Renting a newly purchased house

Hi,

I am considering buying a house that I would not intend to move into myself for at least a year. My idea is to buy now and rent the house for the next and then move in. I know I will have to register with PRTB etc. The house was previously rented but that tenant has left and it is now empty. I am wondering would the rent by subject to the 4% increase under the RPZ rules, or can I set a new rent amount as I would be a new owner of the house.

Also is there anything else that I should take into consideration for this idea?

amcalester

If the property is in a RPZ then you will be bound by the 4% increase.

The biggest thing to consider is what you will do if the tenant decides to overhold in 12 months.

Thanks Amcalester

Is it the PRTB who would monitor the price I would set the rent at? I understand that the previous tenant had a very favourable rent, well below market value, as they had been in the property for several years and had a good relationship with the person that is selling the house.

I would have any tenant sign a 12 month lease. Is it possible that they can just not leave the property once the lease expires?

amcalester

downtheroad wrote: »

Thanks Amcalester

Is it the PRTB who would monitor the price I would set the rent at? I understand that the previous tenant had a very favourable rent, well below market value, as they had been in the property for several years and had a good relationship with the person that is selling the house.

I would have any tenant sign a 12 month lease. Is it possible that they can just not leave the property once the lease expires?

I don't think anyone is actually monitoring the previous rental price, but regardless you are bound by it.

Rent arrears/Rent arrears and overholding was the top dispute at the RTB in 2016 so take from that what you want.

Graham

downtheroad wrote: »

I would have any tenant sign a 12 month lease. Is it possible that they can just not leave the property once the lease expires?

Tenants acquire part 4 rights after 6 months which your lease cannot override. Once this happens you can only end the tenancy under very specific circumstances.

It's worth spending some time familiarising yourself with all of the information on the RTB website from both a landlord and tenant perspective. To do otherwise could see you make a very costly mistake.

It's also worth pointing out that although rent arrears/overholding may be the main RTB disputes, it is a relatively small number of tenancies that results in either.

Del2005

Once they are resident for 6 months they get Part 4 tenancy which allows them 6 years. You can reject their Part 4 but if they don't move it'll be a year at least before you get your property back and there is no realistic way to get the back rent or any damage from the tenants.

Mike3549

But if landlord wants to move into property himself, its one of allowed reasons to terminate the lease early. Also dont forget that taxman will take half of the rent money received

Giblet

If the property has been off the rental market for 2 years (ie: without a sitting tenant), you can ignore the 4% RPZ restriction.

pilly

downtheroad wrote: »

Thanks Amcalester

Is it the PRTB who would monitor the price I would set the rent at? I understand that the previous tenant had a very favourable rent, well below market value, as they had been in the property for several years and had a good relationship with the person that is selling the house.

I would have any tenant sign a 12 month lease. Is it possible that they can just not leave the property once the lease expires?

It's very possible so it's a risk to consider. Just be very very careful in picking the tenants and make sure they know that's it's only for a year and no more. Or you could consider doing 2 six month leases but not to the same person.

If I'm honest I wouldn't do it for the return you'd get it's not worth the hassle or worry imo.

For what reason would you not be moving in yourself, may I ask?

Claw Hammer

Tenants are like rats. They will kiss your ass to get into the property and then act the maggot. They will call in the RTB, the Local Authority, the Revenue, solicitors an d sundry others and abuse you and the property. When they have you turned into a nervous wreck they will then try and buy the property on the cheap. Have nothing to do with them.

pilly

pilly wrote: »

It's very possible so it's a risk to consider. Just be very very careful in picking the tenants and make sure they know that's it's only for a year and no more. Or you could consider doing 2 six month leases but not to the same person.

If I'm honest I wouldn't do it for the return you'd get it's not worth the hassle or worry imo.

For what reason would you not be moving in yourself, may I ask?

I'm not currently living in Ireland but plan to move home in a year, or possibly longer, and have an opportunity now to buy a house that I like and don't want to miss the opportunity to buy it. Rather than leaving it idle for the next year I thought it would make more sense to rent it to help pay the mortgage for the time that I am not living in it.

pilly

downtheroad wrote: »

I'm not currently living in Ireland but plan to move home in a year, or possibly longer, and have an opportunity now to buy a house that I like and don't want to miss the opportunity to buy it. Rather than leaving it idle for the next year I thought it would make more sense to rent it to help pay the mortgage for the time that I am not living in it.

Hmm, that makes it even more difficult to be honest in that you'd have to manage it from abroad. You could employ an agent to do it but just take account of all the risks everyone has mentioned.

Thanks everyone so far for the advice. I should have said that 1 year is the minimum time I would be renting it for, there is a possibility that I could stay living abroad for 2 or 3 years, and the way property in the area is rising I don't think I could afford to buy a similar house 3 years from now, that's why I am looking at this option.

Of course property could fall in value in the area in that time also, but I just don't see it happening. This house is in Dublin not far from the city centre.

I did see on the Citizens Information website that The landlord can end a Part 4 tenancy if the landlord needs the property for their own use or for an immediate family member (this only applies to private landlords) - this sounds like it applies to my example. I would definitely use an agent to manage the letting.

pilly

downtheroad wrote: »

Thanks everyone so far for the advice. I should have said that 1 year is the minimum time I would be renting it for, there is a possibility that I could stay living abroad for 2 or 3 years, and the way property in the area is rising I don't think I could afford to buy a similar house 3 years from now, that's why I am looking at this option.

Of course property could fall in value in the area in that time also, but I just don't see it happening. This house is in Dublin not far from the city centre.

I did see on the Citizens Information website that The landlord can end a Part 4 tenancy if the landlord needs the property for their own use or for an immediate family member (this only applies to private landlords) - this sounds like it applies to my example. I would definitely use an agent to manage the letting.

Yes that's correct but if a tenant decides they don't want to move either way that's when you have your problem.

You also may have trouble getting a mortgage when you're not living here.

dancingqueen

You can use a fixed term lease. When that ends, you can either renew it with another, or move in yourself. I am on a 12 month fixed term lease now, and have been in the past also. It isn't ideal as a tenant but as a landlord it means you have greater control over the length of time your tenants can stay in the property.

https://www.rtb.ie/dispute-resolution/dispute-resolution/terminating-a-fixed-term-tenancy

Caliden

Don't rent out the entire house.

Rent rooms so it's a licencee agreement.

pilly

dancingqueen wrote:

You can use a fixed term lease. When that ends, you can either renew it with another, or move in yourself. I am on a 12 month fixed term lease now, and have been in the past also. It isn't ideal as a tenant but as a landlord it means you have greater control over the length of time your tenants can stay in the property.

Part 4 trumps a fixed term lease, doesn't matter.

Thanks everybody, giving me plenty to think about here on what is the best way to proceed.

Another option I had considered was renting the property directly to the likes of google, as I would expect them to be law abiding when it comes to me requiring the property back for myself. Does anybody have any experience with this, how to go about it?

Cina

Just to chirp in, as someone who just purchased an apartment and has aspirations/delusions of maybe living abroad for a while at some point, or maybe somewhere else - it sounds like renting the apartment out to tenants would be a potential nightmare?

pilly

Cina wrote: »

Just to chirp in, as someone who just purchased an apartment and has aspirations/delusions of maybe living abroad for a while at some point, or maybe somewhere else - it sounds like renting the apartment out to tenants would be a potential nightmare?

Potential I suppose is the operative word. You could get great tenants, you could get nightmares. It's a lottery.

My advice would be only do it if you can afford not to have the rent coming in.

The_Conductor

Only let out a property- if you can afford not to get paid for a protracted period of time.
Fixed term leases- mean absolutely nothing- a Part IV provision under the Residential Tenancies Act- trumps any fixed term provisions- once the tenant has been in situ for 6 months.
You can end a tenancy if you intend to move in yourself- however, it can still take you 2 years + to get the property back (during which time you are expected to maintain the property- regardless of whether the tenant is paying rent, or not). The Residents Tenancy Board- guarantee you a hearing within 12 weeks- however, this is simply the first step in the process of getting your property back- and the tenant is entitled to appeal every single step- all the way- allowing for deadlines- this can take up to 28 months (if the tenant simply keeps with deadlines).

As for a mortgage to buy such a property- as a non-resident- you will find it incredibly difficult to get a mortgage (unless you get a mortgage before you leave the country of course)- or you have the means to pay for the unit in cash.

Finally- agents for managing tenancies- are falling by the wayside- several of the larger property managment agencies are not taking on new clients- as even with higher fees- its simply implausible to operate in the current regulatory regime. Some national agencies toyed with upping management fees to 20%- but simply decided to get out of the business altogether- as it became impossible to chase moving targets- in the current environment.

In short- and this is a personal opinion- you'd be nuts to even consider what you're proposing. The cards are stacked firmly against you- in the eyes of the law- you have few if any rights, regardless of whether, or not, the tenant decides to pay their rent- and if they don't- it can still take over 2 years to get your property back.

The only way this makes sense is if you can afford to carry a tenant and live somewhere else- even after you come back- the presumption that you can simply ask for your property back to live in- and the tenant will meekly leave- letting you live happily ever after- is naive in the extreme.

pansophelia

I've been a tenant for years and have just bought my first property.
Hundreds of thousands of people in this country rent, and the majority are decent and will not withhold rent or overhold. I work in an industry of young professionals, the vast majority of whom rent, without any difficulty on either side.
Looking briefly at the rtb website, yes there are about 50 cases this year of overholding that have been adjudicated on - but this represents a very small percentage of the number renting. I agree that a major problem is that any adjudication does not appear to be legally binding.
Overall, this will likely work out just fine without any difficulties, as it does for most tenant-landlord relationships. You do need to go in with your eyes open, and consider how all aspects of managing the property will be dealt with even if you have an agent eg. any breakages, damage to property, frequency of inspection etc. I would strongly recommend meeting any potential tenants and not relying on an agent to choose them. Obviously check up on references. Give plenty of notice of when you are planning to move back - ideally giving a moving out date of a month or two prior to when you actually need to take possession to allow for any problems. I have several friends and family members renting out property - overall no difficulties, the commonest complaint I hear is that the place isn't looked after like it's their own, but that's because it's not their own.
Again, as mentioned, you need to not be completely relying on the rent money to pay the mortgage - just in case.
I've just come through a long and difficult purchasing process - if you've found a house that's right for you now, you're probably right to jump at the chance.

Claw Hammer

dancingqueen wrote: »

You can use a fixed term lease. When that ends, you can either renew it with another, or move in yourself. I am on a 12 month fixed term lease now, and have been in the past also. It isn't ideal as a tenant but as a landlord it means you have greater control over the length of time your tenants can stay in the property.

https://www.rtb.ie/dispute-resolution/dispute-resolution/terminating-a-fixed-term-tenancy

When the fixed term lease ends the landlord has to issue a notice of termination. The notice of termination can't be incorporated in the lease. A fixed term lease is no better for the landlord than no lease from the point of view of recovering possession.

sbsquarepants

Graham wrote: »

Tenants acquire part 4 rights after 6 months which your lease cannot override. Once this happens you can only end the tenancy under very specific circumstances.

.

What happens after 6 years is up?
After renting for 6 years and 1 month are you legally back to the same position as if you'd been renting for just the 1 month?

Also to read some of the posts on this forum you'd swear that renting out a house / apartment is akin to throwing your life savings in the fire.

Surely things cannot be that bad??

Roaving bands of tenants, scouring the country and hijacking the buildings of unsuspecting landlords for years on end with the full support of the government!

Claw Hammer

sbsquarepants wrote: »

What happens after 6 years is up?
After renting for 6 years and 1 month are you legally back to the same position as if you'd been renting for just the 1 month?

Also to read some of the posts on this forum you'd swear that renting out a house / apartment is akin to throwing your life savings in the fire.

Surely things cannot be that bad??

Roaving bands of tenants, scouring the country and hijacking the buildings of unsuspecting landlords for years on end with full support of the government!

A further part 4 tenancy will have started. The notice periods for termination also increase each year up to 8 years.

sbsquarepants

Claw Hammer wrote: »

A further part 4 tenancy will have started. The notice periods for termination also increase each year p to 6 years.

So, once a tenant is in place for more than 6 months, they can legally stay for a further 5 and a half years if they choose?
Except under a few specific circumstances that is.

Claw Hammer

sbsquarepants wrote: »

So, once a tenant is in place for more than 6 months, they can legally stay for a further 5 and a half years if they choose?
Except under a few specific circumstances that is.

Yes, unless the Section 34 grounds apply.

sbsquarepants

Jesus, that is scary!

Would one of those grounds be simply that the owner wanted to sell?

Claw Hammer

sbsquarepants wrote: »

Jesus, that is scary!

Would one of those grounds be simply that the owner wanted to sell?

Yes.

pilly

sbsquarepants wrote: »

What happens after 6 years is up?
After renting for 6 years and 1 month are you legally back to the same position as if you'd been renting for just the 1 month?

Also to read some of the posts on this forum you'd swear that renting out a house / apartment is akin to throwing your life savings in the fire.

Surely things cannot be that bad??

Roaving bands of tenants, scouring the country and hijacking the buildings of unsuspecting landlords for years on end with the full support of the government!

You sum it up fairly well, in fact housing associations including councils are advising people to overhold believe it or not.

sbsquarepants

Claw Hammer wrote: »

Yes.

That's not as bad I suppose.
Still fairly outrageous though, that legally a tenant can just refuse to move out after their lease expires!

pilly wrote: »

You sum it up fairly well, in fact housing associations including councils are advising people to overhold believe it or not.

Sure why wouldn't they if the law supports it.
Surely it's the law itself that's crazy, not the groups advocating it be utilised.

Claw Hammer

sbsquarepants wrote: »

That's not as bad I suppose.
Still fairly outrageous though, that legally a tenant can just refuse to move out after their lease expires!



Sure why wouldn't they if the law supports it.
Surely it's the law itself that's crazy, not the groups advocating it be utilised.

What the law actually says is that when the lease expires the tenancy continues on a periodic basis. There is no question of the tenant having to refuse to move out. As a matter for the landlord to issue a proper "Notice Of termination" in order to end the tenancy. The tenancy can only be terminated on limited grounds during the currency of the Part 4 period. The only thing a written lease does is sets out the terms of the agreement clearly. This can be important if there is an attempt to terminate the tenancy on the grounds of breach of the Lease terms

pilly

sbsquarepants wrote: »

That's not as bad I suppose.
Still fairly outrageous though, that legally a tenant can just refuse to move out after their lease expires!



Sure why wouldn't they if the law supports it.
Surely it's the law itself that's crazy, not the groups advocating it be utilised.

The law doesn't support it, it is illegal to overhold, it just takes at least 24 months to enforce this law.

sbsquarepants

pilly wrote: »

The law doesn't support it, it is illegal to overhold, it just takes at least 24 months to enforce this law.

How can it simultaneously be illegal to overhold, but a tenant be entitled to stay for 5 1/2 years more once they've been there for 6 months?

Or are you talking about tenants staying even after a (part 4) legitimate request to leave?

pilly

sbsquarepants wrote: »

How can it simultaneously be illegal to overhold, but a tenant be entitled to stay for 5 1/2 years more once they've been there for 6 months?

Or are you talking about tenants staying even after a (part 4) legitimate request to leave?

I'm talking about tenants refusing to leave after a valid termination notice is issued. For example, LL wants to move back in.

sbsquarepants

And councils are encouraging people to do this? To keep them off their lists I suppose?

That's outrageous!

pilly

sbsquarepants wrote: »

And councils are encouraging people to do this? To keep them off their lists I suppose?

That's outrageous!

Exactly, they don't want families arriving at their doorstep homeless so actually tell them straight out not to move.

Lantus

Buy house and pay someone to come round once a week to check clean and maintain it. Move into your lovely home on your return.

It will be cheaper and easier than becoming a landlord for 12 months paying tax on all rental income, agency fees, furniture, all other costs, managing property and coming home to a more disheveled property that needs cleaning and redecorating.

The_Conductor

pansophelia wrote: »

I've been a tenant for years and have just bought my first property.
Hundreds of thousands of people in this country rent, and the majority are decent and will not withhold rent or overhold. I work in an industry of young professionals, the vast majority of whom rent, without any difficulty on either side.

Absolutely true. We only tend to hear/see the worse case scenarios- both here- but also in the media. So you have nightmare tenants and nightmare landlords. Both exist- and both are very much in a minority. However- the manner in which the extreme cases are reported- and seized upon by advocacy groups etc- do ruin things for the vast majority of people letting property- or renting property. So- when a prominent case arises in the media- there are all manner of shrill calls that further onerous regulation is needed- and then when you get further outliers- this is then a self-enforcing prophecy.

pansophelia wrote: »

Looking briefly at the rtb website, yes there are about 50 cases this year of overholding that have been adjudicated on - but this represents a very small percentage of the number renting. I agree that a major problem is that any adjudication does not appear to be legally binding.

I'd emphasise- there are 50 cases (I haven't counted them)- which have been adjudicated on. However, both from this forum- and from various family members- I can single handedly point at another 50-60 cases of overholding- that landlords quite simply haven't bothered pursuing to the RTB. I.e. the number of cases of overholding (or damage) which are brought to the RTB by landlord- is the tip of the iceberg- rather than a fair or true reflection of the actual extent of the issue. There are numerous reasons for this- not leastly- if a landlord goes down this road- he/she will have massive legal fees- and a tenant can simply keep appealing the various findings- to the extent that even with the RTB guidelines of 12 weeks for cases involving overholding or non payment of rent- it can even now take 26-28 months for a tenant to exhaust all their objections and appeals- all the while they may not be paying rent.

The tenant has absolutely nothing to loose lodging an RTB case- the landlord does. The fact that a significant majority of adverse rulings are now made against tenants- which has happened for the first time over the last 2 years- is simply sympthomatic of a broken system- even where the landlord has nothing to gain- aside from a moral victory. A finding against a tenant- is unenforceable- the most a landlord can hope for is their property back- eventually- and if it hasn't been destroyed- all the better- but 10-20k of damage- is far from unusual.

Tenants bring cases- including spurious cases- at the suggestion of Threshold etc- landlords don't tend to- because they have nothing to gain.........

pansophelia wrote: »

Overall, this will likely work out just fine without any difficulties, as it does for most tenant-landlord relationships. You do need to go in with your eyes open, and consider how all aspects of managing the property will be dealt with even if you have an agent eg. any breakages, damage to property, frequency of inspection etc.

You can't say this. It might work out fine- it might not. And as for getting an agent- this is proving more problematic than ever- google the larger estate agents- and see how they increased their fees to 20% in 2016 and then decided to get out of the sector altogether in 2017. The regulatory environment is onerous- and the portrayal of landlords is toxic- unless a landlord is very hands on- or willing to pay a very high agents fee- they are likely to find themselves in trouble of one kind or another.

As for inspections etc- its a catch 22- a tenant is entitled to peaceful enjoyment of their home- however, if a landlord inspects too frequently- and it has been suggested that 6 monthly inspections are too frequent- they are being unfair to the tenant. Meanwhile- a 'high risk tenant' who was inspected 2 monthly at the start of a tenancy- and who destroyed the property- was deemed to have been insufficiently inspected- and the damage was the fault of the landlord for not paying sufficient attention to their property (and a finding was made against the landlord at the RTB- which is perverse............)

It all sounds fair and reasonable- until you start to look at the actual facts on the ground.

pansophelia wrote: »

I would strongly recommend meeting any potential tenants and not relying on an agent to choose them. Obviously check up on references.

Yes- to a certain extent- however, you have to know what you're doing- and you're risking a non-successful applicant accusing you of bias under the equality act. Its a minefield. Its a lot more clearcut for certain types of tenant- but you can't differentiate- or you're in trouble.

pansophelia wrote: »

Give plenty of notice of when you are planning to move back - ideally giving a moving out date of a month or two prior to when you actually need to take possession to allow for any problems.

Actual notice- depends on how long the tenant has been resident- you can put whatever you want in a lease- but its meaningless- the terms defined in the Act are law. A month or two- could very well be illegal.

pansophelia wrote: »

I have several friends and family members renting out property - overall no difficulties, the commonest complaint I hear is that the place isn't looked after like it's their own, but that's because it's not their own.

I've several friends and family members- some of whom have had wonderful tenants down the years- others of whom have had disasters (including serious structural damage to an apartment complex). On the basis of some of my family and friends- buying and renting out a property is a no-brainer- but on the basis of others- it was the worst possible thing they ever did.

pansophelia wrote: »

Again, as mentioned, you need to not be completely relying on the rent money to pay the mortgage - just in case.
I've just come through a long and difficult purchasing process - if you've found a house that's right for you now, you're probably right to jump at the chance.

Once again- the OP is not buying a property to live in themselves, right here, right now. He/she is planning on going abroad- by their own suggestion for several years. They are in an entirely different situation to you. Prices are already falling in some areas (in Dublin- look at recent sales of secondhand properties in the Adamstown/Clonburris area)- whereas other areas which were once considered dodgy- have become gentrified- and are rapidly becoming highly desireable.

Prices can go up as well as down (and for new properties- are rising)- secondhand prices- are stagnating (for numerous reasons- including increased supply, higher deposit requirements, some people disposing of property into what they view as peak market etc etc)

All-in-all- this should be viewed in the context of an investment by a person who does not intend to have a hands-on approach to managing their property. As such- its on dodgy territory- before you even begin to look into residential property as an investment opportunity.

mdebets

Lantus wrote: »

Buy house and pay someone to come round once a week to check clean and maintain it. Move into your lovely home on your return.

It will be cheaper and easier than becoming a landlord for 12 months paying tax on all rental income, agency fees, furniture, all other costs, managing property and coming home to a more disheveled property that needs cleaning and redecorating.

Or it could be a lot more expensive, if the person you pay to clean and maintain it decides, to rent out your house and these tenants destroy it. Or he decides to use it as party central for him aself and his friends while you are away and destroys it.
After all, he knows exactly that you are out of the country and won't be able to check the house.

Dag12

I have a query which is quite similar. I intend to buy a property that I am not intending to live in for some time as working ina different county. I was wondering if I can rent a room to a licensee rather than a tenant and retain main bedroom for myself whenever I am in town. Are there any anticipated problems with such arrangement?

endacl

If you kept the box room for yourself, had your post sent there, and stayed over one or two nights a month, you wouldn’t have tenants. You’d have licencees, and overholding wouldn’t be an issue.

The_Conductor

https://www.boards.ie/discussion/comment/117789613#Comment_117789613

You could very well have your licensees report you to Revenue as the property would not be considered to be your normal place of residence. Whether or not they were licensees would be very disputable, you would be liable to be found at the RTB that they are in fact tenants and you are infringing on their right to peaceful enjoyment of their home. Staying there once or twice a month- does not make it your home.

endacl

https://www.boards.ie/discussion/comment/117790200#Comment_117790200

Three times so.