New owner - Does Rent Pressure Zone regulations apply

someday2010

Looking at purchasing a house to rent out initially, the house was previously let out at well below to going market rate, I would say by at least 30% although no tenant has been in the property for the last 9 months while it was getting ready for sale. If I buy the property will I be bound by the PRZ regulations on rent even through it is can be clearly demonstrated the previous rent was 30% below going rate. Presumably previous owner has a good tenant for a number of years

Michael D Not Higgins

Yes, the old rate is still applicable plus whatever allowable increase for RPZ since the last increase.

Frilly Knickers

someday2010 wrote: »

Looking at purchasing a house to rent out initially, the house was previously let out at well below to going market rate, I would say by at least 30% although no tenant has been in the property for the last 9 months while it was getting ready for sale. If I buy the property will I be bound by the PRZ regulations on rent even through it is can be clearly demonstrated the previous rent was 30% below going rate. Presumably previous owner has a good tenant for a number of years

How can you find out what it was previously let for? Is this online or has the EA told you?

Could you do rent a room instead?

Mrs OBumble

AirBnB for one year and three months will reset the clock.

Baby01032012

As above. It needs to not be let for 2 years for RPZ not to apply.

4ensic15

It can also be upgraded to get around the rent cap.

Frilly Knickers

4ensic15 wrote: »

It can also be upgraded to get around the rent cap.

The upgrade can't be simply cosmetic and in essence has to include building work and/or structural changes such as an extension.

15 months airbnb would be a cheaper option.

4ensic15

Frilly Knickers wrote: »

The upgrade can't be simply cosmetic and in essence has to include building work and/or structural changes such as an extension.

15 months airbnb would be a cheaper option.

Airbnb might not be suitable in the particular location. Airbnb also requires a high standard. Unlikely a previously let out house is of a standard to suit airbnb.

Squatter

someday2010 wrote: »

Looking at purchasing a house to rent out initially, the house was previously let out at well below to going market rate, I would say by at least 30% although no tenant has been in the property for the last 9 months while it was getting ready for sale. If I buy the property will I be bound by the PRZ regulations on rent even through it is can be clearly demonstrated the previous rent was 30% below going rate. Presumably previous owner has a good tenant for a number of years

What did the 9 months period of "getting ready for sale" involve? Would any significant repairs or renovations have been carried out?

Cuddlesworth

4ensic15 wrote: »

It can also be upgraded to get around the rent cap.

You can also just let rooms out rather then the property itself, making the tenants licensee's.

FishOnABike

Cuddlesworth wrote: »

You can also just let rooms out rather then the property itself, making the tenants licensee's.

You need to be living in the house for the tennants to be licencees.

Fian

Mrs OBumble wrote: »

AirBnB for one year and three months will reset the clock.

This is not correct. A two year gap does not reset the controls.

There is some confusion about this because the legislation provided that properties which had not been rented in the two years prior to the legislation coming in were not rent controlled. A two year gap subsequent to that does nothing.

Unless substantial renovation takes place the RPZ controls continue to operate. 4% increase per annum since last rent increase. this should factor in to what you are willing to pay - the market value of the property is directly impacted by the rent levels.

Knowing what rent can be charged may not be so easy for a new owner to work out.

The seller may not even tell them, if he does how does he know its the truth. How does he know when the last review was, especially in a reciever sale for example when the reciever will most likley have no idea and with tenants long gone how will they find out.

Before someone says the RTB rent register I wouldnt trust that in the slightest.

The whole RPZ situation is a total joke but this aspect of it is the worst of all. All LLs should be allowed charge the rent that the highest bidder will pay but its even more insance that a new owner with a new tenant cannot charge what the market is willing to pay.

robp

Fian wrote: »

This is not correct. A two year gap does not reset the controls.

There is some confusion about this because the legislation provided that properties which had not been rented in the two years prior to the legislation coming in were not rent controlled. A two year gap subsequent to that does nothing.

Unless substantial renovation takes place the RPZ controls continue to operate. 4% increase per annum since last rent increase. this should factor in to what you are willing to pay - the market value of the property is directly impacted by the rent levels.

I am not saying you are incorrect but very few people would pick up on that nuance by reading the official information online from RTB etc.

Extremely unclear.

Fian

These are teh relevant provisions, inserted into section 19 of the 2004 Act by the 2016 legislation: (subjection 4 sets out the RPZ formula, my emphasis)

(5) Subsection (4) does not apply—

(a) where a dwelling has not at any time been the subject of a tenancy during the period of 2 years prior to the date the area is prescribed under section 24A as a rent pressure zone or deemed to be so prescribed;

(b) if, in the period since the rent was last set under a tenancy for the dwelling—

(i) a substantial change in the nature of the accommodation provided under the tenancy occurs, and

(ii) the rent under the tenancy, were it to be set immediately after that change, would, by virtue of that change, be different to what was the market rent for the tenancy at the time the rent was last set under a tenancy for the dwelling.

Cuddlesworth

FishOnABike wrote: »

You need to be living in the house for the tennants to be licencees.

What is a Licensee?
A licensee is a person who occupies accommodation under license. Licensees can arise in all sorts of accommodation but most commonly in the following four areas;

persons staying in hotels, guesthouses, hostels, etc.,
persons sharing a house/apartment with its owner e.g. under the ‘rent a room’ scheme or ‘in digs’,
persons occupying accommodation in which the owner is not resident under a formal license arrangement with the owner where the occupants are not entitled to its exclusive use and the owner has continuing access to the accommodation and/or can move around or change the occupants, and
persons staying in rented accommodation at the invitation of the tenant.

I can't but notice that the RTB have changed their guidelines(used to have 4 options which were more wishy washy) but the point stands. Rent a room, tell them they are licensee and they do not have exclusive access to the property. Maintain that by keeping bills in your name and hiring a cleaner.

RTB and tenancy laws don't apply. Less fuss, quick evictions. With houses you usually make more money and the risks involved are drastically reduced.

You can feel free to link to the same RTB test cases that people always link to, where the specifics around elusive use were always in favour of the tenant(making them applicable to the RTB). This is the direction a huge proportion of the somewhat professional landlords have gone.

4ensic15

Guidelines are just that. Guidelines. The RTB have held some situations are licences and others are tenancies. Calling an agreement a licence does not necessarily mean the RTB will agree. Great care is needed.

Cuddlesworth

4ensic15 wrote: »

Guidelines are just that. Guidelines. The RTB have held some situations are licences and others are tenancies. Calling an agreement a licence does not necessarily mean the RTB will agree. Great care is needed.

The only difference between now and 4 years ago is that the RTB are now claiming that the customer has to be aware they are a licensee(although that's questionable).

Every test case I've seen that wins the tenancy argument, its always the same stick. The person had a choice who lived there, who came and went, when the landlord could visit, at some point in their time there. Which made them a tenant.

The landlords I know who are doing this(to a extreme in most cases) don't even have RTB test cases as it never gets that far. Any complaints from their licensees are ignored.

Cuddlesworth

4ensic15 wrote: »

Guidelines are just that. Guidelines. The RTB have held some situations are licences and others are tenancies. Calling an agreement a licence does not necessarily mean the RTB will agree. Great care is needed.

Also, we have been over this a few times.