LL in RPZ, rent 40% below market, how much can I charge?

whiteshorts

Accidental landlord from years ago.
Rented property for 2 years, tenant moved out, new tenant moved in, been there nearly 4 years, same rent for over 7 years (long story).
PRTB registered 1st tenant but never changed name when new tenant moved in.
Now need to raise the rent so what can I do now?
Do I have to give tenant notice, if so how much?
Can I charge market rent now instead of the discounted rent that is being currently charged?
Current rent is €1,000 a month, market rent is €1,400.
Bit lost trying to find anything on the RTB website.

Moonbeam

1st of all register your tenant with the PRTB . If the rent has not been put up in a few years then put it up.
I don't see an issue except the PRTB one .

Ms Doubtfire1

ehm..is the property in a rent pressure zone?

whiteshorts

If the rent has not been put up in a few years then put it up.

Does the the 4% limit kick in as it's....

is the property in a rent pressure zone?

Yes

Have I any choice or way out as rent not increased for 6 years?

massy086

whiteshorts wrote: »

Does the the 4% limit kick in as it's....



Yes

Have I any choice or way out as rent not increased for 6 years?

No your stuck with the 4%

Nutser

You'll be able to raise it by more than 4% as it hadn't been raised in so long. There is a formula to figure it out on the RTB website.

The_Conductor

Nutser wrote: »

You'll be able to raise it by more than 4% as it hadn't been raised in so long. There is a formula to figure it out on the RTB website.

The formula is:

R x (1 + 0.04 x t/m)
*please note that you should do your calculations working from right to left

R = The amount of rent last set under a tenancy for the dwelling (the current rent amount)
t = The number of months between the date the current rent came in to effect and the date the new rent amount will come in to effect.
m = you must enter 24 OR 12

In your case this is:

Current rent * (1+0.04 84/24)

If the current rent is set at 1000 Euro- the maximum reviewed rate is:

1,143.33

There is an actual rent increase calculator on the RTB's website which you can plug your figures into here:

https://www.rtb.ie/rent-pressure-zones/rpz-calculator

fash

Give serious consideration to doing up the apartment- enough to constitute "substantial refurbishment".
E.g. Kitchen, bathroom, floors, heating- perhaps electrics.

You get to increase rent for a better apartment and escape the rent cap trap.

2 years of €400 can pay for a lot.

athtrasna

fash wrote: »

Give serious consideration to doing up the apartment- enough to constitute "substantial refurbishment".
E.g. Kitchen, bathroom, floors, heating- perhaps electrics.

You get to increase rent for a better apartment and escape the rent cap trap.

2 years of €400 can pay for a lot.

Kitchen, bathroom and/or floors don't meet the definition of substantial renovations to permit rent increases above the 4% scale

The_Conductor

athtrasna wrote: »

Kitchen, bathroom and/or floors don't meet the definition of substantial renovations to permit rent increases above the 4% scale

The alterations/renovations would probably have to be such that planning permission was required and be structural in nature- before they would be considered as such under the new regulation- alternatively, if the property is significantly below market value- simply keeping it vacant for 2 years is probably a better course of action.

murphaph

What "significant" means needs to be tested in court before anyone can say for sure. The law is (perhaps deliberately) vague.

Personally I don't believe that pp being required would indicate anything. Imagine a house on a road with no off street parking. You need pp to open a gate onto the road to provide an off street parking space. Would that be enough to remove the cap? In my mind no, but who knows until it's tested.

A complete gutting inside and a replaster with new wiring and plumbing and all new finishes and furniture would need no pp but to me would be more significant than the driveway example, but again, not been tested in court so maybe​ my interpretation is way off.

The_Conductor

Very valid point Philip- and true no doubt, it suits the RTB to keep it as vague as possible.

Selik

I'm about to spend the guts of 20k renovating my apartment. The works include making kitchen open plan, removing faux fireplace, new kitchen, new remodelled bathroom, new flooring, lighting, wardrobe and redeoration. New furnishings to go in afterwards and will taking pictures of everything.

This is the a major renovation for a 1 bed apartment and I will be charging market rent afterwards.

Samuel T. Cogley

Let us know how you get on.

Selik

I'll be sure to!

Pkiernan

The RTB calculator is a very good tool, and shows how much you can legally raise the rent.
I was surprised to see that in the event of a change of tenants there is scope to get the rent closer to market than originally thought.
I'd recommend the OP use it.

Paulw

Pkiernan wrote: »

I was surprised to see that in the event of a change of tenants there is scope to get the rent closer to market than originally thought.

Have you a link to that?

Pkiernan

Paulw wrote: »

Have you a link to that?

https://www.rtb.ie/rent-pressure-zones/rpz-calculator

My dad has a property rented to 3 nurses in Dublin at approx half market value for about 7 years now. Happy to keep them there, but good to know that it isn't just a simple 4% above the last year's rent for when they decide to leave.

The_Conductor

Pkiernan wrote: »

https://www.rtb.ie/rent-pressure-zones/rpz-calculator

My dad has a property rented to 3 nurses in Dublin at approx half market value for about 7 years now. Happy to keep them there, but good to know that it isn't just a simple 4% above the last year's rent for when they decide to leave.

Pkiernan-

Lets say your Dad let the property to 3 nurses on the 1st Jan 2010- just over 7 years ago, and gives the correct notice of a rent review with a new rent level to take effect on the 1st July 2017- the maximum their current rent of 1000 could increase to is 1,150.

This is nowhere near market value for the property- sure, its not a flat 4%- you're on a 24 month cycle for the first review- 12 month reviews @ 4% per annum thereafter- so you could increase it to 1,150 on the 1st of July of this year (pulled this date at random to give you a nice round figure)- and 4% per annum thereafter (with the appropriate notice obviously).

So- if you haven't increased the rent since the tenancy commenced over 7 years ago- you could not increase it 15% in total- in one foul swoop.

Its all to do with when the last review took place.

Yes- its not 4%- however, its still massively below market rates.

Pkiernan

From the RTB site itself, for a NEW tenancy, using the E1000 figure as an example.
Previous speculation would have set the new rent at E1040. Actual allowable is E1370

[font=museo-sans-n9, museo-sans, sans-serif]SUMMARY OF RESULTS:[/font]
Tenancy Type: New

Date previous rent set: 01/06/2008

Date new rent to take effect: 01/09/2017

Previous rent amount: €1000

Maximum rent permitted: €1370.00

* Please note the amount above is the maximum increase permitted; Landlords can apply a lesser amount.

Calculation: R x (1 + 0.04 x t/m)

€1000 x ( 1 + 0.04 * 111/12) = €1370.00

Pkiernan

[font=Arial, sans-serif]SUMMARY OF RESULTS:[/font]

Tenancy Type: New
Date previous rent set: 01/06/2008
Date new rent to take effect: 01/09/2017
Previous rent amount: €1000
Maximum rent permitted: €1370.00
* Please note the amount above is the maximum increase permitted; Landlords can apply a lesser amount.
Calculation: R x (1 + 0.04 x t/m)
€1000 x ( 1 + 0.04 * 111/12) = €1370.00

The_Conductor

Its all to do with the number of months since the commencement of the tenancy and/or the last review. You have 24 months more than I used.

Also- you get to use a 12 month interval- as its a new tenancy- if it was a continuation of the pre-existing tenancy (i.e. a rent review for the current tenants)- for the first review its divided by 24, not 12- it is however divided by 12 for each review thereafter.........

There are two factors here- 1) its a new tenancy rather than a review of the current tenancy and 2) you've a 9 year interval............

Claw Hammer

Selik wrote: »

I'm about to spend the guts of 20k renovating my apartment. The works include making kitchen open plan, removing faux fireplace, new kitchen, new remodelled bathroom, new flooring, lighting, wardrobe and redeoration. New furnishings to go in afterwards and will taking pictures of everything.

This is the a major renovation for a 1 bed apartment and I will be charging market rent afterwards.

Ordinary renovations and repairs do not break the rain. There must be some enhancement to the rental value of the property. The amount spent is not necessarily an indication of enhancement, particularly if it is work that would have had to be done anyway.

beauf

The post you quote predates the last round of changes to this.

Though I would argue a new kitchen is on a par with a boiler, radiators, windows or doors. In that its beyond a normal refurbishment. Of course it depends how you define any of this.

ted1

massy086 wrote: »

whiteshorts wrote: »

Does the the 4% limit kick in as it's....



Yes

Have I any choice or way out as rent not increased for 6 years?

No your stuck with the 4%

No , if there no rent increase in 7 years he can go up 14.5% there is a guide here.

https://onestopshop.rtb.ie/calculator/rpz

mrslancaster

The_Conductor wrote: »

The formula is:

R x (1 + 0.04 x t/m)
*please note that you should do your calculations working from right to left

R = The amount of rent last set under a tenancy for the dwelling (the current rent amount)
t = The number of months between the date the current rent came in to effect and the date the new rent amount will come in to effect.
m = you must enter 24 OR 12

In your case this is:

Current rent * (1+0.04 84/24)

If the current rent is set at 1000 Euro- the maximum reviewed rate is:

1,143.33

There is an actual rent increase calculator on the RTB's website which you can plug your figures into here:

https://www.rtb.ie/rent-pressure-zones/rpz-calculator

I would appreciate it if someone could explain how the RTB calculator works if it is a few years since the last rent increase in a RPZ.

If an RPZ rent increase is 4% after 24 months for rents set before Dec16, and then 4% after the next 12 months, does the RTB calculator take account of that.

Example:
LL had good tenants and did not increase rent since Jun 15.
LL sends notice of rent increase due on 1 Oct 18 to give tenants 90 days notice.

RPZ allowable increase is 4% per year except for the 2 years for rents set before Dec16. In this example it is 40 months since the last increase to the new rent. So that would be: 24 months @ 4% and 12 months @ 4% and 4 months pro-rata @ 4%. That comes to 0.093% in total.

From what I can see on the RTB calculator, it does the calculation based on either 24 or 12.

If the entire 40 months is calculated together it shows 40 divided by 24 which comes to an allowable increase of 0.67%.

Should the calculations in this example be done in 2 stages - ie input the first 24 months and then input the next 16 months?

From the RTB website:
Landlord has not reviewed the rent in previous 24 months:
For tenancies that are already in existence a review is only permitted 24 months after the tenancy came in to existence or 24 months from the date the rent was last set. In this instance m = 24.
For this initial rent review after the 24 month period as specified above a maximum rent increase of 4% will apply. (This amounts to 2% per annum applied pro-rata for the period since the rent was last increased).

Following on from this initial review after 24 months, a landlord is now entitled to review the rent every 12 months.

New tenancies from 24th December 2016:
Landlords of all new tenancies within a Rent Pressure Zone commencing on or after 24th December 2016 are entitled to review the rent annually. In this instance m = 12.

If rent reviews take place annually the permissible rent increase in each case will be 4%. If, for example, a landlord opts to review the rent after 18 months (instead of one year) the allowable increase will be 6% (4 % per annum pro-rata for 1 ½ years).

Thanks for any opinions on this

The_Conductor

Its not based on and 'either' or 'principle'.

There are two calculations for the rent- the first one- as you have correctly alluded to- is where the tenancy commenced prior to Christmas eve 2016.
In that instance-

1. the first (and only the first) review is after a minimum of 24 months

The formula is: R x (1 + 0.04 x t/m)

The first review under the Act- is on the basis of a 24 month review period- subsequent reviews are under the 12 month rule (tenancies which commenced after 24th Dec 2016- are automatically on the 12 month cycle from the get-go.

If- for example, you let a property on the 1st of January 2000 (a cool 224 months ago) at 500 Euro per annum (were we even using Euro back then?) and the property were in a Rent Pressure Zone- the maximum you could increase the rent to- under the formula is:

€500 x ( 1 + 0.04 * 224/24) = €686.67

That is an increase from 500 to 686.67- after over 18 years........... (there are people out there who it suited for one reason or another not to increase the rent- they're caught in this trap).

You are thereafter free to review the rent every 12 months @ 4% per annum (with 90 days notice of the rent increase- so effectively- you can increase the rent every 15 months).

If you review the rent today- you can apply the increase on the 23rd September- and review again 12 months hence @ 4% increase, subject to detailing the prevailing market conditions for the area.

The pro-rata increase- is calculated on a monthly basis @ 4% per 12 months- after the initial review- which is calculated on the basis of a 24 month review cycle............ I.e. its all on the 24 month cycle- for review 1- and then you move onto the 12 month cycle- you don't get a chunk @ 4%*24 months and another chunk @ 4%*12 months- its all the one.........

Yes- its unfair- however, landlords are the ultimate scapegoat- and the politicians are making hay by whipping them as hard as possible.

TomOnBoard

Can you sell?

mrslancaster

Thanks for the information conductor.

Could you link to where does it say everything is based on a 24 month calculation? I can only find where it says the review can' t be before 24 months.

The_Conductor

mrslancaster wrote: »

Thanks for the information conductor.

Could you link to where does it say everything is based on a 24 month calculation? I can only find where it says the review can' t be before 24 months.

This link gives you the details here:

https://www.rtb.ie/rent-pressure-zones

The explanation it gives is:

R x (1 + 0.04 x t/m)
*please note that you should do your calculations working from right to left

R = The amount of rent last set under a tenancy for the dwelling (the current rent amount)
t = The number of months between the date the current rent came in to effect and the date the new rent amount will come in to effect.
m = you must enter 24 OR 12

I.e. it explicitly states 'm' in the equation is either 12 or 24 (depending on when the tenancy commenced and the date of the last review).

I.e. if you are a landlord and are trying to maximise your rental income- you need to get onto a 12 month cycle asap- as your prospective rent increase is 4% per annum then- versus 4% over a 24 month period- if you last reviewed before 24th December 2016.

Actually how the hell did they come up with that inequity- and keep a straight face?

ted1

mrslancaster wrote: »

The_Conductor wrote: »

The formula is:

R x (1 + 0.04 x t/m)
*please note that you should do your calculations working from right to left

R = The amount of rent last set under a tenancy for the dwelling (the current rent amount)
t = The number of months between the date the current rent came in to effect and the date the new rent amount will come in to effect.
m = you must enter 24 OR 12

In your case this is:

Current rent * (1+0.04 84/24)

If the current rent is set at 1000 Euro- the maximum reviewed rate is:

1,143.33

There is an actual rent increase calculator on the RTB's website which you can plug your figures into here:

https://www.rtb.ie/rent-pressure-zones/rpz-calculator

I would appreciate it if someone could explain how the RTB calculator works if it is a few years since the last rent increase in a RPZ.

If an RPZ rent increase is 4% after 24 months for rents set before Dec16, and then 4% after the next 12 months, does the RTB calculator take account of that.

Example:
LL had good tenants and did not increase rent since Jun 15.
LL sends notice of rent increase due on 1 Oct 18 to give tenants 90 days notice.

RPZ allowable increase is 4% per year except for the 2 years for rents set before Dec16. In this example it is 40 months since the last increase to the new rent. So that would be: 24 months @ 4% and 12 months @ 4% and 4 months pro-rata @ 4%. That comes to 0.093% in total.

From what I can see on the RTB calculator, it does the calculation based on either 24 or 12.

If the entire 40 months is calculated together it shows 40 divided by 24 which comes to an allowable increase of 0.67%.

Should the calculations in this example be done in 2 stages - ie input the first 24 months and then input the next 16 months?

From the RTB website:
Landlord has not reviewed the rent in previous 24 months:
For tenancies that are already in existence a review is only permitted 24 months after the tenancy came in to existence or 24 months from the date the rent was last set. In this instance m = 24.
For this initial rent review after the 24 month period as specified above a maximum rent increase of 4% will apply. (This amounts to 2% per annum applied pro-rata for the period since the rent was last increased).

Following on from this initial review after 24 months, a landlord is now entitled to review the rent every 12 months.

New tenancies from 24th December 2016:
Landlords of all new tenancies within a Rent Pressure Zone commencing on or after 24th December 2016 are entitled to review the rent annually. In this instance m = 12.

If rent reviews take place annually the permissible rent increase in each case will be 4%. If, for example, a landlord opts to review the rent after 18 months (instead of one year) the allowable increase will be 6% (4 % per annum pro-rata for 1 ½ years).

Thanks for any opinions on this

It’s not 0.0973%. It’s 9.73% you’re mixing up % with decimals.