Family lease - new rules

J.pilkington

Have a nephew renting an apartment from me, lease is in favourable terms (less than 75% of market value) to help him out. He has been there 3 years and each year signs a contract (to keep everything above board, no agent involved with this process).

I expect he will wait another 18mths until he is finished his degree and I do not plan to increase the rent during this time so I am worried what will happen beyond this period in terms of getting a new tenant in and the 4% increase.

In 18mths time what is stopping me from offering the apartment to a new tenant at the market value? How will anyone know what my nephew was paying to know I have increased beyond the 4%?

Everything is above board tax wise so this should not form part of this discussion.

Thanks

Paulw

The 4% only applies to a rent increase, for a current tenant. It does not apply to a new tenant. What a previous tenant paid for the unit makes no difference.

For a new tenant, you can set the rate at anything you want.

Sarn

Paulw wrote: »

The 4% only applies to a rent increase, for a current tenant. It does not apply to a new tenant. What a previous tenant paid for the unit makes no difference.

For a new tenant, you can set the rate at anything you want.

To the best of my knowledge that is no longer the case. The new change in legislation means that the 4% applies to new tenants as well. How that is supposed to be policed is anyone's guess.

The crazy thing is, technically a discount that you've given to a family member or very good tenant that had earned it gets passed on to a new tenant. The new legislation effectively discourages LLs giving favourable rates.

Just to add that's in a rent pressure zone only. Section 34 of the new legislation seems to support the above.

Paulw

Sarn wrote: »

To the best of my knowledge that is no longer the case. The new change in legislation means that the 4% applies to new tenants as well. How that is supposed to be policed is anyone's guess.

I can't find the actual legislation, and I don't believe the wording is available yet. So, until that happens, no one is totally sure.

beauf

You can refurbish the apartment either. Though how they will police that is either is also an open question.

I expect most of this won't be policed. But these things will be manipulated by tenant and landlord alike.

Pkiernan

J.pilkington wrote: »

Have a nephew renting an apartment from me, lease is in favourable terms (less than 75% of market value) to help him out. He has been there 3 years and each year signs a contract (to keep everything above board, no agent involved with this process).

I expect he will wait another 18mths until he is finished his degree and I do not plan to increase the rent during this time so I am worried what will happen beyond this period in terms of getting a new tenant in and the 4% increase.

In 18mths time what is stopping me from offering the apartment to a new tenant at the market value? How will anyone know what my nephew was paying to know I have increased beyond the 4%?

Everything is above board tax wise so this should not form part of this discussion.

Thanks

What did you report the rent as when registering to the RTB? Or did you have to? I imagine this is how it'll be tracked.

DubCount

This is the final bill.

http://www.oireachtas.ie/documents/bills28/bills/2016/9216/B92d16S.pdf

Section 33 states that a new tenant must be provided with the last rent for the property, when the rent was last reviewed, and the calculation of new rent by reference to the new rent increase restrictions.

As far as I know, there is no allowance for reductions given to friends, family, good tenants or any other reason. If you have previously done a good turn for a tenant, for any reason, you are victimised. The legislation rewards any landlord who maximises rent, for at lease 3 years and that's only if they dont introduce more quirky laws or extend periods an area stays as a "rent pressure zone".

beauf

Basically this bill encourages rent increases. Especially for those below market rent.

The rule of rent can't be increased for a new tenancy is basically unenforceable particularly in a case like this within a family where the relation will be totally on the LLs side and anything can be claimed.

In fact can a family letting like this within a family be considered not a tenancy and thus a rent has not been really set at all?

Ayuntamiento

Paityn Sticky Searcher wrote: »

The rule of rent can't be increased for a new tenancy is basically unenforceable particularly in a case like this within a family where the relation will be totally on the LLs side and anything can be claimed.

In fact can a family letting like this within a family be considered not a tenancy and thus a rent has not been really set at all?

If the LL and his nephew try to claim that he was paying a higher amount of rent throughout the tenancy, I'm sure revenue will want to know why the LL wasn't paying tax that correlates to that amount.

newacc2015

Paityn Sticky Searcher wrote: »

The rule of rent can't be increased for a new tenancy is basically unenforceable particularly in a case like this within a family where the relation will be totally on the LLs side and anything can be claimed.

I dont even think it a case of that it is unenforceable, it will be a case no one really will care. I know dozens of landlords with hundreds of property and none of them have bothered to get BER ratings, as no tenant ever asks for them. In a market with such limited supply, I seriously doubt a potential tenant will turn to a landlord and say "can I have the rent of the last tenant and the last rent review". Most potential tenants will know that there will be a queue of other tenants who wont ask/be bothered asking for that info

One massive problem with rent controls in Sweden is the fact it has created a black market in the form of tax evasion. You claim to rent the property at the rent control rent and then pay the remainder of the rent in cash to your landlord. IMO you will see a lot of that here.

Ayuntamiento

Ayuntamiento wrote: »

If the LL and his nephew try to claim that he was paying a higher amount of rent throughout the tenancy, I'm sure revenue will want to know why the LL wasn't paying tax that correlates to that amount.

Revenue will have no involvement in it.

J.pilkington

Ayuntamiento wrote: »

If the LL and his nephew try to claim that he was paying a higher amount of rent throughout the tenancy, I'm sure revenue will want to know why the LL wasn't paying tax that correlates to that amount.

I specifically requested that the tax issue be left out of this discussion in the hope that the thread would stay on topic and would not descend down the direction that nox and yourself are steering it down.

Can we please stay on topic, I am receiving useful info from other posters and I'm sure other posters will appreciate this info if we keep it on topic

opti76

whats to stop you agreeing a new rent with your nephew say a month before he moves out ...

that then becomes the last rental amount ,which according to legislation has to be given to the new tenant

Ayuntamiento

Paityn Sticky Searcher wrote: »

Revenue will have no involvement in it.

Yes they will. If I were the new tenant in this hypothetical situation I'd be going straight to revenue to report this landlord.

And If the RTB etc are involved in this then the logical way of proving rent paid to date is what the landlord declared as his taxable income from rent.

Thankfully I'll no longer be renting from 2017 onwards as I've just bought a house. Interesting times ahead for landlords and tenants alike...

J.pilkington

opti76 wrote: »

whats to stop you agreeing a new rent with your nephew say a month before he moves out ...

that then becomes the last rental amount ,which according to legislation has to be given to the new tenant

I can only do a 4% increase which would still mean significantly below market value.

Have been doing a little research and if the law penalises me for helping out my nephew then I'll have no choice but to go into loophole mode and one option i see is come renting time I'll advertise at market but have 2 leases, one for the apartment at current lease plus 4% and one for the car parking space to make up the difference and only option for tenants is to rent both together. Apartment is close to UCD so will have no problem finding willing tenants

Ayuntamiento

Ayuntamiento wrote: »

Yes they will. If I were the new tenant in this hypothetical situation I'd be going straight to revenue to report this landlord.
..

Going straight to revenue with what? You won't know what the previous tenant was paying and revenue aren't concerned about rental disputes, once tax has been paid on the money received revenue won't care what's on a rental agreement.

Sarn

newacc2015 wrote: »

I dont even think it a case of that it is unenforceable, it will be a case no one really will care. I know dozens of landlords with hundreds of property and none of them have bothered to get BER ratings, as no tenant ever asks for them. In a market with such limited supply, I seriously doubt a potential tenant will turn to a landlord and say "can I have the rent of the last tenant and the last rent review". Most potential tenants will know that there will be a queue of other tenants who wont ask/be bothered asking for that info

One massive problem with rent controls in Sweden is the fact it has created a black market in the form of tax evasion. You claim to rent the property at the rent control rent and then pay the remainder of the rent in cash to your landlord. IMO you will see a lot of that here.

The potential risk to the LL in this scenario is a tenant getting themselves in the door paying a rent over 4% greater than the previous tenancy in order to get it and then lodging a complaint with the RTB that they are being overcharged. Assuming that they can prove it somehow, there is nothing that the LL can do if it happens and it would be too late to charge for parking etc.

newacc2015

Ayuntamiento wrote: »

Yes they will. If I were the new tenant in this hypothetical situation I'd be going straight to revenue to report this landlord.

Revenue is the collector general. They collect taxes, not enforce tenancy laws. Revenue has limited resources, they are very selective on auditing. They are going to spend their time chasing GPs evading tens of thousands of taxes per year over a landlord whose new tenant has an axe to grind over their tenancy saying hearsay.

Ayuntamiento wrote: »

And If the RTB etc are involved in this then the logical way of proving rent paid to date is what the landlord declared as his taxable income from rent.

IMO it is disturbing if you think Revenue will be handing over landlord tax returns to the Kangaroo court that is the RTB to have them read to decide what rent a tenant should be paying. AFAIK tax returns are personal and secretly held. They wont be handed over to the RTB willynilly to discuss what rent a tenant should be paying

The fact that this law tends cross departmental information etc shows what a farce it is

The_Conductor

J.pilkington wrote: »

In 18mths time what is stopping me from offering the apartment to a new tenant at the market value? How will anyone know what my nephew was paying to know I have increased beyond the 4%?

You will have registered your nephew's tenancy with the RTB- which includes the rental level.

The new tenant will also have their tenancy registered.

If Tenancy 1 is less than a cumulative 4% from the 1st of January 2017 lower than the rent being charged for Tenancy 2- the new tenants could legitimately lodge an RTB claim that they are being overcharged based on the new legislation- and the landlord wouldn't have a leg to stand on. I.e. a tenant could offer whatever the hell they wanted to secure the property- safe in the knowledge they could dispute it at a later date- on the basis of the rental details lodged with the RTB for the immediately preceding tenancy.

If you haven't updated your RTB registration for your nephew- and haven't hung yourself out to dry- you could legitimately get away with it- as you only had to update the tenancy details with the RTB once every 4 years- i.e. you could claim a rent review took place legitimately at some stage while your nephew was resident in the property- bringing it up to market rates- and as you were not obligated under the old legislation to update the tenancy details other than on a 4 yearly basis- you're covered.........

One way or the other- the scenario you are highlighting is something that our legislators simply haven't allowed for. It is deeply unfair that landlord who hasn't increased rent for a pre-existing tenant be held to the artificially low rent level for a new incoming tenant. As you've seen in this forum and on Irish landlords- both Simon Coveney's and Leo Varadker's staff have told anyone who highlights this- in not so polite language- to take a hike.

If it is a worry for you- the Irish Landlords Association are open for business again from next Tuesday (the 3rd of January) and its 150 Euro to take out membership. I suspect they are going to be inundated with people seeking membership.

If you're happy with this- I'm going to close the thread.