Landlords charging management fees to tenants to get around rent cap

Jobs OXO

Hi I heard from a few people that some LLs are doing this ? Is it allowed?

Gumbo

It's a fee associated with living in a managed estate. I'd say there's nothing wrong with getting the tenants to pay it but the LL has to make sure he/she doesn't offset it as an expense as the tenant is paying and not himself.

Samuel T. Cogley

I'd argue no one really knows. Certain parts of it like refuse charges are certainly fine, but upkeep of the property is on very dodgy ground IMHO.

Victor

Note that this can't be used to get around the maximum 4% rent increase.

It is more tax efficient for the landlord to pay it.

Jobs OXO

Victor wrote: »

Note that this can't be used to get around the maximum 4% rent increase.

It is more tax efficient for the landlord to pay it.

Well it seems that the landlord has now decided to pass on the charge for refuse in addition to the rent.

pwurple

I stripped everything I had included in one flat payment out when tenants changed over recently.

Bins & parking (which are part of property management), internet etc.

Had to be done. There's a rent cap of 4%, but there's no such cap on bins or parking.

Jobs OXO

pwurple wrote: »

I stripped everything I had included in one flat payment out when tenants changed over recently.

Bins & parking (which are part of property management), internet etc.

Had to be done. There's a rent cap of 4%, but there's no such cap on bins or parking.

That's another way I heard that LLs are doing it. Rent goes up 4% but parking space now charged separately

Samuel T. Cogley

Again AFAIK not tested yet. In principle there is no issue charging parking separately, there would be more of an issue if it was a sitting tenant, but a new tenant is simply not getting a benefit the previous one did.

Graham

Personally I would be wary.

It's not hard to conclude that stripping €1,000 of amenities previously included in the rent whilst leaving the rent at its previous level equates to a rent increase. As others have already stated, it's untested territory so the answer to this question is as yet unknown.

Jobs OXO

Graham wrote: »

Personally I would be wary.

It's not hard to conclude that stripping €1,000 of amenities previously included in the rent whilst leaving the rent at its previous level equates to a rent increase. As others have already stated, it's untested territory so the answer to this question is as yet unknown.

What about this situation. Current rent with space ( though space not referenced in lease - just verbally said could be used) is 1000

New rent 1040 and rent for space 160 total = 1200

Graham

Same applies, all anybody can do is guess how the RTB would view such an approach.

Personally I would expect the RTB to view it for what it is, an attempt to circumvent the RPZ rules. BUT I won't pretend to be able to second guess the RTB with any more accuracy than a magic 8 ball.

GGTrek

Victor wrote: »

Note that this can't be used to get around the maximum 4% rent increase.

It is more tax efficient for the landlord to pay it.

It makes no difference at all, completely neutral. Service charges are fully tax deductible. If landlord pays them he will then discount them as expenses in the tax return. If tenant pays them, then they will not appear at all.
Going back to the main issue that the OP and many renters do not understand is that you get no free lunches! Service charges and any variable cost that before was included in rent (parking, tv, internet, rubbish you name it) are not bound, rent is bound: govvie should have thought about this before the nonsense hard caps of the RTA 2016. The sense of entitlement of some people is just unbelievable! I never understood why in Ireland variable costs and taxes for local services used by the tenant are not passed over like it is done in many other countries (I can just name a few: Germany, UK, Brazil, Italy, in many civil law countries even small repairs are paid by tenants). The landlord could change the rent if these costs went up when rent was negotiable, now it is not possible anymore since rent is non-negotiable. Market will adapt to new stupid regulations and free lunches will disappear fast. The Irish rent customs were stuck to pre-2004 law which was strongly pro-landlord: 28 days notices with no reason were the norm, right of re-entry was possible, even the small one month deposit was due to the pro-landlord regulations that limited the risk. Now the government intrusion in the market has been so heavvy pro-tenant (like in many civil law countries) that the market is adapting around. Short of becoming a socialist country, these changes will be inevitable unless the Irish govvie backtracks (I doubt it).

davindub

Jobs OXO wrote: »

Hi I heard from a few people that some LLs are doing this ? Is it allowed?

If it's a new charge / increase its included in the 4%.

Samuel T. Cogley

On parking spaces I see it like this: There is a bear licence to use the space usually, that's all that's passed on to the tenant. That licence if not referenced in the lease is at least revocable between tenancies*, therefore a charge for it is fine. If it is referenced in the lease then I'd say it can't be stripped out, but that's poor drafting because what would have happened if the underlying licence was revoked for some reason, such as flooding etc.

*There are principles that would prevent it being revoked during a tenancy - estoppel springs to mind but could be wrong there.

Victor

pwurple wrote: »

Had to be done. There's a rent cap of 4%, but there's no such cap on bins or parking.

Has the price of parking and bins gone up by more than 4%?

Jobs OXO

Victor wrote: »

Has the price of parking and bins gone up by more than 4%?

Mgt fees defo increase by more than 4%

Lux23

A landlord tried to get my friends to pay management fees in 2006 so the legislation was relatively new at the time. They took a case and won but it took ten months and the landlord had asked them to move out when the lease was up anyway saying she wanted the place back. They got their deposit for the new property they rented as compensation. If I remember correctly they did offer to pay extra money for bins but the landlord was adamant that they had to pay the whole €3,000.

GGTrek

Victor wrote: »

pwurple wrote: »

Had to be done. There's a rent cap of 4%, but there's no such cap on bins or parking.

Has the price of parking and bins gone up by more than 4%?

For one property I have got garbage collection has gone up more than 20% last year.

emeldc

Just thinking out loud here. If a LL charges say €700 rent, €200 bins and €150 parking bringing the total to €1050, could that not be considered anti HAP tenant as the council will only pay a portion of the rent and not the other expenses. Is there any thing in that legislation that might make it illegal.

Wabbit Ears

I rent a property I own in Poland where this type of situation is just the way its done.

The property has an underground carpark space.

So the 'rent' is broken up into three sections in the contract.

The base rent
The flat rate Utilities that service the apartment (group hot water, management fees, Bins) and whats covered is listed
The rental of the carpark space

All utilities the tenant is responsible for are also listed in the contract, these would be any non-flat rate fees like electricity, gas and TV/Internet.

Its done this way as there are different tax requirements between the different areas. I can see this absolutly becoming the norm here as it makes things very transparent as to what youre paying for.

Lux23

How could you charge €200 a month for bins? Parking maybe, but not bins.

emeldc

Lux23 wrote: »

How could you charge €200 a month for bins? Parking maybe, but not bins.

Sorry, was thinking more of a yearly fee but you get the idea. Even if the monthly fees of bins, parking, management etc came to a couple of hundred euro that might be automatically outside a HAP tenants budget, thus excluding them.

Diemos

pwurple wrote: »

I stripped everything I had included in one flat payment out when tenants changed over recently.

Bins & parking (which are part of property management), internet etc.

Had to be done. There's a rent cap of 4%, but there's no such cap on bins or parking.

Sometimes, I'm surprised that LL's have greedy, money grabbing reputations...

Graham

Diemos wrote: »

Sometimes, I'm surprised that LL's have greedy, money grabbing reputations...

You are of course assuming that many landlords are doing this rather than just ranting about it.

emeldc

Diemos wrote: »

Sometimes, I'm surprised that LL's have greedy, money grabbing reputations...

Why would you be surprised when a LL who lets for the first time can charge as he sees fit whereas his next door neighbour might be charging hundreds of Euro less because of the 4% rent cap.

Diemos

Graham wrote: »

You are of course assuming that many landlords are doing this rather than just ranting about it.

I was referencing one landlord who said they had done this.

That it, "had to be done".

The crappy actions of a few can easily colour an entire group. Journalists are out for blood, what they see as big fat rich landlords feasting on the poor, blood. It won't be long until this practice, like the 2 month deposit, is being used to vilify landlords in the media.

In this case, they'd have a point. I can't see the reasons for this being anything other than a cash grab, a way to get around the 4% cap.

py

Diemos wrote: »

I was referencing one landlord who said they had done this.

That it, "had to be done".

The crappy actions of a few can easily colour an entire group. Journalists are out for blood, what they see as big fat rich landlords feasting on the poor, blood. It won't be long until this practice, like the 2 month deposit, is being used to vilify landlords in the media.

In this case, they'd have a point. I can't see the reasons for this being anything other than a cash grab, a way to get around the 4% cap.

You are assuming a lot of things. Perhaps, like some landlords, he/she had not put up the rent in many years and are subsequently stuck with low rent return because they had a good landlord/tenant dynamic prior to the new letting. Loyalty in business is nothing new but the new legislation is hurting landlords where they are forced to apply loyalty rates to new tenants where there is no business relationship.

Samuel T. Cogley

Diemos wrote: »

I was referencing one landlord who said they had done this.

That it, "had to be done".

The crappy actions of a few can easily colour an entire group. Journalists are out for blood, what they see as big fat rich landlords feasting on the poor, blood. It won't be long until this practice, like the 2 month deposit, is being used to vilify landlords in the media.

In this case, they'd have a point. I can't see the reasons for this being anything other than a cash grab, a way to get around the 4% cap.

Journalists don't see LL's that way simply as the vast majority are not. They do see people as easily manipulated sheep though, which on the whole, they are.

As for a cash grab, if the fees have increased more than 4% what are LL's meant to do? The government didn't, when they changed refuse charges, exempt anyone. The sooner this unconstitutional interference with property rights is dropped the better for everyone including tenants. Many tenants could see their rents halved overnight if the government was serious about sorting this; simply make rent tax deductible, and stop the double taxation of the same money.

Instead we have this stupid narrative that LL's must be greedy and the valiant government are there to protect people being forwarded by the media. Bollocks.

awec

Samuel T. Cogley wrote: »

Journalists don't see LL's that way simply as the vast majority are not. They do see people as easily manipulated sheep though, which on the whole, they are.

As for a cash grab, if the fees have increased more than 4% what are LL's meant to do? The government didn't, when they changed refuse charges, exempt anyone. The sooner this unconstitutional interference with property rights is dropped the better for everyone including tenants. Many tenants could see their rents halved overnight if the government was serious about sorting this; simply make rent tax deductible, and stop the double taxation of the same money.

Instead we have this stupid narrative that LL's must be greedy and the valiant government are there to protect people being forwarded by the media. Bollocks.

Yea, right. This is absolutely never going to happen. No landlord is going to pass on tax breaks to tenants so we can knock that one on the head right now I think. A little fanciful.

Samuel T. Cogley

awec wrote: »

Yea, right. This is absolutely never going to happen. No landlord is going to pass on tax breaks to tenants so we can knock that one on the head right now I think. A little fanciful.

The LL has nothing to do with it and this isn't the first time this has been explained (to you specifically IIRC) in this forum. The rental outgoing is simply deducible for the tenant, like it used to be (to what point I'm not sure). It was knocked on the head, let's unknock it. Given it was in place before it's hardly fanciful and would be a huge help in finding LL's who were not tax and RTB compliant.

awec

Samuel T. Cogley wrote: »

The LL has nothing to do with it and this isn't the first time this has been explained (to you specifically IIRC) in this forum. The rental outgoing is simply deducible for the tenant, like it used to be (to what point I'm not sure). It was knocked on the head, let's unknock it. Given it was in place before it's hardly fanciful and would be a huge help in finding LL's who were not tax and RTB compliant.

My bad, I completely misread your post.

You mean the rent relief scheme? Did it go as far as to half rent though? I think I claimed that before and I got back roughly 1 months worth of rent at the end.

Samuel T. Cogley

awec wrote: »

My bad, I completely misread your post.

You mean the rent relief scheme? Did it go as far as to half rent though? I think I claimed that before and I got back roughly 1 months worth of rent at the end.

Exactly it, as I recall it wasn't particularly generous either but it is the proper way to control rents. One month would be an 8.3% reduction though so even that would go further than the current policy and would apply equally to everyone. One could pay for this by removing the allowance (slowly) of interest on mortgages to start discouraging every idiot with mortgage approval becoming a LL - however given we don't have enough units as it is I can see that being bloody unpopular.

awec

That would be helpful for tenants for sure, but assuming you mean to bring it in to replace the 4% cap the risk would probably be landlords exploiting the fact that tenants get tax back to hike rents further.

It's a vicious circle.

Samuel T. Cogley

awec wrote: »

That would be helpful for tenants for sure, but assuming you mean to bring it in to replace the 4% cap the risk would probably be landlords exploiting the fact that tenants get tax back to hike rents further.

It's a vicious circle.

I'm all for a cap during a given tenancy. I'm actually all for the termination rules being what they are. I think 5% though per year with extra allowances made when something comes in like refuse charges is the way to go. For example for 2018 they might allow 7%. 2019 back to 5%.

Anyway sorry I'm meandering now

Fian

awec wrote: »

That would be helpful for tenants for sure, but assuming you mean to bring it in to replace the 4% cap the risk would probably be landlords exploiting the fact that tenants get tax back to hike rents further.

It's a vicious circle.

Except in a RPZ - but yes if rent were tax deductible the consequence, outside RPZs, would be significant increase in rent. Would exacerbate difficulties for the unemployed or people on lower incomes (who would benefit less from the tax deductions). Supply and demand - we have an unsdersupply and this woudl significantly boost demand. market prices would rise.

I think this is an idea which would backfire.

awec

Samuel T. Cogley wrote: »

I'm all for a cap during a given tenancy. I'm actually all for the termination rules being what they are. I think 5% though per year with extra allowances made when something comes in like refuse charges is the way to go. For example for 2018 they might allow 7%. 2019 back to 5%.

Anyway sorry I'm meandering now

The system would work better if there was an exceptions process to allow landlords to apply for a greater than 4% increase between tenancies if they could demonstrate that the current rent is completely out of whack with market rates.

But administering this would probably be too costly.

Samuel T. Cogley

Fian wrote: »

Except in a RPZ - but yes if rent were tax deductible the consequence, outside RPZs, would be significant increase in rent. Would exacerbate difficulties for the unemployed or people on lower incomes (who would benefit less from the tax deductions). Supply and demand - we have an unsdersupply and this woudl significantly boost demand. market prices would rise.

I think this is an idea which would backfire.

The unemployed / lower incomes should be properly assisted and not dumped in the private rental sector to, essentially, fend for themselves. It's nigh on impossible to find something on HAP as it is. Units should be rented by the council at 80% of market value and completely administered by them. Standards, tenants rent deposits everything. This should be in return for a 10-15 year unbreakable under any circumstances lease, including repossession.

Diemos

Samuel T. Cogley wrote: »

Journalists don't see LL's that way simply as the vast majority are not. They do see people as easily manipulated sheep though, which on the whole, they are.

Instead we have this stupid narrative that LL's must be greedy and the valiant government are there to protect people being forwarded by the media. Bollocks.

Well which is it? Do journalist not paint the majority of LL's by the actions of a few or are they pushing a narrative on the sheep?

Samuel T. Cogley wrote: »

As for a cash grab, if the fees have increased more than 4% what are LL's meant to do? The government didn't, when they changed refuse charges, exempt anyone. The sooner this unconstitutional interference with property rights is dropped the better for everyone including tenants. Many tenants could see their rents halved overnight if the government was serious about sorting this; simply make rent tax deductible, and stop the double taxation of the same money.

The fees can increase by 20% and still be covered by a 1% rise in the annual rent. Basic maths.

Diemos

Samuel T. Cogley wrote: »

I'm all for a cap during a given tenancy. I'm actually all for the termination rules being what they are. I think 5% though per year with extra allowances made when something comes in like refuse charges is the way to go. For example for 2018 they might allow 7%. 2019 back to 5%.

Anyway sorry I'm meandering now

Given that Ireland has had an average inflation of 0.5% over the past 5 years, I think 4% is more than fair. It should be open to review if inflation rises sharply.

Fkall

Over the last five years the marginal tax rate on rental income has increase from 42% to 55%

jamesthepeach

I've been hearing about lots of landlords now stripping out all other charges for the rent.
One told me he is charging 1500 per year for the parking disk and it isn't optional. If they take the apartment they agree to pay for the parking disk.

Others are even stripping.out the furniture and going as unfurnished as possible to remove any potential extra costs.

And many of them are doing zero maintenance apart from maybe plumbing, electrical stuff that could cause knock on or safety issues.
Eg no painting, etc while a tenancy is ongoing.

It was all predicted when rent control was first mentioned.

awec

jamesthepeach wrote: »

I've been hearing about lots of landlords now stripping out all other charges for the rent.
One told me he is charging 1500 per year for the parking disk and it isn't optional. If they take the apartment they agree to pay for the parking disk.

Others are even stripping.out the furniture and going as unfurnished as possible to remove any potential extra costs.

And many of them are doing zero maintenance apart from maybe plumbing, electrical stuff that could cause knock on or safety issues.
Eg no painting, etc while a tenancy is ongoing.

It was all predicted when rent control was first mentioned.

Furniture has never had any impact on the level of rent so that's pretty bizarre. Indeed, I am sure many tenants would only love their landlord to get rid of the existing furniture so they can get their own, especially in properties where the landlord has furnished them with all the old and odd ****e of the day.

And I bet none of these landlords ever actually painted with tenants in-situ anyway, so it seems like another bizarre point.

If they are doing zero maintenance then they're incredibly stupid, it's their property at the end of the day, they'll have to pay for it eventually.

Again, you would nearly think that pre-RPZ that landlords were driving rents down and serving their tenants every whim. Complete nonsense, we now have landlords moaning that they won't do things that they never did anyway.

jamesthepeach

awec wrote: »

Furniture has never had any impact on the level of rent so that's pretty bizarre. Indeed, I am sure many tenants would only love their landlord to get rid of the existing furniture so they can get their own, especially in properties where the landlord has furnished them with all the old and odd ****e of the day.

And I bet none of these landlords ever actually painted with tenants in-situ anyway, so it seems like another bizarre point.

If they are doing zero maintenance then they're incredibly stupid, it's their property at the end of the day, they'll have to pay for it eventually.

Again, you would nearly think that pre-RPZ that landlords were driving rents down and serving their tenants every whim. Complete nonsense, we now have landlords moaning that they won't do things that they never did anyway.

Nonsense.
Ask the poster whose tenants put their curtains into the washing machine which broke down if supplying furniture made any difference to their bottom line. Expand that out and you will get it.

Tenants are soon to get their wish if they don't want landlord supplied furniture. It suits everyone now. It's already starting to happen.
Unfortunately legislation prevents you from going properly unfurnished though.

But hey, at least you'll be able to sleep in a bed bit stained by people before you. That's definitely a plus.

awec

jamesthepeach wrote: »

Nonsense.
Ask the poster whose tenants put their curtains into the washing machine which broke down if supplying furniture made any difference to their bottom line. Expand that out and you will get it.

Tenants are soon to get their wish if they don't want landlord supplied furniture. It suits everyone now. It's already starting to happen.
Unfortunately legislation prevents you from going properly unfurnished though.

But hey, at least you'll be able to sleep in a bed bit stained by people before you. That's definitely a plus.

Excellent news, sounds like a win win for everyone then.

Indeed it is strange that if supplying furniture is so awful and expensive for landlords that it has taken until now for them to realise it's not mandatory.

jamesthepeach

awec wrote: »

Excellent news, sounds like a win win for everyone then.

Indeed it is strange that if supplying furniture is so awful and expensive for landlords that it has taken until now for them to realise it's not mandatory.

Agreed.
Like all other costs/potential costs they are examining them a lot more they used to.
Basically they are adapting to legislation.
Widely predicted when rent control turned up, as exactly the same effect is seen everywhere rent control appears

awec

jamesthepeach wrote: »

Agreed.
Like all other costs/potential costs they are examining them a lot more they used to.
Basically they are adapting to legislation.
Widely predicted when rent control turned up, as exactly the same effect is seen everywhere rent control appears

Yep. I have long advocated unfurnished rentals as both easier for tenants and for landlords.

The maintenance thing though, can't help but feel landlords would be hurting themselves in the long run if they skimp on this.

If the whole car parking and other costs to get around the cap becomes a big issue that'll ultimately just be legislated against as well.

In the mean time, the government needs to increase supply so that rents are driven down and we can remove all this temporary legislation again.

Graham

jamesthepeach wrote: »

I've been hearing about lots of landlords now stripping out all other charges for the rent.
One told me he is charging 1500 per year for the parking disk and it isn't optional. If they take the apartment they agree to pay for the parking disk.

Others are even stripping.out the furniture and going as unfurnished as possible to remove any potential extra costs.

And many of them are doing zero maintenance apart from maybe plumbing, electrical stuff that could cause knock on or safety issues.
Eg no painting, etc while a tenancy is ongoing.

It was all predicted when rent control was first mentioned.

For balance, I don't know any landlords doing any of the above.

jamesthepeach

Graham wrote: »

For balance, I don't know any landlords doing any of the above.

I do. Several. And have a read of the threads on boards.
I think there was one even yesterday who was asking about it.

oppenheimer1

jamesthepeach wrote: »

Agreed.
Like all other costs/potential costs they are examining them a lot more they used to.
Basically they are adapting to legislation.
Widely predicted when rent control turned up, as exactly the same effect is seen everywhere rent control appears

Are you seriously suggesting that landlords never examined the cost of their business up to now?!

jamesthepeach

oppenheimer1 wrote: »

Are you seriously suggesting that landlords never examined the cost of their business up to now?!

I am.
Look at all of us who got stuck with below market rates when rpz came in, just as a small example. If everyone was running their business like they should have been running a business you certainly wouldn't have had that.

Graham

jamesthepeach wrote: »

I do. Several. And have a read of the threads on boards.
I think there was one even yesterday who was asking about it.

There'a a fair bit of ranting, theorising and considering on the thread. That doesn't equate to landlords actually doing it.

I suspect the truth lies somewhere between the two but I don't see much in the way of evidence to support your assertion that there's large scale unbundling or massive drop-offs in maintenance.

I guess we'll be able to see quickly enough if complaints to the RTB increase around either areas.