Signing > 1 year leases

UDP

Hi,

I am in an apartment at the moment for about 9 months and it is perfect for me in every way which is a hard thing to find.

I am just starting a job in a very stable large company and my girlfriend is in the middle of 1st year in her masters (4 year masters) so we should be in a stable position for the next 3 years or so.

I am paying 850 in rent (which I think is about 50 a month over what the cost should be). I was thinking of offering to sign a 2-3 lease on the apartment for a lesser amount (will try and reduce the rent without the longer contract first of course though). I would probably accept 800 but 750 would be what I would love to get (not sure how realistic it is though).

Would I be crazy to sign a 3 year lease on an apartment?
Are there cons other than risk of losing job and being stuck in a lease that I am not thinking of?
Also is it very rare to have a longer than 1 year lease in Ireland or becoming more the norm?
And is asking for 750 in exchange for a 3 year lease a bit unrealistic?

Thanks.

not even wrong

UDP wrote: »

Are there cons other than risk of losing job and being stuck in a lease that I am not thinking of?

There's also the risk that market rent might fall below the 750 mark (if the government takes the axe to rent allowance, or if the economy takes another dive). Then you'd be stuck paying over the odds for the next 3 years.

And don't tell yourself this can't happen -- €850 to €750 is only 12% decline, if you read the Daft rental reports rents fell 25% in the three years between 2007 and 2010. If you'd signed your 3 year lease in 2007 then in 2010 you'd still be locked into paying €750 while all your neighbours paid €637.50.

silja

It's a gamble in terms of rents going up or down but if you are in Dublin, they seem to be stabilising, so I think if you get a reduction to just below current market rates for the type of flat you have, you'd be fine with a 3 year lease. I am a landlord and signed a tenant for a two year lease last year- they asked for slightly below market rates which at first I was going to refuse but as my husband pointed out, if it saves us advertising, painting, and possibly an empty flat for a month or two, it is more than worth it.

odds_on

You could always consider asking for a Part 4 lease (which the landlord cannot refuse, provided he has agreed that you can remain in the apartment when the fixed term ends.

However, a Part 4 lease, although less secure than a Fixed Term agreement is much easier to get out of if needs be. However, it is also easier for the landlord to terminate the lease but only under six specific conditions.

It the landlord has multiple lets, then he will probably be more agreeable to a Part 4 lease, especially if you have been a good tenant.

xper

UDP wrote: »

I am just starting a job in a very stable large company and my girlfriend is in the middle of 1st year in her masters (4 year masters) so we should be in a stable position for the next 3 years or so.
...
Are there cons other than risk of losing job and being stuck in a lease that I am not thinking of?

Multinational company? Could they send you elsewhere at some point over the next three years?

Just starting the job? Okay, the company might be stable but you're on a year's probation. Sure, it'll probably work out fine but the risk is there. Just saying in case you're thinking that the only way of lossing the job is redundancy.

Aaaaaaaaand, hate to mention it, but there is always the possibility that you guys might break up. Now, if your GF is studying full-time and not contributing anything/much to the rent, that scenario may be an emotional catastrophe and not a financial one but, again, its a risk factor that exists.


In your situation, a long term fixed lease that secures a low rent is worth considering alright but I would be inclined to look to negotiate clauses to allow you to break the lease at certain points in time and/or under certain demonstrable circumstances. Specifying rent reviews and/or stepped rent levels is worth discussing too but, as advised, guessing what market rents will be in two years is real crystal ball stuff.

If you are committing to a long stay in the place, you might also wish to discuss with the landlord about making adjustments to the furniture and fittings or whatever too.


That all said, especially for the period of time you are looking at, a Part 4 tenancy would effectively give you most of this anyway but with probably more flexible get-out options. Yes the landlord can give you (long) notice to leave under six specific circumstances but is it likely that he will sell this property or acquire it for his own family purposes when he has long term paying tenants in it. You may or may not know enough about his circumstances to judge that.

odds_on wrote: »

You could always consider asking for a Part 4 lease (which the landlord cannot refuse, provided he has agreed that you can remain in the apartment when the fixed term ends.

Actually, as they are there more than six months, a Part 4 Tenancy is already automatically in place alongside the fixed term lease and will continue when the fixed term ends. There is no provision for the landlord to agree for them to remain after the fixed term ends, the law says they stay if they want to. The only onus on the tenants is to inform (not ask, inform) the landlord in writing that they intend to remain in the property under the Part 4 Tenancy when the fixed term expires. This should be done between 1 and 3 months before the end of the fixed term. Failure to inform the landlord does not mean that they can not avail of the Part 4 tenancy (that happens automatically) but does permit the landlord to recoup any expenses that he might have incurred having assumed the tenants were going to vacate at the end of the fixed term (primarily, cost of mistakenly readvertising the property, booking cleaners, whatever).

Graces7

Leases are interesting as it seems landlords are coming to terms with the new laws.

Many of the ads on eg daft state a year or six months open to extension.

We signed a one year lease in August 2010. But when the paperwork finally came re the PTRB registration I notice that they stipulated 3 years on that. I said nothing as we wanted a longer lease anyways after some bad experiences in the past.

When an issue came up late last year I had to contact the agent and reminded him that the lease had expired. He asked if we wanted a lease; I said yes but nothing more was done or said.

We have left it at that as we know we do have some protection in law these days. We took this vary.... basic,,,, house as it had been lying empty and is not needed and not a family home etc and thus we were not at huge risk of being illegally or otherwise evicted. After six moves in five years because of this kind of issue.... a trailer in a field would have sufficed!

It makes sense not to commit to too long in these dubious times.

While we all seek security and permanence sometimes the risks are too great.

Good luck!

Victor

If agreeing such a lease, ensure there is a break clause. You have no idea what can happen over a period of years - break-up, job loss, accident, transportation for life to Australia ...

. As you have been there longer than 6 months, you are automatically entitled to renew your lease anyway. The landlord can't increase the rent above the market rate, which is unlikely to increase much in the next few years and could indeed reduce further, but anything is possible.

I'm not sure, but I think the Residential Tenancies Act has some restrictions on such leases anyway.

Victor

If agreeing such a lease, ensure there is a break clause. You have no idea what can happen over a period of years - break-up, job loss, accident, transportation for life to Australia ...

As you have been there longer than 6 months, you are automatically entitled to renew your lease anyway. The landlord can't increase the rent above the market rate, which is unlikely to increase much in the next few years and could indeed reduce further, but anything is possible.

I'm not sure, but I think the Residential Tenancies Act has some restrictions on such leases anyway.

Dr_Colossus

Not directly related to the OP's question in terms of an extended lease but in terms of reducing the rent from 850/month would it be an option to pay 6 months rent in advance for a reduction in the base rate? Any pitfalls to such an arrangement provided you can afford such an initial outlay?

Victor

What if you decide to move out next month?

Or the place burns down?

odds_on

Or you get seriously ill or involved in an accident and have to be hospitalized.
or you lose your job.

Dr_Colossus

Victor wrote: »

What if you decide to move out next month?

Or the place burns down?

odds_on wrote: »

Or you get seriously ill or involved in an accident and have to be hospitalized.
or you lose your job.

Fair points, didn't think that one through. However regarding signing a new lease and deciding to move out the month after are you not legally required to honor the 12 months rent agreement baring such unusual circumstances as the house burning down. Besides if the house did burn down would you not be entitled to a refund from the insurance, you have the same risk each month after paying for the month ahead although granted there's a big difference between the value of one month and six months rent.

odds_on

Dr_Colossus wrote: »

Fair points, didn't think that one through. However regarding signing a new lease and deciding to move out the month after are you not legally required to honor the 12 months rent agreement baring such unusual circumstances as the house burning down. Besides if the house did burn down would you not be entitled to a refund from the insurance, you have the same risk each month after paying for the month ahead although granted there's a big difference between the value of one month and six months rent.

That is the problem with Fixed Term leases - you are legally bound to them until the expiry date. However, Irish law allows you to assign your lease to another person (acceptable to the landlord). This system allows you to get out of the lease and keep you deposit (subject to damage beyond normal wear and tear). But as I suggested in a previous post, a Part 4 lease may be more suitable if the tenant can get the landlord to agree. This is incorrect - if the tenant has acquired Part 4 rights, he can elect which type of lease he wants.

On the landlord's side, with a Fixed Term lease, he has great difficulty in getting repossession of his property - apart from the tenant not honouring his obligations.

In the UK, a person looking to pay six months' rent up front is often considered to be some type of scammer/dodger/person likely to damage or cultivate drugs in the property. There are no "inspections" in the UK, so the tenant has free run of the property without being disturbed.

xper

odds_on wrote: »

... But as I suggested in a previous post, a Part 4 lease may be more suitable if the tenant can get the landlord to agree....

Again, if the tenant has been in the property more than six months,as is the case here, then a Part 4 Tenancy is an automatic right. The landlord has no say.

odds_on

xper wrote: »

Again, if the tenant has been in the property more than six months,as is the case here, then a Part 4 Tenancy is an automatic right. The landlord has no say.

Yes, xper, absolutely correct - both an serious error and mistake on my part. The tenant has the right to choose which type of lease best suits him once he has acquired Part 4 rights.

Possibly the only advantage of going for a longer fixed term lease would be to get a reduction in the rent - but would this be worth it if the tenant has to vacate at short notice (loss of job, accident, family circumatances etc etc) and possibly lose his deposit if he is unable to assign the lease?????

The_Conductor

odds_on wrote: »

In the UK, a person looking to pay six months' rent up front is often considered to be some type of scammer/dodger/person likely to damage or cultivate drugs in the property. There are no "inspections" in the UK, so the tenant has free run of the property without being disturbed.

True. However- on the continent its normal (not 6 months rent, 3 would be normal). Also, on the continent- property is almost universally let unfurnished on long term leases- a person gets a 2/5/10/20 year lease on a vacant unfurnished property- pays their 3 months in advance alongside monthly rent which is also usually set for the period of the lease (helped by the fact that there has traditionally been low inflation, and mortgages on these properties tend to be fixed mortgages at between 4 and 5 per cent).

The Irish situation obviously is different. :pac:

3DataModem

As a landlord I would love long leases, and have happily dropped rent for 'committed' tenants. The only problem is there is no good accepted legal framework for extended leases (with provisions for break clauses and upward and downward rent reviews). I have one tenant at the moment who would be perfect for this - so essentially he is on a de-facto Part 4 at the moment. I think if Part 4's became the norm - with proper break and review clauses - that renting would be a much more attractive proposition. Some people want to rent homes, and I think they need to be catered for better.

odds_on

3DataModem wrote: »

As a landlord I would love long leases, and have happily dropped rent for 'committed' tenants. The only problem is there is no good accepted legal framework for extended leases (with provisions for break clauses and upward and downward rent reviews). I have one tenant at the moment who would be perfect for this - so essentially he is on a de-facto Part 4 at the moment. I think if Part 4's became the norm - with proper break and review clauses - that renting would be a much more attractive proposition. Some people want to rent homes, and I think they need to be catered for better.

From the tenant's side, Part 4 leases don't really need break clauses as a tenant can give the appropriate notice (depending on how long he's been in occupancy) and leave.

From the landlord's point of view, it's a little more complicated in that he only has 6 options in which to regain possession of his property but then, if he wants long term leases, it doesn't really affect him. For this reason, Part 4 leases are less secure than fixed term leases.

Part 4 rents can be review once a year - to the market value, up or down. But if you put it up, the tenant may be liable to leave.

Just my thoughts.

3DataModem

odds_on wrote: »

From the tenant's side, Part 4 leases don't really need break clauses as a tenant can give the appropriate notice (depending on how long he's been in occupancy) and leave.

From the landlord's point of view, it's a little more complicated in that he only has 6 options in which to regain possession of his property but then, if he wants long term leases, it doesn't really affect him. For this reason, Part 4 leases are less secure than fixed term leases.

Part 4 rents can be review once a year - to the market value, up or down. But if you put it up, the tenant may be liable to leave.

Just my thoughts.

Interesting points. I should probably update my understanding of Part 4. My attitude is simply that a tenant should be able to leave with notice provided they have met a minimum term (I usually say six months) and also a minimum term after any significant investment requested by tenant (repainting, new furniture, etc) but realistically if you rent keenly priced nice places you are never - ever - short on tenants.