Increasing rent in RPZ

WhatsGoingOn2

I own a 3 bed property that I have been renting to a friend for the last 10 years. I have only been charging him 1100 a month in an area where the average rent for a 3 bed is now 2200. I don't want to raise the rent to that level, but with the recent interest rate changes I will need to charge approx 1600 to cover costs. Is it possible to raise by that much in an RPZ if I can prove that the rent is way lower than it should be?

rowantree18

Check on the Residential Property Board website. A cursory glance suggests that you cannot. You'd have to remove the friend, substantially renovate and then apply to them to be allowed raise it, but it is still unlikely you could raise it that much.

I suppose in this situation there are people who might negotiate a cash payment of 400e off the books. Illegal and I'm in no way suggesting this.

House next door to me is rented out. Tenants changed recently and the new ones are paying appropriately 1000e less than Market value (house was advertised), as it was previously rented at x-price, but I know that as part of the deal the new tenant is paying the management fee and property tax - worth about 2k. That's not normally part of a lease but they are getting way below market value.

jface187

You might be losing a friendship if you kick him out.

WhatsGoingOn2

To clarify, he is going to Australia, I'm not kicking him out.

Fian

Sell the house.

If you increase rent illegally the next tenants will be entitled to move in, pay rent for 6 months (or as long as they want) and then look for a repayment over the amount you are entitled to charge - so if you up rent from 1100 to 2200 they can claim back the 900 or so excess rise and you will get hit with a fine as well. Plus probably see your name in the papers.

You will not be able to sell to an investor but a 3 bed semi should sell to a family.

This is the price you pay for being generous to a sitting tenant - you can't get back to market rent when strangers move in after the tenant moves on. Unfortunate consequence of the RPZ rules. If you had been increasing the rent by the amount permitted each year you would now have a much higher rent set than you are allowed to move to now.

Alternatively you could leave the place untenanted for 2 years and then go back to market rent or bring in substantial renovation - but that last is uncertain in terms of what is sufficient to enable a rent reset.

spaceHopper

Have you registered the rental with the RTB, have you told them how much they were paying.

If so your best option would be to give it to the government to house Ukrainians for two years. You will get 800 a month tax free. After two years you can rent it on the open market again.

After that you need to do a very big upgrade and one mistake the RTB say no. Or sell it.

WhatsGoingOn2

Yes, it was registered with RTB.

I'll look into this scheme thanks. I am also looking into the Rental Accommodation scheme, but not sure if that option is available anymore.

Else, I'll just have to sell, unfortunately.

mrslancaster

https://www.boards.ie/discussion/2058315572/increasing-rent-in-rpz

That's a huge difference in rent. This is a useful guide about the substantial change rule but it depends on the current condition of the property and what changes are needed or even possible, ie most apartments can't be physically altered so not as easy as a house. Get a report from a local EA about the achievable rent before any work is done and what rent could be charged if XYZ works were carried out. Guide has examples, probably expensive, but maybe getting market rent when the work is done might justify the cost, an 1100pm uplift would go a long way towards that and the works may also increase the re-sale value of the house.

https://www.ipav.ie/sites/default/files/rtb_guidelines_for_good_practice_on_the_substantial_change_exemption_in_rent_pressure_zones.pdf

WhatsGoingOn2

https://www.boards.ie/discussion/comment/121167159#Comment_121167159

Great, thanks for that.

I contacted an EA today in regard to the situation, looks like I am going to have to sell as I can't afford any substancial renovation at the moment. 1 less house for people to rent. If I ever became a landlord again (which I have no plans to), I would have no choice but to charge max rent from day 1 and increase it by as much as possible each year to avoid this situation again. Surely this is against what should happen to keep rents low, but the current RPZ rules mean that landlords have little choice, else they could end up in the same situation as I found myself in.

FishOnABike

https://www.boards.ie/discussion/2058315572/increasing-rent-in-rpz

Plugging the figures into the rent review calculator on the RTB website it looks like you would only be able to raise the rent by a little over €200. The exact amount would depend on the date the €1100 rent was set and the date the increased rent would start.

mrslancaster

https://www.boards.ie/discussion/comment/121167229#Comment_121167229

Imo the rules for substantial change are so onerous and expensive that very few small landlords can fund significant alterations and also have zero rent for the length of time those works are in progress. Its a double whammy and easier to just sell up. Not great for renters as it means fewer rental properties available in the long term.

If landlords can't cover the cost of the service they provide they will sell. Any other business with increased costs passes those costs on to the end user and we all see that in the increased cost of living, yet landlords are expected to absorb extra costs. The recent mortgage interest hikes affects a lot of small landlords and with constant changes to regulations and no effective remedies for dealing with rogue tenants, more and more small landlords will probably leave the sector. Its a depressing situation for anyone trying to find a place to live.

Dav010

Did you register how much your friend is paying in rent with the RTB?

WhatsGoingOn2

https://www.boards.ie/discussion/comment/121173870#Comment_121173870

Yes, it was all above board.

Emblematic

https://www.boards.ie/discussion/comment/121167229#Comment_121167229

On the other hand it is one more property for people to purchase.

DubCount

https://www.boards.ie/discussion/comment/121176859#Comment_121176859

Yes, and ex rentals coming onto the market has certainly helped keep property sale prices down. That doesnt mean we an afford to lose more properties from the rental market when we already have too many renters chasing too few rentals.

In a market where we simply need more properties, a property moving from rental to owned just moves a problem from one part of the property market to another. Right now, private rental and social housing is where the biggest squeeze is, and IMHO any more landlords bailing out is not good news for Ireland or for that part of the market where the "property crisis" is most severely felt.

Rows Grower

https://www.boards.ie/discussion/2058315572/increasing-rent-in-rpz

The whole system needs an overhaul with a view to having some empathy for people that find themselves in a similar position to yours.

There was a knee jerk reaction by the government some years ago because some unscrupulous landlords were taking total advantage of the housing shortage and that ill though reaction was a quick fix temporary solution to a growing problem, it gained positive headlines for the government at the time but in the long run compounded the problem. There was no heed given to the accidental landlords that worked their balls off to improve their lot and found themselves unable to sell because of the economic crash.

As it stands now your tenant can rent a room in your house and make more rent from that single room than what you are getting for the whole house.

While you are stuck with all the annual overheads including the income tax, property tax, insurance and upkeep your tenant will have no tax liability on income up to 14,000 euro.

It's an absolutley crazy situation that wil hopefully be addressed in the budget in 10 days.

Bass Reeves

https://www.boards.ie/discussion/comment/121177729#Comment_121177729

Rentals as well would have higher occupancy rates. Nobody rents a house bigger than they need.

ec_pc

I was in the same boat myself earlier in the year. Long term renter decided to move out and I was less than half the market rate in rent. House needed some cosmetic updating in terms of new bathrooms etc but RPZ guidelines just made it unsustainable financially. I sold up.

I wouldn't hold my breadth for the budget.

PRTB are an absolute disgrace, I am waiting a month for a reply to a mail. If anything a grass roots review is needed of that organisation.

Emblematic

https://www.boards.ie/discussion/comment/121177729#Comment_121177729

Certainly agree that what is needed is more properties generally. Where rental properties need to be increased I would argue that they should ideally social or housing association rentals. Failing that, cost based rentals owned by housing trusts and the like. Even properly regulated fund based landlords would be acceptable.

But I think a private landlord selling up because their tenant is leaving anyway is probably a step up for the country. They are no longer blocking someone buying.

Bass Reeves

https://www.boards.ie/discussion/comment/121179133#Comment_121179133

Nobody blocks anybody from buying. On a cost basis regulated funds are the most expensive to rent ftom, then private LL, however housing association's and KA rentals are state subsidized. For the state HAP rentals are the best value.

Every time a house leaves the rental sector, 90% of the time the occupancy rate drops.