Fair Rent?

Hollister11

My parents might have a house available to rent in about 5 months time.

The house is a 3 bed, 2 bath Howth. What is a fair rent to charge. They don't want to rip people off, but they wan't to get a fair rent as well.

They are thinking €1500 p/m, is this to low, to high or fair enough.

handlemaster

2200 per month

wirelessdude01

Look and see what similar properties in the area are charging. Charge what the market is sustaining.

jimmycrackcorm

Your parents need to charge the maximum the market well bear. It's because the laws are stacked against landlords, the responsibilities are significant.

All it takes is one bad tenant, non payment of rent over a significant period and property damage to lose thousands of Euros.

murphaph

Under no circumstances go one cent below the absolute maximum market rate (let suitable tenants bid against each other to establish the max market rent and take the suitable candidate who offers the most).

myshirt

Minimum, and I mean minimum, 2 grand a month.

I get you in terms of trying to help people out, avoid price gouging, and make it a win win, but more often than not it is the most decent of landlords that get the hardest time. You have to go with the market rate.

The_Conductor

Unfortunately- I have to agree with the others.
Its all well and good wanting to be fair to tenants- but you can be 100% certain- tenants will have no qualms about kicking up a fuss- regardless of how fair you are to them.

You are in a rent control zone (RPZ) so any prospective future rent increase is limited to 4% per annum.

The list of responsibilities you have, as a landlord, has increased- and continues to do so (see the latest Statutory Instrument enacted on the 1st of July of this year). Letting a property is not a simple as finding good tenants, getting them in, and letting them lodge the rent to your bank account forever after more. Being a landlord- is a business, and its a business where you have to be ontop of your legislative obligations, and at the beck and call of the tenant should anything go wrong.

A fair rent, is whatever the going rent is- period.

Having had a look at DAFT- I'd suggest a rent of 2,200-2,400 is fair market rent for the area in question.
You do not want to hit 2,500 a month- as there are additional reporting requirements for a tenant, and they are obliged to pay a 1% stamp duty on the rent directly to Revenue- which is a hassle and annoyance.

davo10

Op, this is the one and only time when your parents have the opportunity to set the rental rate, unhindered by the legislation. Every rate change going forward depends on the level set at the start, the most they will ever be able to put up the rate is +4% of current rate. So tell your parents that it is essential that they set rent at market rate, not below.

And before they do that, ask them are they sure they want the hassle of being Landlords at their time of life. If they can get a good price, might be better to sell in a market which is high at the moment.

Pkiernan

And ask for 2 months deposit too.

The_Conductor

davo10 wrote: »

And before they do that, ask them are they sure they want the hassle of being Landlords at their time of life. If they can get a good price, might be better to sell in a market which is high at the moment.

+1000

A lot of people have a very romantic notion that they'll buy a house, or repurpose the family home as a rental unit to help fund their retirement.
Honestly- its a high pressure business- and no matter how lovely your tenants are- or how you bend over backwards to help them- the moment you treat it as anything other than a cold hard business transaction- where you are the supplier of a service (namely housing) to a purchaser (your tenant) under the rights and obligations as set out in the Residential Tenancies Act- you're screwed.

As the others have also said- the outset is your one and only time to set what the rent associated with the property is to be- thereafter any subsequent tenants are entitled to whatever rent you have associated with the property- without any regard whatsoever for what the market rent in the area is- aka if you get wonderful tenants now- and want to give them a good rate- you are stuck with that rate forever after........

Also- with respect of the deposit- a tenant will take better care of something- if they have something to loose. The whole Irish nonsense of 1 month's rent as a deposit and sure you'll use it as your final month's rent- is complete and utter bollox. The only way to hit this on the head- is to ask for 2-3 months deposit (and if the property is in a high demand area- its far from unheard of for prospective tenants to offer a significantly higher number of months rent multiple as a deposit- some multinational companies are currently offering 6 months deposit + the first year's rent in advance- and you are letting to the company rather than a private individual- which is a major plus.

The big thing is you are trying to protect your asset- and generate a reasonable return.

If your parents property is not mortgaged- you also don't have the major manner of sheltering the rental income from the tax man- and if they are no longer PAYE employees- the rental income could potentially be subject to up to 54% tax.......... The tax implications are staggering- and brutally unfair particularly for landlords who have prudentally paid down any mortgage or debts outstanding associated with the property.

Being a landlord- is not a game- and is not a nice and easy way to supplement/augment your pension/retirement income- its damn hard- and involves a lot of work- and the necessity to remain uptodate with legislation and requirements- and to be at the beck and call of your tenants. It is not for the faint hearted- its running a high pressure business.

Achasanai

The_Conductor wrote: »

+1000
Also- with respect of the deposit- a tenant will take better care of something- if they have something to loose. The whole Irish nonsense of 1 month's rent as a deposit and sure you'll use it as your final month's rent- is complete and utter bollox. The only way to hit this on the head- is to ask for 2-3 months deposit (and if the property is in a high demand area- its far from unheard of for prospective tenants to offer a significantly higher number of months rent multiple as a deposit- some multinational companies are currently offering 6 months deposit + the first year's rent in advance- and you are letting to the company rather than a private individual- which is a major plus.

2/3 months for a deposit would be a serious imposition on any prospective renter. A far better solution would be for the money to be transferred to an independent body. If there's an issue at the end, either party makes a claim. I've spent way too long trying to get a deposit back from unscrupulous/couldn't give a boll*x landlords/estate agents

davo10

Achasanai wrote: »

2/3 months for a deposit would be a serious imposition on any prospective renter. A far better solution would be for the money to be transferred to an independent body. If there's an issue at the end, either party makes a claim. I've spent way too long trying to get a deposit back from unscrupulous/couldn't give a boll*x landlords/estate agents

That escrow facility is not there, the equivalent of 2-3 months rent is now a must, it's a far greater imposition on the LL if the property is wrecked or rent is not paid. For years I've asked for 3 months, some have objected, no problem, move out of the way, the person behind you has their cheque book out.

Tenants have the benefit of the RTB, LL don't have that luxury, even if the LL wins a case, the chances of getting something from a tenant who has fled is zero.

The_Conductor

Achasanai wrote: »

2/3 months for a deposit would be a serious imposition on any prospective renter. A far better solution would be for the money to be transferred to an independent body. If there's an issue at the end, either party makes a claim. I've spent way too long trying to get a deposit back from unscrupulous/couldn't give a boll*x landlords/estate agents

What you're suggesting- doesn't work.
There is a scheme not dissimilar to what you're describing up and running in Scotland (and other areas in the UK). Its being reviewed at the moment- as no-one, landlords or tenants, were happy with it.

A scheme that might work- would be if tenants had to take out specific insurance to cover against any damage over and above normal wear and tear in a rental property. This was mooted several years ago- but tenants representative groups said it was unfair on tenants- as there would be a record kept of tenants who had claims made against them- and this would be apparent when a landlord was presented with the insurance certificate- and it could be used as a discriminatory mechanism for picking the better tenants.

At the end of the day- a landlord is letting a property valued on average (in the Dublin area) at 320k. There has to be some cognisance of this- and there has to be mechanism for landlords to safeguard their property. The whole- one month's rent as a deposit lark- has been abused 5 ways to kingdom come- by tenants who seem to imagine its their last month's rent- when it patently is not.

Of all the cases lodged by tenants with the RTB- less than 7% of cases relate to deposits which were unfairly purloined, and were upheld by the RTB. I.e. 93% of all tenant cases lodged- either were not to do with deposits- or were found to been properly purloined by the landlord.

Annecdotally- landlords don't bother, by and large, lodging cases against tenants who destroy property- as there is no mechanism, save the limited deposit, for chasing the tenants to make good on damage. I've seen more structural damage in rented property- including townhouse on Bridge Street in Galway that was so badly damaged it had to partially demolished and reconstructed- at a cost of 80k. The tenant in that case- walked, and refused to engage with the PRTB (as it then was)- and the landlord had no comeback whatsoever- save, remortgaging to reconstruct the property.

This- is a lot more common than you might imagine.

Landlords have lost all faith in the system- and the processes for dealing with tenants- the pendelum has swung so far in favour of tenants- regardless of what tenant's do- most landlords are simply relieved to get back their properties at the end of the day- regardless of whether the tenant has been overholding- or has physically damaged the unit(s).

If the current system for residential tenancies applied to commercial lettings- you'd have every single landlord in the country- in court on a constant basis- trying to rectify the ills of the sector- instead, the landlord is held up as a bogeyman- and anything wrong with the sector- is blamed on the landlord.........

Achasanai

The_Conductor wrote: »

What you're suggesting- doesn't work.
There is a scheme not dissimilar to what you're describing up and running in Scotland (and other areas in the UK). Its being reviewed at the moment- as no-one, landlords or tenants, were happy with it.

That was only recently introduced, though, no? As in, around 2012/13? Reviewing is a good idea, so maybe some sort of compromise might be in order that is fair to both landlords and tenants.

The_Conductor wrote: »

At the end of the day- a landlord is letting a property valued on average (in the Dublin area) at 320k. There has to be some cognisance of this- and there has to be mechanism for landlords to safeguard their property. The whole- one month's rent as a deposit lark- has been abused 5 ways to kingdom come- by tenants who seem to imagine its their last month's rent- when it patently is not.

Of all the cases lodged by tenants with the RTB- less than 7% of cases relate to deposits which were unfairly purloined, and were upheld by the RTB. I.e. 93% of all tenant cases lodged- either were not to do with deposits- or were found to been properly purloined by the landlord.

Do those figures not break down the other 93%? Genuinely curious.

I'm sure a small minority of tenants abuse the deposite system, in the same way that a small minority of landlords do as well. Anecdotally speaking, I have always tried to pay the last month's rent and in the few instances where I haven't, it's been the landlord telling me to just not pay the last month's rent. And getting back the deposit when I have paid - and keep in mind that I have always, always handed over whatever place in far better nick than when I had arrived - has sometimes been very difficult.

Never mind that 2/3 months deposit for a rented place would be a significant percentage on an actual deposit for a house.

Moomintroll99

In Victoria in Australia where I'm from we have the Residential Tenancies Bond Authority - holds rental deposits until end of tenancies.

https://www.consumer.vic.gov.au/bondauthority

I'm no expert, but I've used it both as landlord & tenant, seemed to work fine? If there's damage, landlord claims against it, if tenant disputes they run a little mini court case thing to resolve it and make a ruling either way.

I've never had to raise or defend a dispute, but on the surface it seems like a better solution than the one currently in Ireland.

Hollister11

Thanks everyone.

The folks may not rent it out. There going to get a valuation once the tenants move out, and if the price is right list it.

Nothing is decided yet. Thanks again.

The_Conductor

Achasanai wrote: »

That was only recently introduced, though, no? As in, around 2012/13? Reviewing is a good idea, so maybe some sort of compromise might be in order that is fair to both landlords and tenants.

March 2011- they also don't have an equivalent to the RTB- they register tenancies with the individual local authorities. That aspect of the equation seems to be working for them- the deposits- and the return of them- is more an issue. At present they have over 60 million on deposit relating to tenancies that have ended- that has not been returned to either tenants or landlords- of which over half is greater than 24 months overdue being reimbursed.

Achasanai wrote: »

I'm sure a small minority of tenants abuse the deposite system, in the same way that a small minority of landlords do as well. Anecdotally speaking, I have always tried to pay the last month's rent and in the few instances where I haven't, it's been the landlord telling me to just not pay the last month's rent. And getting back the deposit when I have paid - and keep in mind that I have always, always handed over whatever place in far better nick than when I had arrived - has sometimes been very difficult.

Annecdotally- because there quite simply aren't official figures- its not a small minority at all- its borderline a majority of tenants. Any given landlord is as likely to encounter a tenant who abuses the deposit system, as not. Threshold actively encourage tenants to either use the deposit for the last month's rent- and also to overhold- and are on record (RTE Primetime Investigates) giving this advice. Its not a small minority- in some parts of the country- tenants who obey their obligations under the Act are in an absolute minority.

Achasanai wrote: »

Never mind that 2/3 months deposit for a rented place would be a significant percentage on an actual deposit for a house.

If its a first time buyer- and they are trying to buy the equivalent property that they are renting- the mean value of the property is 320k- and a 10% deposit requirement would be 32k. In a Dublin context- 3 months average rent is just under 5k. So- no, its not a significant percentage of a deposit- it might be 20% of a 10% deposit- i.e. 2% of the absolute value of the property. In international terms- the norm is 3.5%

davindub

Hollister11 wrote: »

Thanks everyone.

The folks may not rent it out. There going to get a valuation once the tenants move out, and if the price is right list it.

Nothing is decided yet. Thanks again.

If it is currently let, the rpz rules apply, there is a calculator here. https://www.rtb.ie/rent-pressure-zones/rpz-calculator

Grolschevik

Hollister11 wrote:

The folks may not rent it out. There going to get a valuation once the tenants move out, and if the price is right list it.

There are tenants there currently? Then any new rent to be set will be controlled.

The_Conductor

Moomintroll99 wrote: »

In Victoria in Australia where I'm from we have the Residential Tenancies Bond Authority - holds rental deposits until end of tenancies.

https://www.consumer.vic.gov.au/bondauthority

I'm no expert, but I've used it both as landlord & tenant, seemed to work fine? If there's damage, landlord claims against it, if tenant disputes they run a little mini court case thing to resolve it and make a ruling either way.

I've never had to raise or defend a dispute, but on the surface it seems like a better solution than the one currently in Ireland.

There is no trust between Landlords and the Residential Tenancies Board here in Ireland- which is one of the big issues- the RTB- is laughingly referred to Residential Tenant's Board- i.e. its there for tenants- but not for landlords........

At the moment the big problem is the tendency for a significant majority of Irish tenants to view 1 months' rent as a deposit as the norm, properties are let furnished, and in most areas tenants simply tell the landlord that the deposit is their last month's rent- and the landlord can't do anything.

If a landlord is sufficiently annoyed- they might take a case to the RTB- to prove a point more than anything else- because they aren't ever going to be able to enforce it- all the tenant does is plead penury, and presto- their 20k or however much damage they caused- gets written off. It happens so often- that landlords simply don't bother with the RTB- its not there for them- it, and the legislation, supports the tenant, and presumes there is guilt associated with the landlord- pretty much regardless of what the tenant has done.

Have a look in this forum- there is one landlord who has a thread today- where his tenant is running a brothel from the property- and we are having to tell him to follow the letter of the law. The cops (the Gardaí) don't care- you'd imagine they would- but nope, they don't.

Landlords in an Irish context- have everything stacked up against them- and while we do have a Residential Tenancies Board- its viewed as antagonistic towards landlords- wholly regardless of the merits of the cases presented to it.

In an Irish context- the legislative context and the regulatory environment are wholly in the tenant's favour- to quite ridiculous extremes (and don't get me started on the tax situation).

The_Conductor

Grolschevik wrote: »

There are tenants there currently? Then any new rent to be set will be controlled.

Yup- if there are currently tenants there- it doesn't matter one iota that the market rent is 2200-2400 (which it patently is- have a look at DAFT)- its whatever rent the current incumbents are on- + 4% p.a. backdated to their last rent review.

If your parents have given their last tenant a good deal- well, any incoming tenants- get the same deal- you don't get to reset the clock because its a new tenant.

This is 100% why you have to view letting property as a business transaction. A tenant who pays their rent on time, and takes reasonable care of property- is not doing anything other than what they're supposed to be doing- and does not deserve to be given a free ride because of it- esp. in the context that any future incoming tenant is entitled to the same deal.

If you sell the property to an investor- who plans to let it out- they too are restricted to the rent you offered to the last tenant. A property with a tenant- or a restricted rent associated with it- is worth perhaps 10-15% less than a similar property that does not have these strictures associated with it.

wordofwarning

Achasanai wrote: »

2/3 months for a deposit would be a serious imposition on any prospective renter.

All potential renters? Some renters might not be able to put up 2/3 months rent. But a lot are more than able to. In cities like NYC, a good renter with flawless credit rating is expected to put up 2/3 months deposit. With no/bad credit, asking for a 6 month deposit is not unheard of.

If you are so bad with money to the extent you don't have 2/3 months deposit available, there is no way I would put that potential tenant in a 500k house.

Achasanai wrote: »

A far better solution would be for the money to be transferred to an independent body. If there's an issue at the end, either party makes a claim. I've spent way too long trying to get a deposit back from unscrupulous/couldn't give a boll*x landlords/estate agents

So you really think the RTB which can take up to a year to evict a non-paying tenant from a property is going to hand you back a deposit immediately as you move out of house? The answer is no.

wordofwarning

The_Conductor wrote: »

Annecdotally- because there quite simply aren't official figures- its not a small minority at all- its borderline a majority of tenants. Any given landlord is as likely to encounter a tenant who abuses the deposit system, as not.

The RTB has figures that 99.7% of tenancies end in no despite over the deposit. Out of the 0.3% that are referred to the RTB. 40% were some fact unfairly withheld, 20% were entirely fairly withheld and only 40% were entirely unfairly withheld.

Despite most tenancies ending in no issue over the deposit. We constantly reminded landlords are evil and can't be trusted with deposit despite the reality not backing up the allegations...

What I strongly dislike about Irish tenants is that a lot seem to think paying their rent constantly late is the norm. Some see no issue with paying their rent 2 weeks late at times. Yet when they move out, they expect you to be there at noon the day they move with an envelope of cash to return their deposit. They get pissy when they are told it will take a few days to return their deposit ie you need to properly inspect the property, ensure all waste is gone and excess waste/breakages deducted from the deposit etc

When a landlord is not waiting with an envelope of cash on the day of moving out to some is being unfair with the deposit...

Achasanai

The_Conductor wrote: »

March 2011- they also don't have an equivalent to the RTB- they register tenancies with the individual local authorities. That aspect of the equation seems to be working for them- the deposits- and the return of them- is more an issue. At present they have over 60 million on deposit relating to tenancies that have ended- that has not been returned to either tenants or landlords- of which over half is greater than 24 months overdue being reimbursed.

Interesting. It might work if RTB were reformed. Although there seems to be a lot of mistrust and anger directed between the two groups if this group on Boards is to be believed. Have never experienced it in real life (only with estate agents).

The_Conductor wrote: »

Annecdotally- because there quite simply aren't official figures- its not a small minority at all- its borderline a majority of tenants. Any given landlord is as likely to encounter a tenant who abuses the deposit system, as not. Threshold actively encourage tenants to either use the deposit for the last month's rent- and also to overhold- and are on record (RTE Primetime Investigates) giving this advice. Its not a small minority- in some parts of the country- tenants who obey their obligations under the Act are in an absolute minority.

Yeah, I find that hard to believe, regardless of Threshold or whoever is telling tenants. As you say, there are no figures available, but in my experience - and it's a fairly wide circle of both tenants and landlords - I've only come across withholding or last month for deposit in a tiny minority of cases. As I mentioned above, the only time I've done deposit as last month is when I was specifically instructed to by the estate agent.

The_Conductor wrote: »

If its a first time buyer- and they are trying to buy the equivalent property that they are renting- the mean value of the property is 320k- and a 10% deposit requirement would be 32k. In a Dublin context- 3 months average rent is just under 5k. So- no, its not a significant percentage of a deposit- it might be 20% of a 10% deposit- i.e. 2% of the absolute value of the property. In international terms- the norm is 3.5%

20% isn't a significant percentage? I guess we just have different understandings of significant.

wordofwarning wrote: »

All potential renters? Some renters might not be able to put up 2/3 months rent. But a lot are more than able to. In cities like NYC, a good renter with flawless credit rating is expected to put up 2/3 months deposit. With no/bad credit, asking for a 6 month deposit is not unheard of.

If you are so bad with money to the extent you don't have 2/3 months deposit available, there is no way I would put that potential tenant in a 500k house.

It's not a case of being bad with money, but it's a significant (in my understanding of the word) amount of money to no longer be in your account, where you might actually be able to invest it and get something (however small) back at the end.

wordofwarning wrote: »

So you really think the RTB which can take up to a year to evict a non-paying tenant from a property is going to hand you back a deposit immediately as you move out of house? The answer is no.

As I said, perhaps reform of the RTB is the answer. I'm not coming at this from a tenant v landlord, or landlord v tenant angle (as many on this group seem to do), I've had overwhelmingly positive experiences with landlords (estate agents are another matter entirely) and I know for a fact that all of the landlords I've dealt with have had overwhelmingly positive experiences with me (and, in fact, this applies to the large circle I mentioned before).

Maybe I'm wrong, and maybe there are a 'borderline majority' of tenants out there fleecing their landlords, and I have just been blessed not to have experienced it. I would (genuinely) be interested in reading a proper study done on this.

The_Conductor

Achasanai wrote: »

Maybe I'm wrong, and maybe there are a 'borderline majority' of tenants out there fleecing their landlords, and I have just been blessed not to have experienced it. I would (genuinely) be interested in reading a proper study done on this.

Most of us would be very interested in a proper study on this- however, seeing as the RTB are only too happy to remove people's details and entire adjudication rulings from their website- I'm not going to hold my breath on this one.

The only agency who have any of the information necessary to flesh out a study- are too busy covering themselves and burying stuff people might be unhappy with.