Landlord looking to increase rent

ninty9er

I phoned my letting agent this morning with a minor query, next thing, I'm informed the landlord is seeking a €100 rental increase. The property has had no vacant period for almost three years and rent is always on time.

Based on two properties sold in the estate over the past 12 months, the yield is between 6.9%-7.2%. I don't know how much the landlord paid for the property, but considering the average current price based on the property register, the increase would represent a gross yield between 7.7%-8%. From what I understand the landlord lived in the property for a number of years before the property was rented, so may even have paid less than current market value, on the other hand, it could have been a boom buy in massive negative equity, however, neither of these are a tenants concern. We'll see no value bounce if the former and we didn't buy beyond our means if the latter.

If we were to move out, it's possible the landlord could lose a month every year replacing tenants, whereas we replace on a room by room basis, bothering nobody.

Am I being entirely unreasonable in thinking we're a good prospect for a landlord. I'm not opposed to a small increase to cover things like NPPR and LPT, but given the things we'd ask to be fixed to justify any further increase, I'm not sure it'd be worth it to our landlord to increase the rent.

djimi

The sale price of the house has no bearing on the rental price; what you need to do is have a look at what similar properties in the area are renting for, and then see if the increase keeps the price in line with the average rental market rate. If the new rate is well above the market rental average then you have a case to dispute the increase; if its in or around the average then the landlord is entitled to seek the increase.

Whether or not the property will remain empty and the landlord will lose money is the call that they need to make. Certain markets (mostly in and around Dublin) have a very strong rental market and chances are the landlord will not suffer any significant vacant period.

Pawwed Rig

Djimi is on the button with everything he said.
If you are talking about €100 increase to a €300 rent then it might be excessive but if it is €100 increase on a €1,000 rent then it might be fair enough. As stated it depends where you live. If you are in Portlaoise then you should still be looking for a reduction but if in Dublin then rent increases are coming for us all.

Check what the market rate is. If you are paying more then move to a cheaper place.

Ray Palmer

ninty9er wrote: »

The property has had no vacant period for almost three years and rent is always on time.

Why do people think paying rent on time is something special? It is what you are meant to do. Rent also increase over time so 3 years since an increase is pretty good.

WIZE

Do you sign a new contact every year?

ninty9er

Thanks for the replies. I'm not saying a ren increase is out of the question for us, but similar properties hae rented in recent months for €50 eiter side of what we're paying. there are no similar properties on at the moment.

On-time rent is a big issue for landlords who depend on it to service loans. Trust me, my grandparents have been on the other side if this equation, however they owned their property, so late rents were more of an inconvenience than an immediate cashflow burden. I agree that rent shouldn't be late, but that's not something a landlord can take for granted.

There are much nicer, larger houses with an extra bedroom asking €400 more at the moment, so we had considered our current rent fair.

djimi

If there are no similar properties available in your area for the purpose of working out the average market rent then I suppose the next thing to do is take a look at what you would get for the increased amount; is it similar standard to what you are renting now or are they all much better properties?

Its impossible to say without knowing the full story whether €100 increase would be considered to be excessive should you challenge it, but unless you are already paying a high rent (relative to market rate) to start with, or you are in a low rent area where such an increase represents a 25% increase, then Im not really sure that it will seen as being excessive tbh. Its probably the upper limit of what a landlord can ask for and expect to get away with.

Marcusm

djimi wrote: »

The sale price of the house has no bearing on the rental price; od.

I have to say I disagree very strongly with this and the dislocation between purchase prices and rental values during the Celtic Tiger was one of the unheralded signs of the madness of the boom. Absent any special factors attaching to the particular property, a reasonable rental yield is a corroborating factor for purchase prices.

That being said, the yield quoted is not that strong in the current Irish market situation and would not rule out a rental increase.

D3PO

Marcusm wrote: »

I have to say I disagree very strongly with this and the dislocation between purchase prices and rental values during the Celtic Tiger was one of the unheralded signs of the madness of the boom. Absent any special factors attaching to the particular property, a reasonable rental yield is a corroborating factor for purchase prices.

That being said, the yield quoted is not that strong in the current Irish market situation and would not rule out a rental increase.

You can disagree with the statement but Djimi is right in the premise.

Rental markets are not dictated by rental yield and it would not hold up as an argument in a PRTB dispute as a reason why rent should not be increased.

The only thing that matters is will the rental property bear the rental asking price in the market it is in. If the answer is yes then the LL has the right to increase it to that amount.

hfallada

I find it funny how even extremely intelligent people can't seem to get their head around the fact most landlords have mortgages, large amounts of taxes, have to furnish the Accoumdation and pay for various repairs, do repairs and pay insurance. Most tenants seem to think rent is pure profit.

OP your landlord has a variety of tax increases in the last 3 years. He might be a on a variable mortgage which the rate of interest has doubled. You can move out but I imagine with a €100 increase over 3 years, your apartment is still value.

Marcusm

D3PO wrote: »

You can disagree with the statement but Djimi is right in the premise.

Rental markets are not dictated by rental yield and it would not hold up as an argument in a PRTB dispute as a reason why rent should not be increased.

The only thing that matters is will the rental property bear the rental asking price in the market it is in. If the answer is yes then the LL has the right to increase it to that amount.

I said nothing about thePRTB but highlighted the comment that house prices have nothing to do with rents. That's simply fallacious. Of course, any landlord seeking to increase rent would need to justify it by reference to the clearing levels for rent if comparable properties. However, over time a link between capital (house prices) and return (rent) and affordability (income levels) needs to exist. Without such equilibrium, booms and busts continue.

Pawwed Rig

Marcusm wrote: »

However, over time a link between capital (house prices) and return (rent) and affordability (income levels) needs to exist. Without such equilibrium, booms and busts continue.

You are talking about averages here over a long period. As the single stand alone unit where you are living the cost of the house is irrelevant to the rent you pay.

The PRTB would be the next step should you propose to appeal a rent increase so is relevant for this discussion.

WIZE

Contracts normally run and renewed every year.

If you are mid contract the Landlord can not up the rent.

But can increase the rent at the end of the years contract and its your coice to stay or go.

The OP simply needs to answer the question if they recieve a new contract every year

djimi

Marcusm wrote: »

I said nothing about thePRTB but highlighted the comment that house prices have nothing to do with rents. That's simply fallacious. Of course, any landlord seeking to increase rent would need to justify it by reference to the clearing levels for rent if comparable properties. However, over time a link between capital (house prices) and return (rent) and affordability (income levels) needs to exist. Without such equilibrium, booms and busts continue.

Youre not wrong that over time house prices will dictate rental prices. But we are not talking about over time; the OP was trying to use recent house sales as a means to gauge what the rental price should be, and in that regard there is absolutely zero relationship between the two. If I buy a rental property for three times its value I cant turn around and ask for three times the rent for it. In terms of trying to gauge a short term rental market value the only thing that matters is what similar properties in the area are currently renting for.

JustAThought

It Sounds a bit random -you ring the agent about something & they casually mention a rent increase?

Are they trying to get you to not contact them & cause them work because you'll be afraid they'll raise the issue again?

Do you know who your landlord is?

Do you have a lease/contract? If so when does it expire? If not, why & look at these circumstances -is the estate agent at fault, did you request one , are you covered under the new legislation & section for residency rights etc . Threshold will put you right on the issues involved & your rights.

I would write by registered list to the estate agent , stating your surprise that when you contacted them for x , they " mentioned" that you. " might have" a rent increase & ask them to put it in writing .

You will then either be notified or they will see that you have called their bluff & back away. Once you know for sure you can then make decisions that will suite you - stay , find a new better/cheaper place, argue & win, argue & loose.

Right now you have nothing but uncertainty - they are obliged to notify you in writing -get them to clarify the situation in writing -don't take anything by phone - they are messing you about & the time to stop that is now.

No doubt if they know you are serious & think you know your rights or will be getting advise from threshold they will cool their amateur efforts.

djimi

JustAThought wrote: »

I would write by registered list to the estate agent , stating your surprise that when you contacted them for x , they " mentioned" that you. " might have" a rent increase & ask them to put it in writing .

To be honest I would do no such thing. Casually mentioning a rent increase over the phone has no legal bearing whatsoever; the OP is fully entitled to ignore the agent. The agent needs to put the matter in writing for it to be official, which obviously is something that the OP does not want to happen. Id be saying nothing; if the agent/landlord wants to give official written notice of the rent increase then fair enough, but if written notice is not forthcoming then all the better as far as the OP is concerned.

The_Conductor

WIZE wrote: »

Contracts normally run and renewed every year.

If you are mid contract the Landlord can not up the rent.

But can increase the rent at the end of the years contract and its your coice to stay or go.

The OP simply needs to answer the question if they recieve a new contract every year

Wrong. Rent may be reviewed once a year. This review does not necessary have to correspond with a contract renewal- it may, but its not a given.

OP- what % increase does the 100 Euro relate to?
And in what part of the country- are we talking?
For example- if its a 10% increase- and the first increase in 3 years- then, I'd consider it quite fair and reasonable- but of course this depends on where the property is- and what other property in the area is renting for.

If this property were put on the market- what would new tenants reasonably expect to pay for it?

Your arguments about rental yield are a bit bizarre- unless of course you're willing to offer to buy the property from the landlord? Its like saying, I like coffee and a croissant for my breakfast in the morning. For lunch a sandwich is nice. They're both meals in the same day- but that is the extent of it.

djimi

The_Conductor wrote: »

Wrong. Rent may be reviewed once a year. This review does not necessary have to correspond with a contract renewal- it may, but its not a given.

Most leases would have the rental amount written into them, so once a lease is signed and if no increase has been agreed and written into the new lease then surely no increase can be sought until the lease expires?

The_Conductor

djimi wrote: »

Most leases would have the rental amount written into them, so once a lease is signed and if no increase has been agreed and written into the new lease then surely no increase can be sought until the lease expires?

In a lot of cases (I'd hazard- the vast majority of cases)- a new lease wouldn't necessarily have been signed at all, the old lease and its articles continue in force, and the tenancy continues under the provisions of a Part 4 Tenancy.

Its more the exception, rather than the rule- that a landlord would sign a new contract with tenants on an annual basis.

The act allows for an annual rent review. It doesn't specify that the review is part of an annual renewal of lease etc- thats a different process.

the world wonders

djimi wrote: »

Most leases would have the rental amount written into them, so once a lease is signed and if no increase has been agreed and written into the new lease then surely no increase can be sought until the lease expires?

That's what I would have thought too, but apparently not:

21.—If the lease or tenancy agreement concerned does not provide for such a review or the tenancy concerned is an implied one, either party may, subject to section 20, require a review of the rent under the tenancy to be carried out and a new rent, if appropriate, set on foot of that review.

WIZE

The_Conductor wrote: »

Wrong. Rent may be reviewed once a year. This review does not necessary have to correspond with a contract renewal- it may, but its not a given.

OP- what % increase does the 100 Euro relate to?
And in what part of the country- are we talking?
For example- if its a 10% increase- and the first increase in 3 years- then, I'd consider it quite fair and reasonable- but of course this depends on where the property is- and what other property in the area is renting for.

If this property were put on the market- what would new tenants reasonably expect to pay for it?

Your arguments about rental yield are a bit bizarre- unless of course you're willing to offer to buy the property from the landlord? Its like saying, I like coffee and a croissant for my breakfast in the morning. For lunch a sandwich is nice. They're both meals in the same day- but that is the extent of it.

If I have a 1 year contract where my rent is €1000 my landlord can increase the rent in the middle of my contract. I dont think so

djimi

The_Conductor wrote: »

In a lot of cases (I'd hazard- the vast majority of cases)- a new lease wouldn't necessarily have been signed at all, the old lease and its articles continue in force, and the tenancy continues under the provisions of a Part 4 Tenancy.

Its more the exception, rather than the rule- that a landlord would sign a new contract with tenants on an annual basis.

The act allows for an annual rent review. It doesn't specify that the review is part of an annual renewal of lease etc- thats a different process.

True, but I have taken "contract renewal" to mean putting pen to paper, not just allowing an expired fixed term lease to roll over into a part 4 tenancy.

djimi

the world wonders wrote: »

That's what I would have thought too, but apparently not:

I might be reading that wrong, but that quote doesnt suggest to me that the rent can be reviewed and increased while a fixed term lease is in place. For the tenancy act to allow that would be to go against the very principle of a signed contract. If I sign an agreement for a year then surely the terms of that contract are set for the year, and if the rent is written into and agreed on the signed lease then that is not something that can be ammended until the lease has expired?

the world wonders

djimi wrote: »

I might be reading that wrong, but that quote doesnt suggest to me that the rent can be reviewed and increased while a fixed term lease is in place.

If it doesn't mean that, then what does it mean?

For the tenancy act to allow that would be to go against the very principle of a signed contract.

It is possible for a statute to override the terms of a private contract -- this is how the Residential Tenancies Act works, it explicitly prevents tenants from contracting out of their rights.

murphaph

JustAThought wrote: »

It Sounds a bit random -you ring the agent about something & they casually mention a rent increase?

My first thoughts as well. If the LL has a rent increase in mind the agent won't know anything about it in all likelihood and if the agent does know the LL is thinking about it then he likely wouldn't mention it until it had been confirmed by the LL that this is his intention.

If the LL had confirmed it the timing is spectacular coincidence IMO. More likely the agent is sounding you out to see if he can increase his commission a bit. If you respond like "ah well, I suppose it's ok" the agent will be on to the LL "advising" him to up the rent.

These agents aren't generally in constant communication with the LL. The LL is paying them NOT be bothered by the property/agent.

djimi

the world wonders wrote: »

If it doesn't mean that, then what does it mean?

If the lease or tenancy agreement concerned does not provide for such a review

Id like to see some clarification of this part, but to me if a new lease is signed, and it includes the rental amount, then I dont see how a landlord could claim that the rental amount was not reviewed. They had the opportunity to review the rent prior to the signing of the new lease, but the fact that they wrote the rental amount onto the lease suggests to me that they are happy to not increase the rent.

Im no legal expert, but thats how it reads to me anyway.

the world wonders wrote: »

It is possible for a statute to override the terms of a private contract -- this is how the Residential Tenancies Act works, it explicitly prevents tenants from contracting out of their rights.

Its not quite the same thing though. You sign a legal contract that states "Tenant X agrees to pay €x per month for a period of x months" or however it is worded then that is the basis of the agreed contract. I dont see why the tenancy act would then allow for the terms of the contract to be changed mid contract; it doesnt make any sense to me. Otherwise, why bother with a contract at all?

camphor

ninty9er wrote: »

I don't know how much the landlord paid for the property.

It is entirely irrelevant.

ninty9er wrote: »

If we were to move out, it's possible the landlord could lose a month every year replacing tenants, whereas we replace on a room by room basis, bothering nobody.

It is also possible he might get a tenant who wouldn't obsess about his business and his personal affairs, who might pay more rent and mantain the property.

ninty9er wrote: »

Am I being entirely unreasonable in thinking we're a good prospect for a landlord.

That is for the landlord to decide. Some don't like letting to begrudgers.

ninty9er wrote: »

I'm not opposed to a small increase to cover things like NPPR and LPT, but given the things we'd ask to be fixed to justify any further increase, I'm not sure it'd be worth it to our landlord to increase the rent.

The only relevant factor in deciding upon rent is the market rent. Outlay and expense are not relevant. If you stay there and your landlord gets more out of you then it is worth his while. If you leave and he gets another tenant who pays more it is worth his while. If you leave and he can't replace you with an equal or better tenant then it is not worth his while.
The agent will want you to pay more, or leave, and will not be impressed by your demeanour.
Your strong point is that you have been there a while and paying up. If you go there will be a lot of work to do.
Your weak points are that you may be paying under the market rent and come across as a begrudging smartass.

You need to play to your strengths.

Clive

21.—If the lease or tenancy agreement concerned does not provide for such a review or the tenancy concerned is an implied one, either party may, subject to section 20, require a review of the rent under the tenancy to be carried out and a new rent, if appropriate, set on foot of that review

Subject to section 20 is the important part there, which precludes rent reviews in the first twelve months of the tenancy, so your standard 1 year fixed term lease does set your rent, barring major changes to the property.

beauf

ninty9er wrote: »

...similar properties hae rented in recent months for €50 eiter side of what we're paying. there are no similar properties on at the moment....

The only thing thats important here is that is market rent is broadly in line with what hes asking.

If there was low demand, rent would fall.