going to try to claim rent allowance? That's the only reason I can think of for them needing a lease.

Cabaal · 28-10-2014 8:51am

Sounds dodgy and certainly sounds like they may be trying to claim rent allowance on the free house

mickrourke · 28-10-2014 9:00am

I was told a lease is needed for the medical card, is there something else I can do instead? There is no question of me signing anything to scam rent allowance but I don't believe he would try it anyway. He really just needs somewhere to stay, and I get someone minding a house.

L1011 · 28-10-2014 9:13am

mickrourke wrote: »

I was told a lease is needed for the medical card, is there something else I can do instead? There is no question of me signing anything to scam rent allowance but I don't believe he would try it anyway. He really just needs somewhere to stay, and I get someone minding a house.

There is no need for a lease for a medical card unless it's a DVC or discretionary card and non existent housing costs are being claimed

_Brian · 28-10-2014 9:17am

I think asking a small rent is reasonable in a case like this.

Even if staying for free would your insurance company view this as a tennant arrangement and so your insurance should be changed.

Unfortunately , even friends sometimes don't appreciate something that's free.

mickrourke · 28-10-2014 9:28am

It probably is reasonable but then I would have to register with ptrb, get Ber, etc so it may be pricey. That comment about the insurance is valid though. I feel like I could be letting myself in for grief I can do without.

hobochris · 28-10-2014 9:38am

mickrourke wrote: »

It probably is reasonable but then I would have to register with ptrb, get Ber, etc so it may be pricey. That comment about the insurance is valid though. I feel like I could be letting myself in for grief I can do without.

Also get him to sign something waving his part 4 tenancy rights, as you are dong him a favor.

I would make the small rent he pays the amount it well cost you in terms of prtb & insurance etc.

Prtb could be a 3 grand fine and 6 months prison if not done right.Something to keep in mind.

L1011 · 28-10-2014 9:42am

You can't sign away Part IV rights...

delthedriver · 28-10-2014 9:55am

This arrangement sounds like a lot of bother.

You will also be liable for income tax even if the rent is a nominal amount.

There will also be an element of wear and tear costs which you need to consider

I am sure the potential tenant could find plenty of other houses available to rent in West Clare.

Enjoy your second home, don't let your life become complicated !!!!:)

mickrourke · 28-10-2014 9:59am

And who'd have thought doing someone a favour could be such a pain, I may need to do this properly and even charge a small rent as this is going to cost me when it shouldn't. At least it will be all above board when completed and I can do a 6 month lease or something for minimal rent.

red_bairn · 28-10-2014 10:02am

I got a Medical Card while unemployed and living with my parents. I'm not sure what this lease business is about.

delthedriver · 28-10-2014 10:05am

mickrourke wrote: »

And who'd have thought doing someone a favour could be such a pain, I may need to do this properly and even charge a small rent as this is going to cost me when it shouldn't. At least it will be all above board when completed and I can do a 6 month lease or something for minimal rent.

Do yourself a favour , don't begin this arrangement.:)

hfallada · 28-10-2014 10:05am

OP he needs to give you something. Even €1 a month to make a contract valid. You don't need to get a ber( they aren't enforced) but I imagine you will have to register with the prtb (about €150). Plus there will be water charges and you will have change your insurance from personal house insurance to insurance for a rental property. Also there is the risk that your friends can't be evicted if he tries to claim he is unfairly evicted by you ( the prtb makes it slow to evict someone).

OP isn't not worth the bother being kind to your friend. Its going to cost you money and there is the risk he won't leave the end of the winter. There is the benefit of insurance companies have a clause on long periods of house being empty. But just go down for the weekend.

delthedriver · 28-10-2014 10:11am

If tenant claims illegal eviction , potentially it could cost you min €10k if PRTB uphold his claim.

Don't get involved!:)

MouseTail · 28-10-2014 10:11am

This situation is not uncommon, but only works if you trust the person staying there 100%, there are risks it can go wrong if not.

It doesn't sound as if you are particularly close to this person, or trust them completely. Little wonder, that needing a lease is cock and bull.

mickrourke · 28-10-2014 10:13am

I'm sure this is a fairly common occurrence for a family member like a parent in a house or something like that. However this is different. I do trust this person but even if there is no lease, there are still things I need to do just to help them out.

delthedriver · 28-10-2014 10:20am

mickrourke wrote: »

I'm sure this is a fairly common occurrence for a family member like a parent in a house or something like that. However this is different. I do trust this person but even if there is no lease, there are still things I need to do just to help them out.

I am not sure your friend is telling you the full story............

mickrourke · 28-10-2014 10:29am

delthedriver wrote: »

I am not sure your friend is telling you the full story............

No I'm fairly sure he's good - it just looks like it's going to cost me a bit just to help him out.

Teyla Emmagan · 28-10-2014 10:44am

If you don't take an even nominal amount of rent then technically they could claim squatters rights. Eventually, but stranger things have happened.

tenifan · 28-10-2014 11:13am

Op, spend a couple of hundred on a solicitor to write up a licensee agreement. This situation has disaster written all over it.

delthedriver · 28-10-2014 11:16am

mickrourke wrote: »

No I'm fairly sure he's good - it just looks like it's going to cost me a bit just to help him out.

It may be cheaper to give him the money to rent someone else's house ????

Perhaps he is trying to establish himself at an address for 6 months in order to qualify for Rent Allowance ??? It may be all quite genuine, be very ,very careful.

The last thing one wants to do is land oneself with all sorts of problems in order to give someone a dig out.

Suggest talking to your solicitor....................:)

Mrs OBumble · 28-10-2014 11:25am

If your friend is rented a house at less than market rate, then s/he is potentially liable for tax on the "benefit in kind" - that's not the right name for it, but the principle applies.

Now, depending on what allowance / benefit s/he is getting this may not be an issue. But if the welfare amount is taxable, it will be using up most or all of their tax-credits, so it may be an issue.

Of course the market rate for a house in West Clare in the winter is probably very low. But still it will be more than E1 per month.

Gatling · 28-10-2014 11:26am

tenifan wrote: »

Op, spend a couple of hundred on a solicitor to write up a licensee agreement. This situation has disaster written all over it.

Except the friend wouldn't be a licencee , he/she would be an actual tenant

Dayor Knight · 28-10-2014 11:32am

Say sorry, mate. I'll let you stay for free as my guest, but I don't leases.... It's a pretty generous offer anyway, so if the person can't live with that, then so be it.

[Deleted User] · 28-10-2014 11:32am

mickrourke wrote: »

I'm sure this is a fairly common occurrence for a family member like a parent in a house or something like that. However this is different. I do trust this person but even if there is no lease, there are still things I need to do just to help them out.

To be honest with you, if I had a second home and offered it to someone for a period of time, I'd be quite annoyed that they instantly try to turn it into a cash grab and put me through a lot of hassle so they can claim a few more euro.

And if it were me being offered the house, I'd be thrilled to have it, and certainly wouldn't be doing anything to make things uncomfortable for the owner.

You're doing him a favour (a massive one at that!). Don't let him run you around.

As an aside, if you need someone to live in your house rent-free.. I've always wanted to see Co. Clare...

zef · 28-10-2014 11:33am

The Op is trying to help his friend out , and i agree arrangements like this are fairly common between family and friends.
Letting a friend stay in a summer house is what is is, right? No wonder the legal profession do so well in this country!

I guess it's all down to do you trust your friend or can you see him refusing to budge come Spring?
For the medical card you do need a lease if you are renting. The person who said you did not is not an independent householder by his own admittance.
Good luck and fair play helping out your friend in the midst of this housing crisis. Many would rather the house go empty for fear of that ISIS of the renting game, the 'rent allowance tenant'.

January · 28-10-2014 11:39am

OP how can you be sure your friend will pay these utilities for you? If he doesn't pay and they are in your name then you will be liable for the debt.

delthedriver · 28-10-2014 11:40am

zef wrote: »

The Op is trying to help his friend out , and i agree arrangements like this are fairly common between family and friends.
Letting a friend stay in a summer house is what is is, right? No wonder the legal profession do so well in this country!

I guess it's all down to do you trust your friend or can you see him refusing to budge come Spring?
For the medical card you do need a lease if you are renting. The person who said you did not is not an independent householder by his own admittance.
Good luck and fair play helping out your friend in the midst of this housing crisis. Many would rather the house go empty for fear of that ISIS of the renting game, the 'rent allowance tenant'.

Respectfully, there is no housing crisis in Co. Clare . Sure I admire the OP for trying to help someone out, however it should not be to their detriment. I suspect the issue would never have been raised if the OP felt 100% comfortable in the first instance.

tenifan · 28-10-2014 12:01pm

Gatling wrote: »

Except the friend wouldn't be a licencee , he/she would be an actual tenant

Not necessarily. There could be a similar arrangement to those vacant hotel/offices, where in return for acting as a caretaker a knock-down rent was applied. Those agreements specifically drew attention to things like no guests, limited use of the house/facilities (e.g. licensee can only use a particular room), no notice period, no tenant rights, etc.

Letting someone stay in your house rent free

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