Rent increase for new tenant

BtxKiddo

Hi guys,

I have a question regarding our rent. short story: renting same apartment in Dun Laoghaire for last 6 years. Finally we are in a position to buy a house and move in the coming months. our last rent increase was in January 2023.

As we are moving out, my cousin will like to take the apartment, if the landlord will accept of course.

question is: can he set a new rent as much as he wants or there is a law that is applying as a limit to how much can he rent to a new tenant once we move out? Hope this makes sense…thank you.

dennyk

If it's in an RPZ (which Dun Laoghaire is), then the rent he can set for a new tenant would still be based on the RPZ restrictions. This calculator will show the maximum rent that could be set based on the current rent and the date it was last set.

That said, if the landlord does plan to illegally increase the new rent beyond the RPZ limit, unless they're truly foolish then there is zero chance they'll agree to rent the place to someone who knows their former tenant personally and will easily be able to find out what the previous rent was, so likely it'll be a moot point anyway.

LilacNails

- wrong info given

dennyk

https://www.boards.ie/discussion/comment/121783512#Comment_121783512

That's not correct; RPZ restrictions remain in place even when one tenancy ends and a new tenancy begins in the property. If it is a brand new rental that has not been the subject of a tenancy at any time during the past two years, then the rent can freely be set at anything up to the market rate, but if there was a tenancy at any time in the past two years then the rent for a new tenancy will be restricted based on that previous tenancy's rent and the RPZ limitations.

Buddy Bubs

My uncle sold an apartment recently, he used it to house his employees and don't really register the tenancies as they come and go. Anyway, his apartment sold as owner occupied and went for much more than another one in same complex because the new buyer can now charge whatever rent they want, the other can only increase by 4% or whatever it was.

So yes, new tenants are protected by this.

lbunnae

https://www.boards.ie/discussion/comment/121783512#Comment_121783512

No that’s wrong.

If the rent is below market rate, it’s highly unlikely that the LL will rent to your cousin. It makes much more sense to allow your tenancy to end, smarten it up a bit, then advertise it for rent.

JVince

If you've been a decent tenant and can give a reference for your cousin and the rent is not to far off current rent, then I think there's a good chance your cousin will get it.

No agency fee involved. Reference from trusted person. No break in rent.

Chat with them and you'll get your answer.

meijin

https://www.boards.ie/discussion/comment/121783741#Comment_121783741

And then the old tenant visits the property, talks to the new tenant, finds out the rent was illegally increased, and reports the landlord to RTB for sanctions...

I am not sure it really "makes much more sense"

Have you any data on how often that scenario plays out? You seem certain.

cormie

https://www.boards.ie/discussion/comment/121783741#Comment_121783741

Unless they leave it empty for two years, then they can only increase it by the 2% cap. So if the LL trusts their tenant and the tenant vouches for their cousin, then it could make far more sense to assign to lease to them. Unless by "Smarten it up" you mean do extensive improvements and increase the floor space by at least 25%, or the BER rating by so many points, or a combination of other requirements as listed here:

https://www.rtb.ie/registration-and-compliance/setting-and-reviewing-rent/guide-to-rent-pressure-zones

https://www.boards.ie/discussion/comment/121784770#Comment_121784770

Again, that really depends on how far below market rate the op is currently paying. I suspect most people here know the RPZ rules, and yet rents continue to rise in excess of those rules. Hence why I didn’t say the LL wouldn’t rent to the op’s cousin, but that it would be highly likely if the rent was far below current market rate, the LL would advertise the property for rent.

And no, I didn’t mean extensive improvements, after 6 yrs, in all probability the place will need to be freshened up before reletting. I’ve nearly always had to repaint after periods like that and replace items which are worn.

BtxKiddo

Thanks all for the replies. It’s fair to mention that the current rent we pay it’s way below the market…

cormie

Yeah most people here may know the RPZ rules but I reckon most renters outside of accommodation forums don't.

@BtxKiddo you can request with the LL to assign the lease to your cousin. If they refuse and you see it being advertised at a much higher rate than legally allowed, it's at your discretion what to do with that information.

3DataModem

https://www.boards.ie/discussion/comment/121783741#Comment_121783741

"It makes more sense to allow your tenancy to end, smarten it up a bit, then advertise it for rent."

No, it does not, because doing so within two years of allowing the tenancy to end is breaking the law.

https://www.boards.ie/discussion/comment/121786858#Comment_121786858

If you are going to quote a post, don’t edit it yourself and then put quotation marks after it, it is disingenuous and not what I posted.

It certainly does make more sense for the LL to end the current tenancy if the rate is considerably below market rate.

3DataModem

@Dav010 fair enough, edited it.

...Ghost...

https://www.boards.ie/discussion/comment/121785671#Comment_121785671

So, if the LL having been very generous to the OP by continuing to rent "way below" the market rate wants to rent it out for market rate (albeit against the ridiculous RPZ rules), then the OP should just be spiteful and report to RTB? It's no wonder so many LLs are jumping out of the market. It's the LLs who are generous by keeping the rent low that get shafted by these RPZ rules.

Note: I'm not a LL, have never been and will never be.

Bass Reeves

https://www.boards.ie/discussion/comment/121785671#Comment_121785671

In that scenario the LL may give the new tenant his exit papers and then sell the property.

It's definable a consideration for LL where a property is significantly below market ( greater then 20%). The only factor that may stop them is the capital gains, selling costs and trying to decide where to reinvest his money.

@BtxKiddo is it long since the LL has risen the rent. If is the full 6 years then LL can increase the rent by 15/16% approximately. He may be happy to rent it again at that rate. I would not be reporting him.

As rental properties are hard to come accross I definitely try to negotiate access with him. PM send

BtxKiddo

Thanks everyone for the opinions. At no stage i’m thinking to report the LL if he will decline my suggestion regarding my cousin taking the rent. Even if he will increase it slightly considering the market, will be a real blessing. i was just checking to see if he goes according to the law what are the options which considering that never was any issue between the two of us i think he might accept my cousin.

BtxKiddo

https://www.boards.ie/discussion/comment/121786955#Comment_121786955

Never thinking to do that. I will talk to him reasonably and even if he will increase it but still below the market my cousin will take it…

bucketybuck

https://www.boards.ie/discussion/comment/121784626#Comment_121784626

Yeah, old tenants are always calling by for a random chat, happens all the time.

blackbox

https://www.boards.ie/discussion/comment/121788075#Comment_121788075

Collecting post?

Bass Reeves

TBH going back to create trouble for a LL who treated you well and rented to you at below the market rate for a substantial amount of time would not be in the phycse of many. There is enough messy LLmout there without encouraging more of them

meijin

Oh, so are you all supporting breaking the law by LLs?

https://www.boards.ie/discussion/comment/121788433#Comment_121788433

No one is supporting breaking the law, sometimes you just have to see the reality of the situation. Have you any indication of how often tenants revisit previous rentals? Personally I doubt many are bothered, especially if they have had a good relationship (as confirmed by the op). Also, the op is probably going to need some leeway on the notice period if he/she is buying a house, there goes the incentive to get involved in any dispute later.

Claw Hammer

The new tenant has to be told how much the old rent was. The rent has to be notified to the RTB on registration. The RTB are now chasing up non compliance with the rent cap. When a landlord is caught in breach they have to pay back all the excess rent to the tenant.

Kaisr Sose

https://www.boards.ie/discussion/comment/121789158#Comment_121789158

Is there a source for that?

In my experience the RTB are very lax, with poor use of, or just poor resources.

cormie

https://www.boards.ie/discussion/comment/121786955#Comment_121786955

There's too many factors of why the housing situation is in such a mess that it would derail the thread to start discussing them all. Yes the laws may make it more difficult for landlords to get a maximum ROI and some may decide it's not as easy to make a return as they thought, so they sell and there's less supply as a result. Market value in a market where so many are desperate for a basic human need, does not equate to fair value. The spiralling knock on effect of market value along with so many other factors has lead us to where we are.

You can't blame LL's for wanting to maximise their ROI in a capitalist World, but reporting breaches of RPZ restrictions does help to curtail a spiralling market value, which overall would appear to have a net benefit for wealth distribution and the greater good. The act of reporting could therefore be seen as a moral obligation and not at all as an act of spite, even though I'm sure many reports are done out of spite given the world we live in.

...Ghost...

https://www.boards.ie/discussion/comment/121789551#Comment_121789551

I know a LL well enough for the odd chat. By coincidence, my OH was good friends with his tenants via school connections. The LL was charging a couple hundred below market rate for over 10 years.

He wouldn’t have increase the rent at all were it not for the RPZ coming in, as he knew he would have been at a loss and much higher risk when the tenants eventually moved out last month. The tenants were the type a LL dreams about. Always paid on time. Never gave any trouble and maintained the property themselves.

I’m sure the rent charged now is within the rules, but it would be nasty of the old tenants to report if it had been increased closer to market rates.

The RPZ rules are counter productive and have a negative impact on the overall market. Your earlier comment seemed to suggest that the OP should check the advertised rent price only if the LL refuses to rent to the cousin. Rightly or wrongly, I think that’s spiteful under the circumstances. I’m glad the OP has said they wouldn’t take that road.

cormie

https://www.boards.ie/discussion/comment/121789717#Comment_121789717

I can't see much reason a LL would refuse to assign the lease to a cousin of a model tenant, unless they planned to hike up the rent beyond the limits. To say I was suggesting the OP do something out of spite is wrong. Some people may feel obligated to report it from a moral perspective, for the greater good.

Unless there's data to show the RPZ rules are specifically negatively impacting the overall market and not just that there are instances where they could have a negative impact in line with other aspects of the market, then that's just speculative.

...Ghost...

https://www.boards.ie/discussion/comment/121790512#Comment_121790512

The OP being a model tenant does not mean the cousin would be. The cousin could be a terrible tenant and the OP being family might be willing to put in a good word to give them the advantage. We could speculate and come up with other reasons aside from financial gain, but we don't and won't know the answer.

Your words to the OP were

you can request with the LL to assign the lease to your cousin. If they refuse and you see it being advertised at a much higher rate than legally allowed, it's at your discretion what to do with that information.

Call it moral obligation, or greater good, but I see the suggestion of being along the line of "if the LL doesn't play ball, shaft him/her if you can". Maybe that's a little on the harsh side, but that's the suggestion, because it is based on whether the LL gives the tenancy to a relative of the OP. If they refuse, go see what the new rent is and report if above RPZ allowance.

By the way, i'm not championing the idea of a LL breaking the rules, but I see good LLs being forced to either charge a tenant more than they would be satisfied with, or lose out later when a new tenancy starts.

There is plenty of data to show that rent controls and caps negatively impact a market. Not that it matters to a Government just looking to get re-elected for another term, or two. The impact takes a few years to really hit home and decades to reverse some of the damage. It's outside of the scope of this thread, but here is an article worth a read.

https://www.brookings.edu/articles/what-does-economic-evidence-tell-us-about-the-effects-of-rent-control/#:~:text=Rent%20control%20can%20also%20lead%20to%20decay%20of%20the%20rental,these%20investment%20by%20raising%20rents.

It's quite balanced, but the important bit of text which we are now seeing here in Ireland is

"A substantial body of economic research has used theoretical arguments to highlight the potential negative efficiency consequences to keeping rents below market rates, going back to Friedman and Stigler (1946). They argued that a cap on rents would lead landlords to sell their rental properties to owner occupants so that landlords could still earn the market price for their real estate."

cormie

https://www.boards.ie/discussion/comment/121790700#Comment_121790700

Yes, that's true, but a recommendation from somebody you know could save time and hassle and they could always evict them before 6 months if they did have issues with them. Whatever risks there may be with the cousin, are greater with somebody completely unknown besides a few references and bank statements. They could ask to meet the cousin to see if they are a good fit too.

I'm sorry that your experiences have lead you to interpret my post as being driven by spite. My post was on the basis of them seeing it advertised at a much higher rate and if they feel this as immoral and reporting them would be for the greater good, that's up to them. Nothing to do with spite :)

You mentioned in your previous post "as he knew he would have been at a loss" and mention "or lose out later" above too. What loss are you referring to? The loss of opportunity to profit more or have their investment perform better than investing elsewhere? As long as they are earning a reasonable gross yield then any loss is just lost opportunity to gain more.

The housing issue is complex and there's many factors at play, there's probably a much better solution which involves an element of capping rent. The system we have in Ireland is a complete mess, and as much as I feel that legality does not equal morality, I think LL's breaking the law to boost yield when they already had a good yield, when their tenants are not taking their place out of anything other than sheer desperation, is wrong.

...Ghost...

https://www.boards.ie/discussion/comment/121791096#Comment_121791096

I don’t think your post was driven by spite. I think the suggestion you made was one which if carried out would have been an act of spite if the OP were to follow the direction.

A LL renting a property is providing a service. The LL should be free to charge the market rate rather than be tied to lower rates which had been offered to a good tenant. Government interference in the form of RPZs doesn’t work. It collapses confidence in the market and leads to LLs exiting the market and a reduction in investment in rental properties.

If a LL was giving a tenant below market rate before RPZ was introduced, they were going to be stuck charging the next tenant below market rate when the good tenant moved out. They might have been happy just having the mortgage payment covered, but now many are receiving near the same low rent while the mortgage interest on the property has dramatically increased.

cormie

https://www.boards.ie/discussion/comment/121791146#Comment_121791146

It would only be an act of spite if spite was the motive rather than moral obligation.

Being free to charge market rate when there is a drastic under supply of something that is a basic need will lead to spiralling market rates, far beyond what is affordable for renters, we're already there even with RPZ's. Having laws in place that will somewhat curtail that spiral isn't the solution to the mess, but along with other policy changes, it may at lessen the madness.

If an LL isn't profiting as much as they had hoped with their investment, then they may just have to something a little more creative :)

...Ghost...

https://www.boards.ie/discussion/comment/121793147#Comment_121793147

I think you are confusing legality with morality. If something is illegal, it is not necessarily immoral. It's illegal to drive a car without a valid tax disc, but it's not immoral.

If there is any tangible connection between the LL and the person reporting an increase in rent above the approved RPZ allowance, it is not a moral decision to report the LL. It is a spiteful one. There is no other logical way to view it.

I have already pointed out why having RPZ rules does not lessen the madness. The opposite is true as less LLs come into the market and existing LLs, (particularly single property LLs) exit the market as a direct consequence of the RPZ rules, which happen to also increase the overall price of properties. It is counter-productive.

Around half of LLs here own a single rental property and make very little ROI. About 80% in total rental properties are owned by LLs with 2 or less properties according to a 2021 Irish Times article. This time last year, 40% of residential sales were small LLs exiting the market. How does that help renter?

The spiraling market we are currently in is not to be placed at the feet of LLs. That's similar to saying the price of bread is the fault of the supermarket. The truth is more complex in both. However, we don't see the Government coming in and putting price caps on what retailers can charge, or what energy providers could charge. There were some bluffs made on the latter in the form of taxes on energy companies, but nothing was to come of it despite the huge increases we saw.

The answer to reduced rents is competition. With limited supply, competition is zero at present. RPZs don't work at all. You can clearly see this.

Suggesting they get more creative to increase their income is what I would consider to be a snide insult to the LLs stuck on low, or negative income because they can't raise the rent to market rates. Your comment suggests you don't know very much about rentals from a business, or investment perspective. I don't know of any other business where the Government have come in and put caps on the prices consumers, or service users pay. But yeah, fcuk the LLs. They were asking for it, weren't they? How dare they for wanting to charge the market rate for renting their property.

I've made my point of view clear, so I will leave it there.

Claw Hammer

https://www.boards.ie/discussion/comment/121789309#Comment_121789309

https://threshold.ie/faq/rent-increases/

A landlord is therefore required to provide the tenant, in writing, with the following information when the tenancy begins: 

• The amount of rent that was last set, which is the rent amount the previous tenant was paying in the rental dwelling. 
• The date the rent was last set, which is the date that the tenancy commenced or the date the landlord previously set and served the notice of rent review. 
• A statement as to how the rent was set in the rental property having regard to the RTB Rent Pressure Zone calculator which reflects the latest HICP inflation. Landlords can use the print option from the calculator to present this information. 

cormie

https://www.boards.ie/discussion/comment/121793423#Comment_121793423

Thanks for the post. I'm not confusing legality with morality. Reporting somebody for doing something illegal that has no affect on anyone else would be most likely driven by spite, or some obsession with adhering to the law. If somebody holds the opinion that reporting somebody would help contribute to a greater good of society, then this would have a moral motive.

I'm not saying RPZ's are the answer and LL's are the problem, far from it. I think putting people's basic needs of shelter in the hands of people who want to maximise ROI is always going to be problematic, especially when there's such a low supply. Investing in property is a very obvious and comparatively easy way to make money in general. There's more creative and rewarding (not just financially) ways but they tend to be more risky and require a lot more work.

meijin

https://www.boards.ie/discussion/comment/121794098#Comment_121794098

but it does affect someone else - the new tenant, and potentially even tenants in other properties who might get a rent increase based on that valuation

cormie

https://www.boards.ie/discussion/comment/121794830#Comment_121794830

I think you've misinterpreted what I was saying. I'm guessing you're referring to where I've said "Reporting somebody for doing something illegal that has no affect on anyone else would be most likely driven by spite, or some obsession with adhering to the law". This was referring to something completely different than what is being spoken about here, like if someone was to report someone for selling alcohol at 12:29 on a Sunday :)

spaceHopper

This is one of the negative effects of the rent pressure zones.

A LL has a good tenant, they don’t really increase the rent and the rent falls below market value. They are then blocked from increasing the rent in line with inflation. This devalues their investment. So whenever a tenant leaves they increase the rent to the max they can get to recover some of the lost rent and to bring it back into line with current rents. This causes rents to increase faster for new lest.

Any new rental properties have to set their rent to the max from the outset, it’s the only time they will be allowed to do it.  

It also stops people from moving because if they do their rent jumps.

OK so they set new rules. You can’t increase the rent by more than inflation, inflation runs away. Panic, you now can’t increase rents by more  than 2% or inflation which ever is the lower. And you can’t increase the rent when there is change of tenant by more than 2%.

It’s also crazy that the most affordable way increase rents to the market rate for an apartment that can’t be made 25% bigger is to leave it empty for two years.

LLs who break the law and charge the market rate for new tenants, could get prosecuted but in reality I don’t think they will. Tenant reports them to the RTB, LL ignores it what will the RTB do. If they take a prosecution they run the risk of high court challenge on conational grounds and the whole RPZ gets struck out. Or the LLs sells and pays the tenant out of the sales proceeds

It’s the last two or three governments fault we are in this mess. They stopped build social housing and didn’t restart it during the crash or just after it. They should have build state owned housing when interest rates were low. Instead they interfered from the sidelines  

Any wonder LL’s are selling up.