Rent to a friend @ reduced price

TerryOC

I have an apt. Tenant (with me 9.5 years, no issues either side) moving to a bigger house as family getting bigger. A friend of mine needs a place now and I'm wondering are there any complications if I charge a bit less than "market price". Say I'm getting €1300 pm now, and will issue a new agreement for €1000.

JeffKenna

The €1,000 will be your base for all future rent increases from now on even when your friend moves out.

Mr.Crinklewood

https://www.boards.ie/discussion/comment/119691633#Comment_119691633

Could OP charge the going rate of €1,300, then get his friend to charge €300 for cooking / cleaning services?

GalwayGaillimh

https://www.boards.ie/discussion/comment/119691633#Comment_119691633

No good deed goes unpunished

tvjunki

Your friend will no longer be a friend when you decide to sell or move in a family member. I would rethink this one if I was you. Don’t rent to friends.

Charge the market rent. You will devalue your house if you want to sell.

We kept the rent low on a 2 bed at €900 per month for the last 6 years when the going rate is now €1750. We had to sell to a home owners as landlords would not touch it. House now sale agreed.

Del2005

There could also be tax implications for renting below market rate, you are gifting them money and the gift limit is low.

TerryOC

I was wondering if I could set up a "caretaker" agreement, where he is minding the apartment for me. I've seen articles where people can live in a premises at low rent while the owners decide whether to sell, renovate etc. I think this agreement wouldn't need to be registered with RTB.

DFB-D

https://www.boards.ie/discussion/comment/119694699#Comment_119694699

I don't think there is much point doing this, if it is in essence a tenancy agreement but called caretakers agreement, it won't really be any better than just not registering the tenancy.

I think just registering the tenancy with a lease amount for the full payment, but agree afterwards to leave the amount short by x amount for x period would be the closest legally, but I'm not an expert so maybe organise a quick chat with a solicitor.

TerryOC

Thanks all for your comments, I think it's best maybe to follow the last comment. Keep it all straightforward & by the book. After being a landlord for 9.5 years, relatively hassle free, I don't want to create problems, even though the person is a friend. Might also think of selling up and be done with it.

spaceHopper

What I've heard of been done is you draw up a lease for the market rate. You register that with the RTB, you give a side letter to the tenant that they have to pay less. You declare that to revenue.

The problem is that your friend gets mates rates and then they move out. Next tenant gets the same discount, you can't re align the rent to the market rate between tenancies so a stranger gets mates rates too. You are locked in. It's apartment, so you can't make it 25% bigger or change the BER so the only way to go back to market rates would be to have it empty for two years. Or use it yourself to two years. If you let it cash in hand and there was any paper trail, think TV license, a utility.... you'd be fooked.

Given it's empty now what about selling and investing in something else?

TerryOC

Investing in what?

Del2005

https://www.boards.ie/discussion/comment/119696668#Comment_119696668

A REIT

Graces7

it is setting a precedent that you may well regret if a change of tenant occurs?

pc7

Honestly don't do it, friends and money rarely mix well. There was a thread here recently where they did just that, the 'friend' didn't pay, wouldn't let them back in and left the place in bits. Its just not a good idea.

POBox19

You could give your friend €300 a month instead. How does that sound, the same difference?

TerryOC

Yes, that's a good idea. Just do a refund maybe. I'll also have a look at the REIT path. Thanks for the contributions. I can understand having a landlord / tenant relationship with a friend isn't ideal. Having a lump of money sitting in the bank with inflation on the rise isn't very attractive to me.

Dial Hard

You'll hear dire warnings about all the ways this could go wrong - they won't pay you, won't move out when the time comes, etc etc, but I rented off a good friend at a discounted rate for 9 years with absolutely zero issue. She put the house on the market earlier this year and while I was absolutely gutted, I moved out on the date agreed with no argument because I can't imagine screwing over a lifelong friend over a place to live. Back at home with the folks since.

I will say that the tenancy was never registered (which meant I didn't get as much notice about the sale as I was technically entitled to) and I have no idea whether she ever declared any of the money to Revenue, but it was a win-win scenario for both of us for a long time.

HBC08

https://www.boards.ie/discussion/comment/119691633#Comment_119691633

Only if in RPZ surely?

TerryOC

Well, it is in a RPZ. But I thought if my friend moved out, say after a year, I would be able to start a new agreement with a new tenant regardless of the previous rent i.e. back to current market rent.

pc7

If Sinn Fein get in there is a good chance or rent freezes too. If you can increase BER by 3 categories I think it is you can also increase rent in RPZ

DownByTheGarden

I believe when you rent now you are stuck at that rent. Even if its a very good friend, relationships can turn sour and you can get fked over. And it sticks now with rental legislation. Keep everything at market rate. You can buy them a few pints to make up for the difference.

Also there might be tax implications for you both if you are renting below market rate. The whole thing is a minefield.

handlemaster

https://www.boards.ie/discussion/2058265711/rent-to-a-friend-reduced-price

Dont do it.. you want to give your friend 3600 euro per year. Thats what your saying..

Mic 1972

https://www.boards.ie/discussion/2058265711/rent-to-a-friend-reduced-price

you can still do a lease contract for 1300 and then accept only 1000 per month. If you are friends this should not be a problem. I would rather rent out to a friend than taking my chances with strangers

MakersMark

Sell up now its empty.

When the IRA party gets in anyone with a second home is going to be fleeced.

TerryOC

What if I give him a contract to rent the apartment but specify it is one bedroom being rented. I am going to use the 2nd bedroom myseld for storage, my model railway or whatever. So, it's market rate for a one bedroom in that area.

Still stihl waters 3

Just give your friend 300 cash back every months

ballyharpat

https://www.boards.ie/discussion/comment/119753032#Comment_119753032

Could you rent it out them as a room in your own house, so you would be 'living' in the other room? So you could be under the rent a room scheme then?

DFB-D

https://www.boards.ie/discussion/comment/119753032#Comment_119753032

I think your own opinion would be as valid as anyone else's here, unless you get legal advice.

Sounds OK though.

mrslancaster

https://www.boards.ie/discussion/comment/119753068#Comment_119753068

If you decide to do this stick to 250pm or a quarterly 750 - you can gift 3k pa to anyone tax free. Rental income would still be on the 1300pm so taxes due on that. You'd need to do the calculations first.

cnocbui

https://www.boards.ie/discussion/2058265711/rent-to-a-friend-reduced-price

Do this and they will be an ex-friend.

Del2005

https://www.boards.ie/discussion/comment/119753068#Comment_119753068

Revenue tax on the rental income so they are loosing ~€600 if they are taxed at the marginal rate if they do that.

Everything you are doing to help a friend can have serious cash and tax implications for you. Just sell it now at the top of the market, there's a reason why thousands of other landlords are selling up when rents are massive.

Claw Hammer

https://www.boards.ie/discussion/comment/119699296#Comment_119699296

See what thought did!

Claw Hammer

https://www.boards.ie/discussion/comment/119753106#Comment_119753106

That happened in the Zhang case. It didn't go well for the landlord.

ballyharpat

ok- I’ll see if I can find details on that, have you a link please?

DownByTheGarden

A little story.

A family member was looking for somewhere to live 3 years ago when their landlord sold up. They couldnt find anywhere. Another family member then offered them the use of their really nice holiday home for a very cheap rent until they found a place of their own. They often let all of the rest of us use it for weekends if we ask nicely and they arent using it.

Roll on 3 years. The other family member (they are both cousins I should say and used to be very close) only intended them to be in it for a couple of months and not 3 years and havent got to use their holiday home in 3 years. Theres always a sob story about why they cant move out. No consideration at all given to the fact that this is a property the owner who bought the property and wants to use what they bought it for.

So a couple of months ago the owners have put the foot down and said they have to be out before Christmas. Sob stories continue and now the owners are greedy scum putting them out at Christmas according to the family in the house. If they left when they were asked it would have been nowhere near Christmas.

Anyway to make a long story short. The people living in the house think its theirs now and the owners are evil for wanting their holiday home back. The ones who own it never wanted to rent it and only did it as a short favour to tide them over. Now everyone on the family is being asked to take sides and lots have fallen out over it.

Never rent to friends or relatives unless you want that relationship to suffer.

Dial Hard

https://www.boards.ie/discussion/comment/119765913#Comment_119765913

And for balance, see my little story upthread about renting off a friend for almost 10 years without issue and moving out when I was asked when she wanted to sell the house.

I'm back living at home since because I couldn't find anywhere else, but - shock horror - we're still friends because I understand the concept of ownership and that the house was her asset to dispose of when she wanted.

With all these horror stories people are falling over themselves to post here I genuinely have to wonder what kind of arseholes many of you are friends with.

mondeoman72

A house in kildare lowered the rent to assist a tenant who was struggling. Now this is the "normal" rent and the LL is locked into it as it in in a RPZ. Being nice, he managed to shaft himself. Beware being nice.

ghostofchrimbo

It's a sad state of affairs.

To purposefully walk the country into a situation where its own people are afraid to help their friends for fear of making their own lives worse.

If housing were food, and the question posed was whether to share food with a friend who needs food, but a lot of the advice is to be careful, because your ration of food may be reduced if you try to help? What a shameful state to be in.

An enemy government would love this as a weapon, yet who created it?

There'll be a hefty price for this in the end no matter what form it takes. Self-cannabilism.

mikemac2

You are a kind soul OP but in a few years time when you want the property back to sell or some other life plan you will be labelled as greedy and heartless.

And some of your mutual friends will go against you also no matter how well you explain the situation.

If you were renting a room the friend could move in and that would work well but that is not the case and I don’t advise to keep a room for yourself and direct some letters there so it seems you live there. It comes up on the forum a lot as some clever original idea to get tax free rent a room rent and deny the person a tenancy but it isn’t right

Take your time to decide what to do, the place is empty so you have time

Thargor

Amazed at all the people thinking the RPZ is some strictly monitored policy with some central database. Its like everything else in Ireland, zero enforcement because the place is owned and run by landlords for the benefit of landlords, Im in Limerick city and any LL I know doesn't give a crap, they're praying tenants will move out so they can whack on another 20-40% raise on the next poor fool, and they'll pay it because they have no choice.

DownByTheGarden

https://www.boards.ie/discussion/comment/119766034#Comment_119766034

I think you are missing the point here :)

My story was just an example of one case where it went wrong. Im not saying everyone will do it by a long shot. Let me ask you though, What would you have done if you didnt find someone else to take you in at the time it was sold?

Bass Reeves

https://www.boards.ie/discussion/comment/119766034#Comment_119766034

At a guess you are a single person and you have a sense of honour. In the case of the holiday homw I suspect that the friend that moved in had a partner and maybe family. I also suspect that the owner gav them reduced rent. problem is you can no longer do favours where property is concerned.

the person living in the holiday home, what has he done for the three year, has he saved towards a deposit for a house. I suspect not I suspect he is a freeloader. he has had a cheap house for three years and has redirected his income in to lifestyle spending

dragonkin

https://www.boards.ie/discussion/comment/119767045#Comment_119767045

This isn't true. RPZ is strictly monitored and there is a central database. LLs have to register every year and write down in the database exactly what rent they are charging. Even if the house/apartment has changed hands the rent can only be increased 2%.

If you know that the rent has increased 20-40% you could move in and call the RTB to investigate it, the LLs haven't a leg to stand on.

For the OP, I'd simply put it up "for sale" until my friend stopped looking, then suddenly it would no longer be for sale due to "terrible market condition, no buyers etc"