Rent Advice

mcko

Hi All,
I have a 3 bedroom semi d rented to a family for the last 3 years, great tenants no problems rent goes into the bank every month, i get €850 a month at the moment, houses in the area are making between €1100 to 1250.
Would i be mad to increase the rent especially as I am a paye worker paying tax at the high rate so the govt get about 60% of the rent.
I have no mortgage on the house so i am not that desperate for the money.

Fian

mcko wrote: »

Hi All,
I have a 3 bedroom semi d rented to a family for the last 3 years, great tenants no problems rent goes into the bank every month, i get €850 a month at the moment, houses in the area are making between €1100 to 1250.
Would i be mad to increase the rent especially as I am a paye worker paying tax at the high rate so the govt get about 60% of the rent.
I have no mortgage on the house so i am not that desperate for the money.

Decide for yourself if you are happy to voluntarily subsidise this family's accommodation costs by €400 a month at a cost of €200 to yourself and €200 to the funds available for public services.

You might consider whether they would be likely to reciprocate if/when rents fall generally and also consider whether they would be able to pay the increased rent if it were imposed.

ford2600

mcko wrote: »

Hi All,
I have a 3 bedroom semi d rented to a family for the last 3 years, great tenants no problems rent goes into the bank every month, i get €850 a month at the moment, houses in the area are making between €1100 to 1250.
Would i be mad to increase the rent especially as I am a paye worker paying tax at the high rate so the govt get about 60% of the rent.
I have no mortgage on the house so i am not that desperate for the money.

I was in identical situation, and increased but not quite to market rates.

Prior to increase I drew up a list of necessary maintenance works
*reroofed shed
* upgrade boiler, heating controls and a few radiators
* a couple of electrical items.
* gutters/fascia and other minor work

Tenant was happy in that house was more comfortable and I was happy with higher income and improvements to property for future sale/rent especially with BER rating improvement.

It's hard to but a value on a troublefree tenant, but they certainly have a significant value in terms of peace of mind/stress. Only you can decide what that is.

mcko

Thanks for the prompt replies.

murphaph

If you can genuinely get 400 more a month (4800 a year before taxes) you're doing yourself out of a nice holiday every year.Good tenants are however valuable to an extent, so I would also raise it to near market rates, but with a little discount. Believe me, your tenants would be very quick to shove off if market rents fell below what they're paying and you didn't come down!

mcko

mcko wrote: »

Hi All,
I have a 3 bedroom semi d rented to a family for the last 3 years, great tenants no problems rent goes into the bank every month, i get €850 a month at the moment, houses in the area are making between €1100 to 1250.
Would i be mad to increase the rent especially as I am a paye worker paying tax at the high rate so the govt get about 60% of the rent.
I have no mortgage on the house so i am not that desperate for the money.

Increase it to market rate or close to it. I never get why people don't want pay increases or to increase rent etc because they have to pay roughly 50% tax on it, they still get the other 50% into their pocket which is 50% more than they would be getting if they didn't get the increase.

Whats the point in having an investment if you aren't trying to maximise your return?

McGrath5

Increase the rent to market rate.

Absolutely no need to be subsidising the tenant to the tune of nearly €5k per year.

handlemaster

There seems to be a lot of people who believe that if a tenant does as they say on the contract they sign that they should pay less who rents move up. Its an assumption that most people are bad tenants . Where as if you think most people are good tenants there is no need not to have the rent at market rate when possible.

ShaShaBear

handlemaster wrote: »

There seems to be a lot of people who believe that if a tenant does as they say on the contract they sign that they should pay less who rents move up. Its an assumption that most people are bad tenants . Where as if you think most people are good tenants there is no need not to have the rent at market rate when possible.

I think its more a case that tenants move into a home advertised at a certain rental price because the amount agrees with them. After years of living there, and not costing the landlord in damages or time, the landlord puts the rent up to market rate and the tenants find themselves in a house that costs the same as "others in the area". It might be niggly things like "Oh but that house on the other side of town hasn't got these poxy alcoves that make my sitting room smaller" or "The cheap laminate in here is all scratched after three years of us using it and I might as well move to a new house if Im paying that much extra" or "Crap, we cant afford this increase now so we're going to have to look for somewhere within our budget to rent".

Then the landlord, who previously had tenants who made rent, kept the house and didn't cause trouble, is opened to a world of unknown where he/she could easily be landed with tenants that end up costing them twice what they make on the increase.
THAT is the value of a good tenant.

ShaShaBear

ShaShaBear wrote: »

Then the landlord, who previously had tenants who made rent, kept the house and didn't cause trouble, is opened to a world of unknown where he/she could easily be landed with tenants that end up costing them twice what they make on the increase.
THAT is the value of a good tenant.

Or more than likely a tenant just as good who pays their rent and keeps the place well. Bad tenants are only a small percentage of tenants particularly at higher rents.

I'd rather get more money for the tiny risk of ending up with a bad tenant.

handlemaster

ShaShaBear wrote: »

I think its more a case that tenants move into a home advertised at a certain rental price because the amount agrees with them. After years of living there, and not costing the landlord in damages or time, the landlord puts the rent up to market rate and the tenants find themselves in a house that costs the same as "others in the area". It might be niggly things like "Oh but that house on the other side of town hasn't got these poxy alcoves that make my sitting room smaller" or "The cheap laminate in here is all scratched after three years of us using it and I might as well move to a new house if Im paying that much extra" or "Crap, we cant afford this increase now so we're going to have to look for somewhere within our budget to rent".

Then the landlord, who previously had tenants who made rent, kept the house and didn't cause trouble, is opened to a world of unknown where he/she could easily be landed with tenants that end up costing them twice what they make on the increase.
THAT is the value of a good tenant.

again the assumption is that most tenants are bad. akso thrown in that the landlord doesnt look after his /her property

davindub

A lot of people will recommend you maximise your investment to take advantage of the shortage of housing and rental properties. Nevermind that people can't afford the rents or have to give up a lot to afford the rent increase.

The same people will complain if they make a loss / negative equity if their investment falls / can't rent the place out / tenants destroy the place/ won't pay rent.

I tend to support landlord rights, but not in terms of ever increasing rents. Property is not an high return investment, it is generally low risk. It has an effect on the wider economy, the higher the rent the less money spent elsewhere.

Legislation in this country surrounding property is a joke, so it falls to the people to act responsibly, you should be making some money, but not maximising your investment. In return you can develop a stable investment with loyal customers. I can see the risks of a new recession coming, and if this occurs you will be glad of the tenants who pay without deduction, look after the property, etc. But that being said, you might increase the rent by a reasonable amount.

handlemaster

The landlord is not a guardian of social justice . Its a business. If thé tenant as some argue are intitled to lower than market rent the the opposite is also true .

exaisle

As a landlord, you don't appreciate the benefit of having a good tenant until you've had a bad one.
Good tenants, who look after the property as if it was their own are worth their weight in gold.
If you have a good tenant, you will tend to have far less in expense and time in looking after the property, so to encourage them to stay as long as possible, I would set their rent at a level which is a little (say 50-100) below the current market rate.

cycling541

McGrath5 wrote: »

Increase the rent to market rate.

Absolutely no need to be subsidising the tenant to the tune of nearly €5k per year.

This is why property issue in this country some people buy homes and want make business out them . Pure greed.

antoinolachtnai

cycling541 wrote: »

This is why property issue in this country some people buy homes and want make business out them . Pure greed.

do remember that you need to reinvest in your house over time. You need to be producing enough income to cover the cost of reinvesting (new decor, furniture, renovations, etc) when the tenant eventually moves out.

davindub

handlemaster wrote: »

The landlord is not a guardian of social justice . Its a business. If thé tenant as some argue are intitled to lower than market rent the the opposite is also true .

It's not a business, it is a circumstance of poor regulation and planning. If property rental is to be classed as a business, EU rules on competition should apply and then the Government would be forced to remove their barriers to entry. I.e. I could build as many units as I wished, compete on quality and affordability. Same as any other business.

Eventually property will be enough of a problem to provoke a recession or major changes to planning. Either scenario won't suit landlords, better to act responsibly to safeguard their own future?

Dr_Kolossus

I'm an accidental landlord. We charge 1350 per month, could prob get 1500, as the house is likely one of, if not the best house in the street. Other houses are already getting 1500.

The rent covers mortgage after tax's paid. Our tenants are great. I reckon it will take at least 5-7 years to get out of neg equity. As soon as we can, we will sell. I want zero hassle, and that's what I have at the moment. I had no intention of making money from the house, it was a home.

I will probably never up the rent for the current tenants if property continues to pay for itself. I guess there are many like us.

For people who don't understand why landlords charge below MKT rates, this is my anecdotal reason.

newacc2015

OP the marginal rate is around 53% but that is assuming you are hitting the very top rates. If you are concerned about tax I would suggest speaking to a tax consultant about reducing your liabilities such as maxing out tax free pension contributions, buying into an EII scheme etc. Your tax liability can be reduced.

IMO most tenants are not considerate about living in a property before market rate at all. You own a property to maximise your rent, there is no reason not to maximise it. The boiler could go tomorrow and you could be €2000 out of pocket. That is a lot of rent required to cover that

beauf

davindub wrote: »

...Eventually property will be enough of a problem to provoke a recession or major changes to planning. Either scenario won't suit landlords, better to act responsibly to safeguard their own future?

I'm not exactly sure what you are hoping for. It been a problem for years. Its a crisis now. Apart from the building shortage causing a lack of rental properties. Landlords are selling up and leaving the market. Making the shortage worse. Its in that context the Govt via Nama are also selling property and removing it from the rental market.

beauf

If it were me I'd raise it but not to the market rate. A good tenant is worth it. If a LL is very active with a property as in always chasing the market rate, and changing tenants that's fine. But not everyone want to do that.

If the market falls or the Govt caps rents more severely, you might have to reduce the rent and not change it for years. Also a good LL should be saving money to refurbish the property on a regular basis, things break, boilers wear out etc. So you should have a float for repairs and such always.

davindub

beauf wrote: »

I'm not exactly sure what you are hoping for. It been a problem for years. Its a crisis now. Apart from the building shortage causing a lack of rental properties. Landlords are selling up and leaving the market. Making the shortage worse. Its in that context the Govt via Nama are also selling property and removing it from the rental market.

I know its a problem, just stating (not hoping) that with the current planning policies LL's have a stable income, there are plans to increase rental properties and social properties slowly, hopefully not affecting rental prices drastically. If prices keep increasing, the barriers limiting supply which create the increases will surely be removed. Same as anything else, monopoly conditions have their breaking point.

Edups

davindub wrote: »

But that being said, you might increase the rent by a reasonable amount.

+1 if you raise the rent fair enough but don't take the piss. If you're tenants are good then don't alienate them for some extra money you have said you don't need. That extra money they may very well depend on.

beauf

davindub wrote: »

I know its a problem, just stating (not hoping) that with the current planning policies LL's have a stable income, there are plans to increase rental properties and social properties slowly, hopefully not affecting rental prices drastically. If prices keep increasing, the barriers limiting supply which create the increases will surely be removed. Same as anything else, monopoly conditions have their breaking point.

In my opinions, there is nothing in your post that's correct.

There is no monopoly, LL do not control the market. They don't even control the rent, there are rent controls. The storage has nothing to do with LLs. There are plans to increase housing rapidly. They just aren't being built rapidly. That's not an issue of planning. There is no plans to build buy to let, housing that I'm aware of. Or indeed any plans to encourage buy to let investors or LL's. Rather the opposite. LL don't want to provide social housing. Its because of all that a LL who doesn't make money when he can, will be badly burnt when rents fall, or they have a tenant overstay. No one will help the LL if they don't protect themselves from a loss. Of all the people to blame for the current crisis LL should be at the bottom of your list. Yes there are bad LLs, and those who take advantage or a crisis. But they are not the cause of the crisis. So are not the solution to the crisis either.

None of this has go anything to do with the OP query. He can only charge the market rate. If he wants to charge less to retain their current tenant, that might work better for them, if they want to retain the current status quo.

davindub

beauf wrote: »

In my opinions, there is nothing in your post that's correct.

There is no monopoly, LL do not control the market. They don't even control the rent, there are rent controls. The storage has nothing to do with LLs. There are plans to increase housing rapidly. They just aren't being built rapidly. That's not an issue of planning. There is no plans to build buy to let, housing that I'm aware of. Or indeed any plans to encourage buy to let investors or LL's. Rather the opposite. LL don't want to provide social housing. Its because of all that a LL who doesn't make money when he can, will be badly burnt when rents fall, or they have a tenant overstay. No one will help the LL if they don't protect themselves from a loss. Of all the people to blame for the current crisis LL should be at the bottom of your list. Yes there are bad LLs, and those who take advantage or a crisis. But they are not the cause of the crisis. So are not the solution to the crisis either.

None of this has go anything to do with the OP query. He can only charge the market rate. If he wants to charge less to retain their current tenant, that might work better for them, if they want to retain the current status quo.

Maybe make yourself aware before you attempt to express your opinion that nothing I posted is correct?

For example:
Ref Build to let (not buy to let, a different concept entirely) - google Hines and Cherrywood.

There are 0 initiatives implemented to enable rapid building, nor planned beyond discussion as yet. If you want to test this, your local council release a detailed plan every 6 years, there was one implemented this year 2016.

Ref rent controls - there is no legislation setting the max price of rent, only that rent reviews can be conducted at least 2 years after the last, no more than market rent to be charged. These two measures have not controlled rent at all, hard to say they are rent controls?

You can figure out the rest yourself, hopefully!

beauf

davindub wrote: »

... there are plans to increase rental properties and social properties slowly,...

There are fast track plans...

Mr. Simon Coveney T.D., Minister for Housing, Planning, Community and Local Government, today (10th November) announced fast-track delivery arrangements for 30,000 new homes in major urban centres in Dublin, Cork and other urban locations around the country. ...

davindub wrote: »

Ref rent controls - there is no legislation setting the max price of rent, only that rent reviews can be conducted at least 2 years after the last, no more than market rent to be charged. These two measures have not controlled rent at all, hard to say they are rent controls?

They are rent controls. They do indeed set the max price, at the market rate, or the last increase for two years. They don't control the market rate though. That's set by supply and demand. In this case demand is fueled by shortage of supply.

beauf

The next tactic will probably to try and stop LL leaving the market. Which will probably increase the rate at which they leave. Increase the shortage even more.