calculating rent increase

ted1

just trying to figure out the correct maximum rent increase in a RPZ.

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


o R = The amount of rent last set under a tenancy for the dwelling (the current rent amount)

o 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.

o m = the number of months since the last rent review (you must enter 24 OR 12)

o For tenancies that are already in existence a review is only permitted 24 months after the tenancy came into existence or 24 months from the date the rent was last set.
o Once this first rent review has taken place, all reviews thereafter are permitted every 12 months. For subsequent rent reviews the permissible rent increase will be 4% per annum applied pro rata for the period since the rent was last increased.



the tenant has been there for 5 years without an increase or review.

63= 5 years + 3 months notice

so is it R*(1+0.04x63/24) or R*(1+0.04x63/12)
10.5% increase or an 21% increase

how is that a 12 months review allows double?

Cheshire Cat

Try the RTB calculator

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

The Moldy Gowl

You can't take the last 5 years into account.
Only this year.

If rent is 2000 then 4% of that is 70 so total rent is 2070

ted1

The Moldy Gowl wrote: »

You can't take the last 5 years into account.
Only this year.

If rent is 2000 then 4% of that is 70 so total rent is 2070

According to the rtb link above I can, as does the formula I copied


Also 4% if 2000 is 80.

ted1

Cheshire Cat wrote: »

Try the RTB calculator

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

Thanks , it’ says that the max is 10.5%.

burkey2k0

Just be careful in the case of further part 4 tenancies. The start of a further part 4 tenancy counts as the start of a new tenancy so you can't increase the rent until the 2nd year of the further part 4 tenancy.

Example being:

- Tenancy commences in 2012 and continues on to become a part 4 tenancy.
- There is a rent review in 2015 (Based on rules at the time rent reviews are allowable every 2 years).
- Part 4 tenancy ends in 2016 and rolls into a further part 4 tenancy.
- Rent review is not allowable in 2017 as it's only 12 months into the 'new' tenancy. Rent Review can occur in 2018 earliest.

It's a minor but very important detail. However there is zero enforcement of any of the rent pressure zone rules so take it or leave it .

ted1

Trying to find three similar properties is troublesome. There’s nothing similar for rent in daft. I pity people looking for a new place.

burkey2k0

ted1 wrote: »

Trying to find three similar properties is troublesome. There’s nothing similar for rent in daft. I pity people looking for a new place.

Have you searched Daft for places that are 'let agreed' too? It's in advanced search options.

But If you are there 5 years, more than likely you're not due a rent review until next year by the way.

ted1

burkey2k0 wrote: »

ted1 wrote: »

Trying to find three similar properties is troublesome. There’s nothing similar for rent in daft. I pity people looking for a new place.

Have you searched Daft for places that are 'let agreed' too? It's in advanced search options.

But If you are there 5 years, more than likely you're not due a rent review until next year by the way.

Rent pressure zones allow increases every year.

The Moldy Gowl

ted1 wrote: »

According to the rtb link above I can, as does the formula I copied


Also 4% if 2000 is 80.

Aye. 70 is 4% of 1750 which was our rent.
Ah right. I rang them up and asked what the story was. They said it's only 4% of the current rent and it's not your problem the landlord didn't increase rent on previous years.


My landlord threw a tantrum when I told him and threatened to sell the house if we didnt agree, so at least you are being sold

burkey2k0

ted1 wrote: »

Rent pressure zones allow increases every year.

No, that is only for tenancies that commenced after 24th December 2016.

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

Also an important difference is that this results in a maximum 2% per annum increase pro rata, rather than a 4%.

burkey2k0

The Moldy Gowl wrote: »

You can't take the last 5 years into account.
Only this year.

That is factually incorrect unfortunately.

Example:
If the rent hasn't been increased in 10 years, then based on the current rules it's subject to a max pro-rata increase of 2% per year, resulting in an allowable 20% increase.

ted1

burkey2k0 wrote: »

Just be careful in the case of further part 4 tenancies. The start of a further part 4 tenancy counts as the start of a new tenancy so you can't increase the rent until the 2nd year of the further part 4 tenancy.

Example being:

- Tenancy commences in 2012 and continues on to become a part 4 tenancy.
- There is a rent review in 2015 (Based on rules at the time rent reviews are allowable every 2 years).
- Part 4 tenancy ends in 2016 and rolls into a further part 4 tenancy.
- Rent review is not allowable in 2017 as it's only 12 months into the 'new' tenancy. Rent Review can occur in 2018 earliest.

It's a minor but very important detail. However there is zero enforcement of any of the rent pressure zone rules so take it or leave it .

if you didn't set the rent at the 2nd part 4, then you can use the original date.

Michael D Not Higgins

ted1 wrote: »

just trying to figure out the correct maximum rent increase in a RPZ.

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


o R = The amount of rent last set under a tenancy for the dwelling (the current rent amount)

o 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.

o m = the number of months since the last rent review (you must enter 24 OR 12)

o For tenancies that are already in existence a review is only permitted 24 months after the tenancy came into existence or 24 months from the date the rent was last set.
o Once this first rent review has taken place, all reviews thereafter are permitted every 12 months. For subsequent rent reviews the permissible rent increase will be 4% per annum applied pro rata for the period since the rent was last increased.



the tenant has been there for 5 years without an increase or review.

63= 5 years + 3 months notice

so is it R*(1+0.04x63/24) or R*(1+0.04x63/12)
10.5% increase or an 21% increase

how is that a 12 months review allows double?

This review will be m=24, so 10.5% increase. Next review will be m=12, so 4% increase next year.

Fian

the m=24 for a first review in an existing tenancy was inserted as an amendment after it was pointed out in the debate that the first increase would be 8% for every tenant since it would occur at least 24 months after previous raise and the RPZ legislation permits 4% per annum.

I am not sure what was objectionable about 4% per annum for those two years as well as subsequent. But anyway the amendment was made.

Unfortunately for you people who had not raised rent in a number of years were badly affacted by the amendment and you are confined to "5 per annum for each of the 5 years since the last rent increase.

Note that if you don't raise the rent, terminate the tenancy and get new tenants you would be legally entitled to raise the rent by 4% per annum for each year since the last increase.

Since your rent is going to be determined by the previous rent unless amendments are made, and since it seems inevitable that RPZs are here to stay notwithstanding the 3 year review, it might be in your interest to let the current rent subsist until you can start a new tenancy. That may depend on how long the subsisting Part IV tenancy has to run. Or you may in fact already be in a new part IV tenancy with the entitlement to raise it by 4% per annum.

also the number of months you insert is the number between the last date rent was fixed and the date the new rent comes into effect - which will be 90 days after the review.

10pennymixup

Where's Sheldon Cooper when you need him?

Fian

10pennymixup wrote: »

Where's Sheldon Cooper when you need him?

the algorithm looks much more complicated than it actually is.

OP if you set out the date the tenancy started, the date of the last rent increase i will tell you the RPZ rent cap that applies. At 5 years you most likely went into the second Part IV tenancy since the RPZ legislation came in, which means you should be able to increase using a figure of 12 for m.

The PRT calculator will probably give you the incorrect figure in the circumstances.

either way because of compounding your capped rent will be reduced unless you review every 12 months going forward.

ted1

I wouldn’t have the heart to increase it more than 10%. It’d be nice to do it, but just cruel.
They are good tenants, and would struggle to find alternative accommodation.

Fian

ted1 wrote: »

I wouldn’t have the heart to increase it more than 10%. It’d be nice to do it, but just cruel.
They are good tenants, and would struggle to find alternative accommodation.

That's generous of you.

Just remember that if you don't increase by the full amount permitted you will, as a consequence, be on a reduced cap for your next tenants as well as these ones. Your increases will be capped at 4% per annum from whatever you increase your rent to.

If you eventually sell the rent cap will impact on your sale price if you are selling to a BTL investor, not so much if you can sell to an owner occupier (depends on the nature of the property to some extent - a 1 bed apartment is BTL only, a 3 bed semi d could sell to an owner occupier.)

murphaph

ted1 wrote: »

I wouldn’t have the heart to increase it more than 10%. It’d be nice to do it, but just cruel.
They are good tenants, and would struggle to find alternative accommodation.

Sorry but you're mad ted (always wanted to say that) if you don't apply the maximum increases allowed. The state has been grossly unfair towards "nice" landlords. They may prevent you from even getting vacant possession before selling next. Who knows.

gar32

I am one of the nice LL and the same size apartment as I own in the same block is going for €400 a month more.

The government rules have brought in an increased tax of 4% a year every year until the enough homes are provided. Which is unlike as the price of building a house any where near these zones is at least €200K upward.

I will have to increase now which is not what I wanted but if I have to sell. No investor would buy if the rent was lower then the market value.

We need a new system to help please. Many 500+ apartments blocks need building down at Dublin port. Move the port up or down away from Dublin.

ted1

gar32 wrote: »

I am one of the nice LL and the same size apartment as I own in the same block is going for €400 a month more.

The government rules have brought in an increased tax of 4% a year every year until the enough homes are provided. Which is unlike as the price of building a house any where near these zones is at least €200K upward.

I will have to increase now which is not what I wanted but if I have to sell. No investor would buy if the rent was lower then the market value.

We need a new system to help please. Many 500+ apartments blocks need building down at Dublin port. Move the port up or down away from Dublin.

Agreed but they need to wait a few years. As they would only put in 7 storey buildings. They should cluster skyscrapers in the docks

Bass Reeves

ted1 wrote: »

I wouldn’t have the heart to increase it more than 10%. It’d be nice to do it, but just cruel.
They are good tenants, and would struggle to find alternative accommodation.

Ted there is noting to say you cannot set the new rent and give them a rent rebate. But because of the new rules if you intent to increase the rent you need to increase it by what is allowable. You may rebate them back to what you consider is a fair rent.

amcalester

Bass Reeves wrote: »

Ted there is noting to say you cannot set the new rent and give them a rent rebate. But because of the new rules if you intent to increase the rent you need to increase it by what is allowable. You may rebate them back to what you consider is a fair rent.

What are the tax implications of this?

Do you pay tax on the gross or net rent?

Bass Reeves

amcalester wrote: »

What are the tax implications of this?

Do you pay tax on the gross or net rent?

I imagine that you can give them either a cheque or a electronic transfer with the rebate. Or you could rebate them it as a lump sum once or twice a year. There is nothing stopping you legally doing it. You only pay tax on rent less expenses, a rebate is an allowable cost.

Fian

Bass Reeves wrote: »

I imagine that you can give them either a cheque or a electronic transfer with the rebate. Or you could rebate them it as a lump sum once or twice a year. There is nothing stopping you legally doing it. You only pay tax on rent less expenses, a rebate is an allowable cost.

I would be very skeptical that you are entitled to write off the "rebate" against tax. But i am not an accountant.

Bass Reeves

Fian wrote: »

Bass Reeves wrote: »

I imagine that you can give them either a cheque or a electronic transfer with the rebate. Or you could rebate them it as a lump sum once or twice a year. There is nothing stopping you legally doing it. You only pay tax on rent less expenses, a rebate is an allowable cost.

I would be very skeptical that you are entitled to write off the "rebate" against tax. But i am not an accountant.

Rebating was quite common on the commercial side during the boom. Rent agreement with a codcil added agreeing rebate. This allowed commercial landlords to hike rate at next review on rest of tenants. Then the lesee got screwed next review after

Michael D Not Higgins

Bass Reeves wrote: »

I imagine that you can give them either a cheque or a electronic transfer with the rebate. Or you could rebate them it as a lump sum once or twice a year. There is nothing stopping you legally doing it. You only pay tax on rent less expenses, a rebate is an allowable cost.

That's very shaky grounds. I'd want a tax accountant to give me advice before I'd follow the above.

Bass Reeves

Michael D Not Higgins wrote: »

That's very shaky grounds. I'd want a tax accountant to give me advice before I'd follow the above.

First off rebating is common is every business area. In another thread here a landlord indicated that he rebated if he was not called to fix anything in a go en period. And yes I would ask an accountant opinion but some here are shooting down the suggestion completely without an accountant opinion either. If I remember I ask my own the next time I am in to them

Michael D Not Higgins

Bass Reeves wrote: »

First off rebating is common is every business area. In another thread here a landlord indicated that he rebated if he was not called to fix anything in a go en period. And yes I would ask an accountant opinion but some here are shooting down the suggestion completely without an accountant opinion either. If I remember I ask my own the next time I am in to them

I have no problem with any landlord rebating part of the rent to their tenant. I do have a problem with people suggesting it's an allowable expense deductible for tax purposes with no backing to that claim. In particular it is not listed as an allowable expense under the Taxes and Consolidation Act, however I'm not an accountant and you can't take my word but neither can we trust anyone else on boards to give such advice.

Bass Reeves

Rebating is considered a reduction in income and is treated as such

ted1

I manage to make a loss each year with this property so im not worried about tax. Letter sent for 10% increase