Increasing Rent

Anthonylfc · 05-11-2018 3:06pm #1

i've a house that i let out 10 years ago , current tenants are there bout 7 years and no issues whatsoever ( thank god ) but it's a 4 bed house and i'm getting alot less that market value for rent , i want to increase this but unsure how to word it without it turning into a conflict

i get €1050 a month at the min and has been that since day 1 , so 7 years now

i'm looking for €1250 ( not a huge increase considering both people work full time and no kids )

currently 3 beds in same estate listed for €1450-1600 so i think i'm not being to unreasonable , i know i could get alot more etc , but these are nice tenants and i just want to get a little more to cover costs , cause at the min after i pay tax etc and any work thats needed , there is nothing in the account should a big problem arise

DubCount · 05-11-2018 3:29pm

Is the property in a Rent Pressure Zone? If so, the increase will be restricted to a maximum of (7*12/24)*4%*1050 = 147.

If its not in a RPZ, then my advise is to increase to full market value immediately. Even though you have nice tenants now, if an RPZ is brought into your area, then you will be stuck on the lower rate even if your current tenants move out, and even if the property is sold. Our current government does not reward the nice guy.

Check out the RTB website for an exact template of the letter advising a rent increase. Follow all directions including the calculation of the rent increase, providing examples of other comparable properties etc.

Good luck !!

Anthonylfc · 05-11-2018 3:41pm

its in the zone

Plumbthedepths · 05-11-2018 3:51pm

DubCount wrote:

Is the property in a Rent Pressure Zone? If so, the increase will be restricted to a maximum of (7*12/24)*4%*1050 = 147.

4 per cent of 1050 is not 147, it's 42.

cruizer101 · 05-11-2018 3:58pm

Its 4% per 2 years though so the total they can increase is 147

amcalester · 05-11-2018 4:00pm

Plumbthedepths wrote: »

4 per cent of 1050 is not 147, it's 42.

7 Years since the last increase so the OP is allowed increase above 4% to "catch up", any subsequent increases are limited to 4% per year.

@ OP increase it to the max you are allowed to. Your tenants won't leave because you're still cheaper than the neighbouring houses.

Anthonylfc · 05-11-2018 4:03pm

no idea what im allowed to charge tbh

they moved in 7 years ago ( before all this stuff with rent caps etc )

any idea what i can ask for ?

amcalester · 05-11-2018 4:08pm

Anthonylfc wrote: »

no idea what im allowed to charge tbh

they moved in 7 years ago ( before all this stuff with rent caps etc )

any idea what i can ask for ?

About e1200 depending on the dates, there's a calculator here that'll do it for you.

tvjunki · 05-11-2018 8:23pm

You need to use the letter template on rtb website. You give the tenants 90days notice of the rent increase.
Use the calculator on rtb site. Type in the date or last rent increase and what the rent is. After this notice you can increase the rent yearly. Make sure all in the right format.
If the tenant moved in 1st of jan 2018 after 12 months you can send a new notice on the 1jan 2019 that the rent is increasing in 90 days.

You also need to state 3 comparison properties to your house on the notice. Daft shows let agreed on it advanced page. Print off a copy and keep on file. If you don't you will end up worse with a fine from rtb.

tvjunki · 05-11-2018 8:33pm

If they moved in 7years then they went through one 4 year cycle. Now into 3 years of another part 4 cycle. After this year they are into 6 years right to stay.

Do not give a lease in writing. Go from one rolling month to another. If you do give a lease and you need to sell you will have to sell with a sitting tenant. House is now devalued as only landlords with cash would be able to buy. Banks will not give mortgages without vacant possession.

If you give a lease put in on the second page a break clause that the landlord can give notice under the residential tenancies act. Very important to put in.
Once you have prepared the notice and completed the calculation go to citizens information to check. They are brilliant and are impartial.

Just bare in mind the government might bring down the line that you cannot evict your tenant on the sale of a house.

pc7 · 06-11-2018 2:29pm

Going by the calculator you can put it up as per below approx. I would do it to cover yourself, they have templates also for increases (and you need to give 90 days notice)

Calculation:

R x (1 + 0.04 x t/m)

€1050 x ( 1 + 0.04 * 85/24) = €1198.75

tvjunki · 06-11-2018 8:55pm

pc7 wrote: »

Going by the calculator you can put it up as per below approx. I would do it to cover yourself, they have templates also for increases (and you need to give 90 days notice)

Calculation:

R x (1 + 0.04 x t/m)

€1050 x ( 1 + 0.04 * 85/24) = €1198.75

You forgot the 3months of the 90day notice.

You work for formula from right to left.
so
€1050 x(1+0.04X88/24)=
€1050x(1+0.04x3.6666666666
€1050x(1+0.14666666666666
€1050x(1.14666666666666)
€1204

Is is 88 months from the last 7years plus the 3months notice.

OP you are not far off what you wanted. Just check the number of months since the last rent was set and if it was more than 88 months(which includes the 3months notice) then amend the formula.

Once again many of us have come up with different amounts and the Government make things complicated.

OP
Use the template on the rtb site.

Use the letter template from the rtb within rpz area at the bottom of this page. https://onestopshop.rtb.ie/during-a-tenancy/rent-reviews-in-a-rent-pressure-zone-rpz/sample-notices-of-a-rent-review/

As you have not increased in the number of years you have also been stung only having the rent set for 2years and then you can increase yearly by 4%.
See from RTB site.

https://onestopshop.rtb.ie/during-a-tenancy/rent-reviews-in-a-rent-pressure-zone-rpz/
For tenancies in Rent Pressure Zones which began before the 24th of December 2016, the landlord can only review the rent 24 months (2 years) after the tenancy came into existence, or 24 months after the date the rent was last set.

Next thing is once you have increase the rent keep increasing the rent as your property will devalue if the rents do not keep up with market rents.

ted1 · 06-11-2018 11:00pm

Plumbthedepths wrote: »

4 per cent of 1050 is not 147, it's 42.

That’s great , well done on your maths. But they are not relevant here. The op can increase by more than 4% if he hasn’t increased the rent in 2 years

tvjunki · 07-11-2018 12:20am

ted1 wrote: »

That’s great , well done on your maths. But they are not relevant here. The op can increase by more than 4% if he hasn’t increased the rent in 2 years

I think that only applies if the property was empty..and then others here would challenge that.
Things are so complicated in this country.

ted1 · 07-11-2018 2:07am

tvjunki wrote: »

I think that only applies if the property was empty..and then others here would challenge that.
Things are so complicated in this country.

No it applies regardless if empty or not. It’s not very complicated at all.

Anthonylfc · 07-11-2018 9:59am

have contacted the tenant and to be honest he is cool with an increase as he knows he paying wayyyy less that market average ( its a 4 bed ) other 3 beds in the area are between 1550-1650 and he is paying me 1050

we actually have a great relationship in that regard , and he looks after the place

to point out , he's over 7 years in the house and ive never raised the rent , what he is paying now is what he paid from day 1

new gas boiler was fitted last year and he never asked a penny , other small stuff he's never asked a penny

he called me yesterday to say his intention is to eventually buy the house off me and he knows its below market value and for me to just go easy on him with the increase

and we havnt actually got a contract etc , but will be drawing one up asap

pc7 · 07-11-2018 10:14am

Still do it all by the book, letter (use the template), 90 days notice, stick to the amount the calculator shows you. Peoples circumstances can change, you are a business not a friend (while its great to have a good relationship). With all the interference in the market currently just do it all by the book.

tvjunki · 07-11-2018 11:07am

Do not give a contract...if you do they have more rights and if you need to sell they are allowed to stay and you have a sitting tenant. Leave as is. You will be devaluing your property as when you go to sell only those with cash will be able to afford it as banks want vacant possession.

If you do decide to give a contract make sure there is a breakout clause that the landlord can use the residential tenancies act notices to leave. Put in a page with the part 4 notices as on the rtb website.

They are still in a part4 cycle with a year left.

tvjunki · 07-11-2018 11:13am

pc7 wrote: »

Still do it all by the book, letter (use the template), 90 days notice, stick to the amount the calculator shows you. Peoples circumstances can change, you are a business not a friend (while its great to have a good relationship). With all the interference in the market currently just do it all by the book.

Agreed.
If you charge more than the allowance your lovely tenant could go to rtb and after years of paying over the amount can claim over charging and you will have to pay compensation which will be large and pay back the allowed amount.

If you see so many of us have different understanding of the law.

I would check this all with citizens information as a back up and they will check with rtb.

Fian · 07-11-2018 4:20pm

Bear in ind that you are restricted to 2% per annum increase for teh first increase in respect of an existing tenancy that was in being before the RPZ legislaiton came in. 4% per annum allowed after the increase.

If you wait until the tenancy rolls over, or perhaps indicated to the tenants that you don't want to commence a new part IV tenancy, you oculd increase by 4% per annum since the last rent was set. As set out below:

R x (1 + 0.04 x t/m)

€1050 x ( 1 + 0.04 * 88/12) = €1358.00

You have lost out by not increasing the rent before or immediately after teh RPZ legislaiton came in and by not increasing it each year. That loss will carry forward as long as the RPZ remains in being. It may also impact the price you would get if you sold the house, though it sounds like a house that could sell to an owner occupier rather than an investor so it might not have too much of an impact.

Any generousity towards your current tenants will follow the house to all future tenants while the RPZ system is in place. So you cannot be nice/generous to your current tenants without that generousity also applying to all future tenants.

you are well behind market rent, if i were you i would be raising by as much as the legislation permits. If the current tenancy is close to expiring (and it probably is) I would consider either not starting a new Part IV with these tenancts or increasing to the maximum (using the formula above) on the rollover of part IV.

Anthonylfc · 07-11-2018 5:02pm

what if the house isn't registered with the prtb ???

or no contract

ouxbbkqtswdfaw · 07-11-2018 5:29pm

tvjunki wrote:

Next thing is once you have increase the rent keep increasing the rent as your property will devalue if the rents do not keep up with market rents.

Why is this?

amcalester · 07-11-2018 5:33pm

vrbpgxut2ziw6h wrote: »

Why is this?

Future owners are bound by the current below market rent making the house less attractive to prospective investment buyers.

DubCount · 07-11-2018 5:34pm

Anthonylfc wrote: »

what if the house isn't registered with the prtb ???

or no contract

the legislation over-rides any contract anyway, so lack of a contract does not matter. OP could contract for 2,500 per month, and it does not over-ride the RPZ pricing restrictions - even where both landlord and tenant are happy with the contracted rate. 1 year after agreeing a contract, the RTB could overturn the rent increase and leave landlord out of pocket.

Registration with the RTB is required and should happen. Even if not registered, the legislation still applies, and the RPZ calculations and requirements for a formal rent review process still apply.

There's just no wriggle room, even where a landlord and tenant agree otherwise.

Fol20 · 07-11-2018 6:38pm

Honestly OP if market rate is between 16-1700 per month. I would consider doing substantial work to the property to get it up to market rate. In the past I wouldn’t have increased rent for long term tenants if they were hassle free knowing that I could charge whatever I want after they leave. The fact the government are constantly changing rules, the last thing you want is to be snookered when they eventually do leave. After talking to some ea. This RPZ directly affects resale value as well so protect your own interests.

Even if you increased to 1200. That’s an opportunity cost of an extra 6k per annum. That’s some serious cash that can’t be ignored. If you did work. With that difference. You could easily recoup it.

tvjunki · 08-11-2018 12:53am

Fian wrote: »

Bear in ind that you are restricted to 2% per annum increase for teh first increase in respect of an existing tenancy that was in being before the RPZ legislaiton came in. 4% per annum allowed after the increase.

If you wait until the tenancy rolls over, or perhaps indicated to the tenants that you don't want to commence a new part IV tenancy, you oculd increase by 4% per annum since the last rent was set. As set out below:

R x (1 + 0.04 x t/m)

€1050 x ( 1 + 0.04 * 88/12) = €1358.00

You have lost out by not increasing the rent before or immediately after teh RPZ legislaiton came in and by not increasing it each year. That loss will carry forward as long as the RPZ remains in being. It may also impact the price you would get if you sold the house, though it sounds like a house that could sell to an owner occupier rather than an investor so it might not have too much of an impact.

Any generousity towards your current tenants will follow the house to all future tenants while the RPZ system is in place. So you cannot be nice/generous to your current tenants without that generousity also applying to all future tenants.

you are well behind market rent, if i were you i would be raising by as much as the legislation permits. If the current tenancy is close to expiring (and it probably is) I would consider either not starting a new Part IV with these tenancts or increasing to the maximum (using the formula above) on the rollover of part IV.

As op have a lease in place before 2016 they have to put 24 in the formula then after that can put 12 in for yearly review. This is an existing tenancy not a new one after Dec 2016.
You set this for 2years then review yearly.

08-11-2018 2:03am

Anthonylfc wrote: »

have contacted the tenant and to be honest he is cool with an increase as he knows he paying wayyyy less that market average ( its a 4 bed ) other 3 beds in the area are between 1550-1650 and he is paying me 1050

we actually have a great relationship in that regard , and he looks after the place

to point out , he's over 7 years in the house and ive never raised the rent , what he is paying now is what he paid from day 1

new gas boiler was fitted last year and he never asked a penny , other small stuff he's never asked a penny

he called me yesterday to say his intention is to eventually buy the house off me and he knows its below market value and for me to just go easy on him with the increase

and we havnt actually got a contract etc , but will be drawing one up asap

What? the ? he called you, letting you know his intention to buy off you?? at this point, you might be able to use that to keep goodwill, but you are under no obligation to sell to him, but if you let them stay another year, it looks like they will be entitled to a 6 year tenancy, Im not sure how that works, I thought 6 year tenancy was already in place and Im not sure what the situation is now regarding selling up and ending a tenancy. If your post quoted below is accurate, it could be tricky for you, Ive known tenants who were nice when it suited them, what happens if you dont want to sell to this guy and he decides to not be nice, I guess if its not registered you could register it now and thats a starting point. Id a tenant who told me the same thing and I thought it was some cheek, Id follow the advice of posters here and seek some advice as advised, this all shows that being friendly and not treating it as a business can bring difficulty to the landlord.
I was friendly myself, I actually think it would be better to not be even friendly, just blank, I think that can be difficult as a landlord of a one off let.
This shows to me at least that its not possible to give preferential rates to tenants by landlords compared to what they can achieve as you can be screwed for it (namely by the passing on of the letting rate to new tenants and to new purchasers), no matter how nice you are.

Best advice here, other than get advice, do a complete renovation and get market rate, dont know where you stand if you're not rtb registered.

Anthonylfc wrote: »

what if the house isn't registered with the prtb ??? or no contract

You need to be, aside from being the law, stops anyone messing you about, and hanging you out to dry.

Anthonylfc · 08-11-2018 10:03am

from day one he said he wanted to eventually buy the house

i mean if he doesnt like my increase can't i just serve him with notice to end tenancy and then re-let to him at diff price etc ??

( i'm not and wouldn't do that to the chap ) just seeing if that would be allowed or prohibited etc

amcalester · 08-11-2018 10:11am

Anthonylfc wrote: »

from day one he said he wanted to eventually buy the house

i mean if he doesnt like my increase can't i just serve him with notice to end tenancy and then re-let to him at diff price etc ??

( i'm not and wouldn't do that to the chap ) just seeing if that would be allowed or prohibited etc

No, you can't re-let it to him (or anyone else) at a rent of your choosing.

The max rent you can charge is that churned out by the formula, circa €1200.

Do you want to sell to him? It's a bit like me telling a taxi driver I'm going to buy his car off him at the end of the journey, not really my decision.

Anthonylfc · 08-11-2018 1:05pm

amcalester wrote: »

No, you can't re-let it to him (or anyone else) at a rent of your choosing.

The max rent you can charge is that churned out by the formula, circa €1200.

Do you want to sell to him? It's a bit like me telling a taxi driver I'm going to buy his car off him at the end of the journey, not really my decision.

yep , just want the value to match what i owe and i'll cut the noose around my neck , im not an invester hoping to make money from rent

my circumstances changed when i lived in it so i decided to rent it out and pay for itself

Fian · 08-11-2018 1:30pm

tvjunki wrote: »

As op have a lease in place before 2016 they have to put 24 in the formula then after that can put 12 in for yearly review. This is an existing tenancy not a new one after Dec 2016.
You set this for 2years then review yearly.

Yes.

If they start a new tenancy though, which will happen after the current part IV rolls over or if they get a new tenant, the OP can increase by 4% instead of 2% for each years since rent was last set. So the OP should consider waiting until the end of this tenancy - which has almost expired, and then increasing rent by the amount i set out rather than increasing it by the 2% he is capped at in the existing tenancy.

would be a bit safer to get new tenants in case they argue that the rollover does not constitute a new tenancy, but will probably be ok regardless if op just increases after rollover.

Increasing Rent

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