Notice of rent increase and subsequent property valuation

TheGlossy

Hi all,

I am a bit confused here.

About 2-3 weeks ago, I received a notice of rent increase effective June 2022. Today, the real estate agent reached out to me stating the owner wants a valuation done on the property by another real estate agency. The current real estate agent stated they have no other information other than the owner wanting to perform a valuation.

I would very much doubt the valuation is done for re-mortgaging / insurance purposes given it is done by another real estate agency. So, I am inclined to think the owner wants to sell but they still served me a 4 months notice of rent increase. I understand it may take a while to sell and the owner might as well increase the rent, but it's quite confusing. It could very well be the owner wants to handover the management of his property to another real estate agency, but not sure.

Any help would be appreciated.

Thanks.

alias no.9

It could be a revision to the mortgage interest rate based on the loan to value. This is more likely if it was previously owner occupied, not sure if tiered LTV rates are a thing on buy to let but lots of ex owner occupied properties would still be on the owner occupied rates.

TheGlossy

https://www.boards.ie/discussion/comment/118814292#Comment_118814292

I'm not sure if it was ever owner occupied. I know it hasn't been since 2000. It was sold in 2013 (to the current owner I presume).

MakersMark

Getting the rent up prior to sale will improve sale price

TheGlossy

https://www.boards.ie/discussion/comment/118815851#Comment_118815851

How? The valuation is not performed on the basis of the rent. It's not a good indicator. The rent is still below market average, so it's only useful to prove that with a sitting tenant, the property is still at least 20% below market rate.

Ray Palmer

https://www.boards.ie/discussion/comment/118815998#Comment_118815998

Lower than market rate +increase>staying at lower rate. If another landlord buys the place the current rent is a factor in the purchase price to them. Even if below market rate it is better to have a higher rent. Valuation is dependent on rent as a factor

A letting agent that also sells is not equal to an estate agent that mostly sells hence different companies. Banks don't treat all agents the same and may not accept valuation from the letting agent and only use a select group.

SteM

The owner wants a valuation, if they like the valuation they get back it they may sell. If they don't like the valuation they get back they may decide to keep it. They'd be crazy not to at least consider the option of selling given the current state of the market. Your rent is going up either way and as others have said the higher the rent the more attractive it is to another landlord.

Your rent being 20% lower than market rate may actually prompt a sale. If the current monthly yield is low and the return from selling is attractive then it might sway the landlord to sell up.

JimmyVik

https://www.boards.ie/discussion/comment/118815851#Comment_118815851

This. Its good practice to do this before sale. Especially with the ever changing legislation.

It shows the current rate the rent is locked at and also gives a date for a purchaser to work from for their own valuation.

Also it shows that the current tenant is a cooperative one, in case there is a need to sell it with the tenant in situ (which would very rarely happen).

And the current rent 100% has a bearing on the price the value of the property as the legislation has seen to this.

Your op definitely says to me that the landlord is selling. In fact he may already have an offer and been told to do these things before the sale can continue.

TheGlossy

https://www.boards.ie/discussion/comment/118817599#Comment_118817599

I see. Thanks.

A bit odd to move forward with a sale without even getting a valuation.

If the landlord was already heavily involved in a sale process, don't you think from a legal standpoint, I should have already been notified?

I agree though - it's crystal clear they are selling. It would make sense anyways given the way the market is headed.

The owner isn't a private owner from what I understand, so I am hoping to still remain in the premises despite the sale, but I don't have too much hope (although it seems to have been the case in the past).

I'm really worried as finding a one-bedroom in Dublin under €2,000 is impossible. I found this place during lockdown when the rental market was favouring renters, now the coin has flipped, so I'm bracing myself.

JimmyVik

https://www.boards.ie/discussion/comment/118817648#Comment_118817648

Since the owner isnt a private owner then it sounds more likely it is a sale. Probably selling on, and the new owners will renovate to get out of the renbt lock if its too much below the market rate.

They wont tell you anything until they have to. I bet that the sale has been agreed. They are getting their ducks in a row. Soon enough you will get your notice for reason of sale. Your notice will have to be at least the amount of days calculated from how long you have been a tenant.

TheGlossy

https://www.boards.ie/discussion/comment/118817720#Comment_118817720

It's 120 days.

My understanding though is that there is a legal rule that states that in the instance where the apartment goes back up for rent, they need to offer it first to the tenant who had to leave due to the sale.

mondeoman72

I'm dealing with a house sale right now. The LL is stuck in the rent trap where he can only charge 1450 pm but the houses in the estate are renting at 2400. It's kinda an obvious one. Estate agent did an assessment yesterday and tenant has to leave. Got an approach from local Councillor about asking LL to reconsider. I explained the facts above and then he went quiet. I pointed out he can sell the house, buy the house next door and then rent at market value.

This is an accidental landlord who is using this for his pension.

I'd bet your LL is preparing for a sale. Perhaps approach them and ask.

TheGlossy

https://www.boards.ie/discussion/comment/118817965#Comment_118817965

I asked the real estate agent who acts on behalf of the owner whether I can anticipate any impact on my rental agreement in the near future. They said they don't have any further information aside from the owner wanting a valuation.

I can understand the owner's perspective because it's exactly what you described above (down to the cent). To be honest, I kinda had an idea this would happen because no landlord in their right mind would leave the rent as it is.

I move to this place last year to be closer to work and now that we're returning to the office, I'm probably going to have to leave. The irony of it all. Heartbroken is an understatement.

Ray Palmer

@TheGlossy

You realistically know nothing about the landlord. The letting agent do not necessarily know anything about the landlord or have to be truthful. I have dealt with many agents and I would never trust a word they say. Was looking at a property next to mine and the BS the agent said about who owned my property was very odd.

If it is not owned by a private individual it is highly unlikely they would let the rent have slipped down so low even in the pandemic. They would be fully aware of the financial ramifications. For all you know the person that owns the property has gotten old and a family memebr is now sorting their property out and not selling.

There is no point worrying until something actually happens

JimmyVik

https://www.boards.ie/discussion/comment/118817890#Comment_118817890

Only if the landlord doesnt sell it.

JimmyVik

https://www.boards.ie/discussion/comment/118818019#Comment_118818019

And the reality of the situation is that should both you and your landlord be happy with you paying an extra €100 for the property that it is illegal, giving you both no choice in you being asked to leave and him having to sell.

What a fcuked up system we have here.

Ray Palmer

https://www.boards.ie/discussion/comment/118818219#Comment_118818219

Not true the same terms of notice apply regardless

JimmyVik

https://www.boards.ie/discussion/comment/118818256#Comment_118818256

If another person buys the property they do not have to rent it to the person who was living in it before.

TheGlossy

https://www.boards.ie/discussion/comment/118818230#Comment_118818230

Having rented abroad, I have to agree. The system is absolutely appalling. It is detrimental to both tenants and landlords.

I don't understand why the owner did not take the liberty to properly increase the rent when the last tenants moved out. Granted, it was during level 5 lockdown, but since the property was back on the market, nothing prevented them from increasing the rent to make it more competitive aside from the fact that it was a renter's market back then.

I live in a RPZ, so realistically speaking, it wasn't exactly the owner's oversight that the rent has remained "low". They're simply tied by the regulation.

Ray Palmer

https://www.boards.ie/discussion/comment/118818271#Comment_118818271

The point about 120 remains is what I was referring to

JimmyVik

https://www.boards.ie/discussion/comment/118818355#Comment_118818355

Thats not what i was referring to though

Ray Palmer

https://www.boards.ie/discussion/comment/118818276#Comment_118818276

That's why I doubt it is a corporate or non private owner. They wouldn't make that mistake but a private owner could easily. The government took a hammer solution to appease the public rather than a sensible approach. THey won't do anything now as the are so afraid of inflation. This will then cause more landlords to leave the market so less rental. The other thing is some landlords will invest in their property as it will be worth while to redo and be free of RPZ rules. Everyday it gets closer on many properties even with raising construction costs. Doing it myself

TheGlossy

I understand the issues owners are facing, certainly.

It's difficult to accept as a tenant because the Dublin housing market is the worst I have ever experienced and it's putting my in a very difficult predicament post-pandemic as the market is nowhere near what it was in 2019.

In most capitals, if a landlord decides to sell, you can easily find something else. In Dublin, it's near impossible. I looked at daft.ie yesterday out of curiosity to see what type of properties were out there. I had a range up to €1,800 for a one-bedroom (which is already quite steep) and there were maybe 5 properties with questionable quality all located in Tallaght or Ballymun. As a 32 year old, I'm certainly not looking to revert back to house sharing. 120 days to find a new place is unreasonable in the current market. At this rate, I'll probably wind up with nowhere to live if the sale proves to be true. I'm even contemplating emigrating because if I can't find nowhere to live, I can't stay here.

Part of me is hoping the owner wasn't transparent with my current management agency and is just looking to contract with a different agent instead. The real estate agent conducting the valuation referred to the management agency as the "current agent". I'm trying to extrapolate a bit to re-assure myself.

Ray Palmer

@TheGlossy

I certainly don't envy the situation but things are bad world wide and likely to get worse for the next while. Friends spoke like this and some left. I thought myself somewhat lucky in that I traveled around a lot as part of work. So old friend in Madrid and I am there with work I will go see them. Not once was the story they said about how much better it was were true. The places they lived they would not have put up with in Ireland.

The guy in Madrid lived in the smallest bedsit I ever saw in real life. He said as the weather is so nice and food so cheap he is always out. I had been in Madrid in the winter before so that was BS. Same all over Europe. US was a bit different but the quality of life they claimed was so much better was really just cheap stuff but shady places to the locals but not to an immigrant. Having lived in the US the inequity there can really be shocking.

Not saying it won't be better but there are compromises on each option you take and don't be fooled by what you hear do real research. Moving to Germany better remember you have to provide the kitchen in the place you rent. Living in Paris expect a tiny place to live same with Rome. Salaries can also be a lot less or getting a job may require knowing people. Lots of factors people don't really consider

Again unless you get your notice you are jumping the gun. It is just as likely that the agent and landlord had a falling out because the agent was meant to keep rent inline and didn't so they are replacing the agent. The agent you are dealing with is then may have a reason to make you want to leave to get back at them. One person you certainly can't trust is the agent don't even try to believe them for what they say or don't say.

TheGlossy

I'm an expat actually. I lived abroad myself. I can't speak about Spain or the US, but the idea that apartments in Paris are tiny is a myth. You can find a pretty decent apartment for €1,800 whereas in Dublin, you just wind up with a disgusting hole in the wall these days. The difference between Dublin and Paris or Brussels is that Dublin has very little options whereas Paris / Brussels may have demand but not as bad of a shortage and the quality of housing is slightly better for the price you pay. Salaries are far higher than in Dublin but taxes are higher too, which is the biggest downfall.

Dublin's market is quite critical right now. I just came across an article that basically stated that the current housing crisis is the worst it's ever been. Plus, salaries are not following suit.

I'm certainly jumping the gun at this stage I agree, but honestly, who wouldn't? Let's just hope for a positive outcome.

endofrainbow

https://www.boards.ie/discussion/comment/118818113#Comment_118818113

Just out of curiosity what did they say ?

TheGlossy

https://www.boards.ie/discussion/comment/118820226#Comment_118820226

The owner is not a private person. The owner is only seeking a valuation at this stage and has not provided any further information.

DFB-D

https://www.boards.ie/discussion/comment/118817648#Comment_118817648

They may be applying for finance and using the valuation as part of the documents/ collateral etc.

If the owner is a company, they probably are doing an audit on the financial statements.

Lots of possibilities, but you just don't know.

Ray Palmer

https://www.boards.ie/discussion/comment/118820226#Comment_118820226

They said I was a Russian investment banker and somebody else owned the garage at the end of my garden. Just strange

Ray Palmer

https://www.boards.ie/discussion/comment/118820063#Comment_118820063

Can only speak to what I saw. Out of 3 of my friends in Paris they all lived in tiny places. Personally I dislike Brussels and would never want to live there. I do like Paris

Not everywhere is a hole in Dublin, the problem is that people are living in the nice places and what is on the market generally is the end of the barrel. Lots of places never get re advertised as people tell their friends when moving and that is how most change overs happen now. I made the mistake of telling the barber I was doing up a property to rent. He keeps contacting me to see the place even though it is a wreck at the moment. Be a few months before ready if I can get the tradesmen to actually turn up. He did say 6 of them were living in a 3 bed house with one bathroom😮

TheGlossy

https://www.boards.ie/discussion/comment/118822149#Comment_118822149

Yeah, Brussels has a great housing market but no one really wants to live there, at least not long term. I don't particularly like it either.

I agree with your points on the Dublin market though. I heard some horror stories about over-crowded apartments / houses. Shared bedroom being advertised for €700 (the price of my studio apartment in inner Paris - which was quite spacious!!). The issue is also the fact you see construction working on brand new buildings in the Docklands for instance, but those will be snapped up either for apartment shares or extremely wealthy people. Your average individual can't rent those. The Dublin housing has no middle ground at the moment you have to pick between the overly expensive apartments no one can afford or the bottom of the barrel ones that no one wants.

The person supposedly conducting the so-called valuation is a trainee from what I see. Whether they will be accompanied by someone more senior is to be seen, but handing a valuation over to a trainee is a bit odd. The estate agent supposedly conducting the valuation called it an "inspection", not mention of a "valuation" per se from their end. Maybe for confidentiality reasons or perhaps there's something else going on between the estate agency and the landlord.

mrslancaster

Even if the property is put up for sale, it can take many months for everything to go through with solicitors, banks paperwork etc. If you can't find a new place quickly or within the notice period, the owner might agree to you staying on a while longer, at least until the sale contracts are signed. Also, sales sometimes fall through.

TheGlossy

Thanks. We'll see what comes about.

Since my current managing agent supposedly doesn't have any information on what's going on, are there any clues that I can look out for when the agent meant to perform the valuation drops by? I obviously can't ask him directly, but since I don't know what an inspection for valuation entails (aside from checking all rooms etc), I'd want to get some clues.

I was in a situation previous rental where the property was being transferred to another real estate agency who then dropped by to assess the property, but the original managing agent was transparent about what was happening.