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Market Value Rent

  • 03-02-2021 8:13am
    #1
    Registered Users, Registered Users 2 Posts: 323 ✭✭


    Query on behalf of my dad. He is renting an apartment for much much less than market value. (He is the landlord).
    His long term Tennant has been paying 850pm and at present the property next door is pulling in 1400pm. This isn't greed but he wants to increase the rent. I have done little research and I am just wondering is it correct that despite it being so undervalued he still can only increase the rent by 4%. Its within a rent pressure zone. I just want to be sure in what information I give him. He won't be renovating or evicting in an effort to pull more money out of the property. He is a man looking to get his finances in order


Comments

  • Registered Users, Registered Users 2 Posts: 9,381 ✭✭✭893bet


    When is the last time the rent was increased?


  • Registered Users, Registered Users 2 Posts: 323 ✭✭Rmgblue


    893bet wrote: »
    When is the last time the rent was increased?

    Maybe 10 years ago


  • Registered Users, Registered Users 2 Posts: 4,396 ✭✭✭whomitconcerns


    If it was 10 years ago he could increase it to €1,036 max based on 2% a year for 10 years.


  • Registered Users, Registered Users 2 Posts: 686 ✭✭✭steamsey


    Rmgblue wrote: »
    Query on behalf of my dad. He is renting an apartment for much much less than market value. (He is the landlord).
    His long term Tennant has been paying 850pm and at present the property next door is pulling in 1400pm. This isn't greed but he wants to increase the rent. I have done little research and I am just wondering is it correct that despite it being so undervalued he still can only increase the rent by 4%. Its within a rent pressure zone. I just want to be sure in what information I give him. He won't be renovating or evicting in an effort to pull more money out of the property. He is a man looking to get his finances in order

    Rpz calc here
    https://www.rtb.ie/calculator/rpz

    I'd say you're stuck with 4% p.a.


  • Registered Users, Registered Users 2 Posts: 24,644 ✭✭✭✭punisher5112


    If he does major renovation he would be able to put the rent up to market rate but it needs to be substantial work.

    Make sure if tenants are there and the time for increase is given with the correct time frame.


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  • Registered Users, Registered Users 2 Posts: 4,396 ✭✭✭whomitconcerns


    He can still get it over 1k without doing anything to be fair. But after that it's do some major work on the place and probably look for a new tenant...

    So do you want to take a 350€ hit or is it worth it to do the work?


  • Moderators, Society & Culture Moderators Posts: 17,643 Mod ✭✭✭✭Graham


    If he does major renovation he would be able to put the rent up to market rate but it needs to be substantial work.

    I understood the exemption was base on a substantial change in the nature of the property rather than simply renovation.

    OP there's an RTB guidance document if your father is considering going down that route.

    Use the RTB calculator to work out the maximum allowable increase now (more than 4% after 10 years). After that increase the rent by the maximum allowable amount at every opportunity to get closer to the market rent.


  • Registered Users, Registered Users 2 Posts: 323 ✭✭Rmgblue


    Graham wrote: »
    I understood the exemption was base on a substantial change in the nature of the property rather than simply renovation.

    OP there's an RTB guidance document if your father is considering going down that route.

    Use the RTB calculator to work out the maximum allowable increase now (more than 4% after 10 years). After that increase the rent by the maximum allowable amount at every opportunity to get closer to the market rent.

    This seems to be the best advice. Thanks Graham and everyone else.
    He is aware this may force his Tennant out and the property will require full refurb after. So he is aware of all this and prepared to spend the money if necessary.


  • Registered Users, Registered Users 2 Posts: 1,300 ✭✭✭meijin


    Rmgblue wrote: »
    This isn't greed but he wants to increase the rent.
    Rmgblue wrote: »
    He is aware this may force his Tennant out

    It is greed then.


  • Posts: 0 [Deleted User]


    meijin wrote: »
    It is greed then.

    BS.

    Charging market rate is providing a service at the going rate for that service. Looking at it from a business perspective, it would be negligence not to do so.


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  • Registered Users, Registered Users 2 Posts: 323 ✭✭Rmgblue


    meijin wrote: »
    It is greed then.

    Sorting out his finances isn't greed. He has afforded his Tennant a very fair price for in excess of ten years. I simply said he is aware it might force them out forcing him to spend money to show he has assessed the risk of doing all this.


  • Registered Users, Registered Users 2 Posts: 1,089 ✭✭✭rightmove


    meijin wrote: »
    It is greed then.


    giving a tenant massively reduced rent is greed ? Even with increase its still massively reduced.:confused: Problem OP is that the value of your property is also affected in that anyone who may buy it is stuck on your rent should they rent it out. Totally unconstitutional but doesnt surprise me these days where governments do things that seem to break rules in favour of virtue popularity to sync in with the opinions of posters like meijin.


  • Registered Users, Registered Users 2 Posts: 1,300 ✭✭✭meijin


    rightmove wrote: »
    giving a tenant massively reduced rent is greed ?

    how did you come up with this completely illogical statement?


  • Registered Users, Registered Users 2 Posts: 323 ✭✭Rmgblue


    meijin wrote: »
    how did you come up with this completely illogical statement?

    Meijin - you seem to think I'm here asking how my dad can increase the rent from 850 to 1400. I'm not. I'm trying to advise him on the correct procedure - his legal requirements.


  • Closed Accounts Posts: 1,112 ✭✭✭notharrypotter


    meijin wrote: »
    how did you come up with this completely illogical statement?

    It seems that comparable property is fetching 1400pm. Based on the ability to increase the rent could rise to just over 1000.
    1400 -1000 = 400, a significant discount.
    Therefore the op's father is still been generous to their tennant.


  • Posts: 0 [Deleted User]


    meijin wrote: »
    how did you come up with this completely illogical statement?

    You are contending that op’s father is being greedy by raising the rent to the max allowed, even though it is capped significantly lower than current market rate?


  • Registered Users, Registered Users 2 Posts: 3,172 ✭✭✭antimatterx


    1K a month for rent is still cheap in most places in Ireland tbh.


  • Closed Accounts Posts: 22,648 ✭✭✭✭beauf


    Rmgblue wrote: »
    Meijin - you seem to think I'm here asking how my dad can increase the rent from 850 to 1400. I'm not. I'm trying to advise him on the correct procedure - his legal requirements.

    Its nonsense. Just trying to derail your query. Best to just click ignore.


  • Registered Users, Registered Users 2 Posts: 3,588 ✭✭✭2ndcoming


    Depends on several factors. Is the tenant reliable, looks after the place well? This can be worth a lot more than an extra €150 a month. Problematic tenants can cost you thousands, not to mention the grief of dealing with them. Plus any month the property is lying vacant or between tenants hits your pocket also. I'm speaking from experience, went through three tenants before getting a good couple, left them on 850 coincidentally from 2010 until the property was sold in 2018 as it covered the mortgage and they gave no hassle.

    If they are a good tenant it's worth asking them how much they can go up. €150 a month might not seem like much but to low earners it can be the difference between being able to afford it and not.

    By going off comparable properties in a ludicrously overblown market, there's also the moral issue that if everyone did that we would have many times worse of a housing crisis than we already do. Not any one individual's fault, indeed directly the fault of successive governments going back to the 80s or 90s, but if you're into societal issues it may be something you'd consider.


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  • Moderators, Society & Culture Moderators Posts: 17,643 Mod ✭✭✭✭Graham


    Mod Note

    if you'd like to discuss the morality of current market rents, start a new thread.

    Do not reply to this post.


  • Posts: 0 [Deleted User]


    beauf wrote: »

    All of those articles state that rent increases are not allowed to be given to people financially impacted by Covid-19. Otherwise they are permitted.


  • Closed Accounts Posts: 22,648 ✭✭✭✭beauf


    kian163 wrote: »
    All of those articles state that rent increases are not allowed to be given to people financially impacted by Covid-19. Otherwise they are permitted.

    That's the first thing someone will claim, if you go to up their rent. However there are criteria now...

    https://www.citizensinformation.ie/en/housing/renting_a_home/tenancies_and_covid19.html

    The other thing to consider if you are increasing someone's rent, its in their best interest not to move as long as possible.


  • Registered Users, Registered Users 2 Posts: 624 ✭✭✭AnRothar


    2ndcoming wrote: »
    Depends on several factors.
    People to on about "good tenants/good landlords" which is not relevant.

    To the op, a moral obligation to the tenant is moot. Your father has a legal obligation to them in terms of what to provide, no more no less.

    There is another hoary chestnut thrown about regarding "accidental landlord's" .
    We're there "accidental landlord's" ?
    Without a doubt the answer is a resounding yes.
    However by now most should have crystallized their losses and gotten rid of the property.
    Anyone who hasn't is a fool.

    Anyone else involved in renting out a property should be treating it as a business.


    I'm speaking from experience, went through three tenants before getting a good couple, left them on 850 coincidentally from 2010 until the property was sold in 2018
    Out of curiosity how much was a comparable property to yours fetching during this time?

    Suppose the equivalent was 1000, so you gifted the tenants €150 per month for 8 years, roughly €15000.


  • Registered Users, Registered Users 2 Posts: 624 ✭✭✭AnRothar


    beauf wrote: »
    That's the first thing someone will claim, if you go to up their rent. However there are criteria now...

    https://www.citizensinformation.ie/en/housing/renting_a_home/tenancies_and_covid19.html

    The other thing to consider if you are increasing someone's rent, its in their best interest not to move as long as possible.
    The citizens advice page linked above confirms that unless you have been financially impacted by covid then normal rent increase criteria apply.

    Regarding the latter part of your post it copper fastens the need for landlord's to follow the rules regarding increasing the rent by the max at each opportunity.
    The tenant knows they have it good so are in no hurry to look for something cheaper.


  • Closed Accounts Posts: 22,648 ✭✭✭✭beauf


    If you do not maintain the rent at market rate you devalue the property to a buyer. This of course only matters if you are selling it.

    It also likely have less money spent on the property to maintain it. Which if its going on a long time will also devalue the property.

    The other issue, is if you give a discount to a long time tenant, the next tenant will also get the much the same discount.
    So the LL is encouraged by the system to maintain the rent at the market rent going forward.

    There are ways to encourage lower rents. Successive Govts have chosen not to do anything about it.


  • Closed Accounts Posts: 22,648 ✭✭✭✭beauf


    AnRothar wrote: »
    The citizens advice page linked above confirms that unless you have been financially impacted by covid then normal rent increase criteria apply.

    Regarding the latter part of your post it copper fastens the need for landlord's to follow the rules regarding increasing the rent by the max at each opportunity.
    The tenant knows they have it good so are in no hurry to look for something cheaper.

    Unless they change it again. Which is not impossible.


  • Registered Users, Registered Users 2 Posts: 3,588 ✭✭✭2ndcoming


    AnRothar wrote: »
    People to on about "good tenants/good landlords" which is not relevant.

    To the op, a moral obligation to the tenant is moot. Your father has a legal obligation to them in terms of what to provide, no more no less.

    There is another hoary chestnut thrown about regarding "accidental landlord's" .
    We're there "accidental landlord's" ?
    Without a doubt the answer is a resounding yes.
    However by now most should have crystallized their losses and gotten rid of the property.
    Anyone who hasn't is a fool.

    Anyone else involved in renting out a property should be treating it as a business.




    Out of curiosity how much was a comparable property to yours fetching during this time?

    Suppose the equivalent was 1000, so you gifted the tenants €150 per month for 8 years, roughly €15000.

    Given the OP mentioned one property and not ten he may well be an "accidental" or at least incidental landlord himself. Especially considering he hasn't upped the rent in ten years.

    On the rest of it, more to life than money pal. I'm happy enough with how it all worked out.

    Note this thread is in the Society & Culture forum under the heading Accomodation & Property, not the Business & Finance forum.


  • Closed Accounts Posts: 22,648 ✭✭✭✭beauf


    2ndcoming wrote: »
    ....
    Note this thread is in the Society & Culture forum under the heading Accomodation & Property, not the Business & Finance forum.

    The finance of this is entirely relevant regardless of where it is.


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  • Moderators, Society & Culture Moderators Posts: 17,643 Mod ✭✭✭✭Graham


    2ndcoming wrote: »
    Accomodation & Property, not the Business & Finance forum.

    Mod Note

    assume that's irrelevant.


  • Registered Users, Registered Users 2 Posts: 323 ✭✭Rmgblue


    @graham I have all my answers here. Thanks for everyone's help and advice. My dad has decided to meet somewhere in the middle between existing rent and rtb calculator. I have filled in the paper work for him to sign and within the form you must submit 'like' properties. They range from 1650-1800. The very last thing my dad is is greedy. Not that I need to fight that corner. Advise here has been very supportive and informative. If it makes you're life easier you can close now. Stay safe everyone


This discussion has been closed.
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