Landlord looking for advice.

Dinarius · 26-06-2019 9:55am #1

The lease on the one-bed apartment we let is due for renewal on October 1st.

So, we must give notice of willingness to renew and any rent increase by July 1st.

I just received a call from one of the tenants - they're a couple and, to be fair, they have been ok for the most part for the last four years. Though last year the oven "caught fire" (have you ever bought a cooker that had a flammable part?) and we had to replace the entire cooker. That €600 took out our €50 rent increase entirely.

They noticed some water (a small amount) in the hot-press last week. They thought nothing of it.

This morning, there is a pool of water in the hot-press and our beautiful solid oak floor in the hall next to the hot-press is squelching underfoot.

I am not happy that they didn't tell me about the water last week.

A tank is easily fixed. The floor is a potentially very expensive.

What can I do in a situation like this?

I'm tempted to renew on a monthly lease only, particularly as other things have cropped up in the past just after we resigned for another year.

Thanks.

D.

The Student · 26-06-2019 10:05am

They are entitled to stay in the property for six years so you wont be able to renew on a monthly basis (welcome to the landlords world).

You can only terminate the tenancy for one of the three reasons. In my view I think you have a few options either sell the property or have more inspections. For what its worth I would be advising the tenant the cost of the replacement of the floor would be coming out of their deposit.

They have a responsibility to advise you if there are any leaks etc. They are not obliged to fix the leaks but if you don't know they exist how can you mitigate their damage.

If you are going to keep the property I would reiterate to the tenants their responsibilities and get the tenants to pay for the floor damage.

Dinarius · 26-06-2019 10:12am

Many thanks for the info.

At what stage did they gain the right to stay in the property for six years?

We were caught napping on the RPZ changes. So, they are currently paying €1250 p/m for a good sized, ground-floor, one-bed apartment in Terenure, with own front door and outside terrace and back garden. Market value would be at least €1500.

We intend raising rent by 4% to €1300 in October. But, we are also tempted to sell into this frothy market.

Thanks again.

D.

The Student · 26-06-2019 10:17am

Once they tenancy has passed 6 months (it by be shorter with recent changes but it was 6 months) they are automatically entitled to a six year tenancy.

If you want to PM me with your queries I can answer. I assume you are new to the landlord game so are not fully sure of the ins and outs of the landlord game.

amcalester · 26-06-2019 10:18am

When did they move in? Are they on the 4 or 6 year Part IV cycle?

Not renewing their lease because they didn’t notify you of the leak isn’t going to make repairing it any cheaper, nor will it allow you increase the rent for the next tenant.

So, your decision to renew should be based on whether you can get a better tenant in.

rightmove · 26-06-2019 10:23am

Be cautious about taking anything from the deposit. Rtb is so pro tenant

....... · 26-06-2019 10:23am

Dinarius wrote: »

(have you ever bought a cooker that had a flammable part?)....

....our beautiful solid oak floor in the hall next to the hot-press is squelching underfoot.

Yes - first cooker I ever bought went on fire - it was faulty. It happens. But why did you pay 600 quid to put in a new cooker? Surely for a rental you would have just put in a basic one - DID have 7 free standing cookers under 300 euro.

Ditto on a beautiful solid oak floor - in a rental???? Why!! Put in a cheap hardwearing laminate.

Mad_maxx · 26-06-2019 10:24am

Dinarius wrote: »

The lease on the one-bed apartment we let is due for renewal on October 1st.

So, we must give notice of willingness to renew and any rent increase by July 1st.

I just received a call from one of the tenants - they're a couple and, to be fair, they have been ok for the most part for the last four years. Though last year the oven "caught fire" (have you ever bought a cooker that had a flammable part?) and we had to replace the entire cooker. That €600 took out our €50 rent increase entirely.

They noticed some water (a small amount) in the hot-press last week. They thought nothing of it.

This morning, there is a pool of water in the hot-press and our beautiful solid oak floor in the hall next to the hot-press is squelching underfoot.

I am not happy that they didn't tell me about the water last week.

A tank is easily fixed. The floor is a potentially very expensive.

What can I do in a situation like this?

I'm tempted to renew on a monthly lease only, particularly as other things have cropped up in the past just after we resigned for another year.

Thanks.

D.

Why do you need to bother with a lease?, part 4 rules trump it anyway

3DataModem · 26-06-2019 10:25am

OP, you seem to have some emotional attachment to the apartment. This makes being a landlord very challenging. You have insurance exactly for this type of damage - did you claim?

I use an agent to avoid exactly this type of issue being anything other than a simple business incident rather than something I actually have to see and deal with personally. I suggest you might do the same, especially if you have some attachment to the apartment.

If October renewal is greater than 4 years and less than 4.5 years since they moved in, you can remove them at that time for any reason you want PROVIDED YOU GIVE CORRECT NOTICE, as they are at the end of a "part 4" lease. If you let them stay they are entitled to stay for a further six years unless you sell... the reason it is six is because the "part 4" rules changed a couple of years ago but leases in progress are only affected at next renewal.

SozBbz · 26-06-2019 10:27am

It really astounds me that there are landlords (either accidental or by choice) out there who don't know about Part 4 tenancy rights.

Fair enough people may get cough out by the odd detail but Part 4 is not news.

https://www.citizensinformation.ie/en/housing/renting_a_home/types_of_tenancy.html

As for the RPZ's.... that was all over the news and well flagged. The writing was on the wall that the government was going to do something. There was ample opportunity for go for an increase ahead of time.

Sleepwalking is the word.

Also, at the risk of stating the obvious, you do know that you can offset some of your tax liabilities for work that goes into a rented property? So, no that €600 isn't wiped out.

If you do need to replace the floor, put in laminate. Its ideal for rented properties. Relatively cheap and very hard-wearing. You need to be practical as to how you furnish a rented property. You could surely have gotten a new oven for less than €600 also.

https://www.revenue.ie/en/property/rental-income/irish-rental-income/what-expenses-are-allowed.aspx

Browney7 · 26-06-2019 10:33am

Dinarius wrote: »

The lease on the one-bed apartment we let is due for renewal on October 1st.

So, we must give notice of willingness to renew and any rent increase by July 1st.

I just received a call from one of the tenants - they're a couple and, to be fair, they have been ok for the most part for the last four years. Though last year the oven "caught fire" (have you ever bought a cooker that had a flammable part?) and we had to replace the entire cooker. That €600 took out our €50 rent increase entirely.

They noticed some water (a small amount) in the hot-press last week. They thought nothing of it.

This morning, there is a pool of water in the hot-press and our beautiful solid oak floor in the hall next to the hot-press is squelching underfoot.

I am not happy that they didn't tell me about the water last week.

A tank is easily fixed. The floor is a potentially very expensive.

What can I do in a situation like this?

I'm tempted to renew on a monthly lease only, particularly as other things have cropped up in the past just after we resigned for another year.

Thanks.

D.

Have you proof that they saw the water last week and didn't tell you or is this what they told you.

In this market, tenants don't want to be seen as a pain in the hole ringing or getting in touch over something that may turn out to be nothing for fear of p1ssing off the LL - "they call me over every little thing" kind of attitude.

antix80 · 26-06-2019 10:34am

Charge the max increase, and bill them for the damage to the floor if it's something that could have been prevented.
If they don't pay, give them their marching orders.

Personally, if I were you I'd sell up. Doesn't sound like your heart is in being a landlord.

Fol20 · 26-06-2019 10:36am

OP, all the issues you mention can happen and are part and parcel of a tenancy.

Was the cooker a fault with the hardware or an “educational” with the tenant. If it’s the latter, this

Put some industrial dehumidifier where the leak was and it should sort it out. I had the same issue with laminate flooring. And it was fine after it. I would do this sooner rather later or your hardwood flooring may warp. Even if it is damaged, it isn’t a major job unless its a very large and it’s in the Centre. Should only take your handyman 1-2hours to pull it up and swap out the damaged boards. He will need to start on one of the perimeter walls but I wouldn’t stress about it.

In future I’d never go for hardwood flooring in a rental anyway as it’s much more expensive.

Dinarius · 26-06-2019 10:53am

Thanks for the replies.

Yes, I guess there is an emotional attachment (and I admit that’s stupid) coz we lived there for five years before renting it. We spent a lot of money on it when we lived there, including that oak floor!

They are pre-2016, so I assume they’re entitled to two more years to bring it up to six.

Once the leak is fixed, I will make it clear who is paying for the floor repair, if that’s required.

As for using an agent; can we afford to at €1250 a month? If, yes, then I’m all ears!

Thanks again.

D.

Ps. Where would we be without boards.ie ?!

Dinarius · 26-06-2019 10:58am

Ps. They told me verbally (on the phone) this morning that they noticed the water last week.

D.

....... · 26-06-2019 10:58am

Dinarius wrote: »

We spent a lot of money on it when we lived there, including that oak floor!

In fairness, its reasonable to expect some repair on a 9 year old floor at some stage in the 9 years.

rightmove · 26-06-2019 10:59am

Have you thought seriously about selling?

Askthe EA · 26-06-2019 11:01am

Dinarius wrote: »

Thanks for the replies.

Yes, I guess there is an emotional attachment (and I admit that’s stupid) coz we lived there for five years before renting it. We spent a lot of money on it when we lived there, including that oak floor!

They are pre-2016, so I assume they’re entitled to two more years to bring it up to six.

Once the leak is fixed, I will make it clear who is paying for the floor repair, if that’s required.

As for using an agent; can we afford to at €1250 a month? If, yes, then I’m all ears!

Thanks again.

D.

Ps. Where would we be without boards.ie ?!

Your agent fees are tax deductible? Your repairs are tax deductible? OP do you have an accountant?

If you dont mind me saying, I think you need an agent

Dinarius · 26-06-2019 11:11am

Askthe EA wrote: »

Your agent fees are tax deductible? Your repairs are tax deductible? OP do you have an accountant?

If you dont mind me saying, I think you need an agent

I know they're all tax deductible - I'm a sole-trader and, yes, I have an accountant.

But, that doesn't answer my question about the cost of an agent.

If I was getting, as an extreme example, €3k a month for a one-bed, then the cost of an agent would be a no-brainer, assuming that their charges are roughly flat and would be the same annually for any one-bed apartment.

So, my question still stands; does it make financial sense to use an agent for a rental income of €1250 p/m, notwithstanding the fact that it's tax deductible?

In short, a business of X income per month (€3k in my above example) can afford an agent. Can a business of €1250 afford one?

Many thanks.

D.

Ps. regarding repairs to a 9 year-old oak floor being a reasonable expectation. You're comparing apples and oranges. Yes, the odd wax and polish, but repair? No.

26-06-2019 11:13am

If they are pre 2016, then they are entitled to only a 4 year Part 4 cycle. If you are going to move them on at the end of that cycle, you need to do your research and know exactly when and how much notice to give.

Also, you don’t need to renew the lease, they have part 4 tenancy rights anyway.

While it could be argued they should have told you about a leak, they didn’t cause it so I m not sure if you can blame them.

TheChizler · 26-06-2019 11:29am

The Student wrote: »

They are entitled to stay in the property for six years so you wont be able to renew on a monthly basis (welcome to the landlords world).

Just in case there's any misunderstanding here, you can of course continue on a rolling monthly basis OP, don't take it to mean you have to provide a new lease. The 4/6 years thing just means that the tenancy can't be terminated by the landlord outside of a few well defined situations, coming to the end of a lease in that time can't trigger a termination.

beauf · 26-06-2019 11:50am

TheChizler wrote: »

....coming to the end of a lease in that time can't trigger a termination.

What do you mean by this?

TheChizler · 26-06-2019 11:55am

beauf wrote: »

What do you mean by this?

Coming to the end of a lease doesn't mean the tenancy is automatically over and you can't tell a tenant to leave for that reason (unless it was a very short lease at the beginning of the tenancy). The Part 4 and further Part 4 rules apply.

Browney7 · 26-06-2019 11:57am

Dinarius wrote: »

Ps. They told me verbally (on the phone) this morning that they noticed the water last week.

D.

So no proof then really. Who's to say if it got to dispute at the RTB that they'd say they woke up and found the place flooded and called you straight away. You can't look at this with the benefit of hindsight - if they sent on a picture of a small pool of water last week would you have sent a plumber straight away or would you have said "ah sure keep an eye on it and let me know"?

I know in my own rental I'd open the hotpress at most once a month as I simply don't use it.

Just my two cents. Leaks happen, appliances fail and these get more regular as properties age. Best of luck with the repair and whatever you decide. As you said, sale may be worth pursuing in this market

The Student · 26-06-2019 12:05pm

Dinarius wrote: »

I know they're all tax deductible - I'm a sole-trader and, yes, I have an accountant.

But, that doesn't answer my question about the cost of an agent.

If I was getting, as an extreme example, €3k a month for a one-bed, then the cost of an agent would be a no-brainer, assuming that their charges are roughly flat and would be the same annually for any one-bed apartment.

So, my question still stands; does it make financial sense to use an agent for a rental income of €1250 p/m, notwithstanding the fact that it's tax deductible?

In short, a business of X income per month (€3k in my above example) can afford an agent. Can a business of €1250 afford one?

Many thanks.

D.

Ps. regarding repairs to a 9 year-old oak floor being a reasonable expectation. You're comparing apples and oranges. Yes, the odd wax and polish, but repair? No.

Just in case there is some confusion regarding the cost of agents fees.

I have not used an agent in a while but from memory they tend to charge around the 6% plus vat to let the property or if memory serves me right I think around 8% plus vat to let and manage the property.

Personally I manage my own properties as I have built up a network of tradesmen over the years who I trust. I have used letting agents to organize viewings etc as trying to advertise a property and arrange viewings in the current climate is just a nightmare.

You appear to need some advice in relation to the whole landlord game. My offer regarding help via PM still stands.

beauf · 26-06-2019 12:14pm

TheChizler wrote: »

Coming to the end of a lease doesn't mean the tenancy is automatically over and you can't tell a tenant to leave for that reason (unless it was a very short lease at the beginning of the tenancy). The Part 4 and further Part 4 rules apply.

Whats the point of the lease?

Graham · 26-06-2019 12:23pm

For the most part, there is no point.

TheChizler · 26-06-2019 12:28pm

beauf wrote: »

Whats the point of the lease?

Debatably very little point for the landlord. It encourages the tenant to stay longer, but there are ways to get out of it without penalty if the tenant is bothered to do a little work. In this market there will be a very small unoccupied window if the tenant leaves with or without a lease, so little benefit. The benefit is really to the tenant in the initial stages of a tenancy, to ensure they get past the 6 months required for part 4. It also means during a lease a landlord can't terminate the tenancy for the special reasons outlined in the part 4 rules unless the lease has a break clause for them.

overkill602 · 26-06-2019 1:05pm

if you want your unit back do not issue a new lease as said they are pointless part4 over rules leases and can work against you, easiest way to get your place back is to not allow a new part 4/6 start, give notice using rtb template served before current expires remember to give a few extra days then sell or do short term lettings more than 14 days

Dinarius · 26-06-2019 1:24pm

Thanks all.

Just viewed property with a plumber.

Looks like there has been long term seepage down behind bath (which is also the shower) and everything behind tiling and underneath bath that is made of wood is now rotten.

So, major revamp of bathroom required. If it was fetching the going rate, the investment would be recouped in far less time. But,...

That said; we’ve been letting it for 14 years, so some makeover is due.

Decisions, decisions....

D.

Caranica · 26-06-2019 1:28pm

Sell, sell, sell. It's just not worth the hassle, the heartbreak or the stress any more.

marieholmfan · 26-06-2019 1:28pm

<SNIP>

Mod

Quit the trolling

Old diesel · 26-06-2019 1:31pm

OP - when you say they've been in the property 4 years - has the actual 4 year anniversary (4 year pre 2016 changes part 4) come and gone yet.

For example was it October 2015 they moved .

From what I can see - IF.....

You issue the notice of termination BEFORE the end of the part 4 tenancy but the notice period ends on or after the part 4 ends.

Then you don't need the normal specific reasons set down for termination of a part 4 tenancy.

Dinarius · 26-06-2019 2:12pm

Old diesel wrote: »

OP - when you say they've been in the property 4 years - has the actual 4 year anniversary (4 year pre 2016 changes part 4) come and gone yet.

For example was it October 2015 they moved .

From what I can see - IF.....

You issue the notice of termination BEFORE the end of the part 4 tenancy but the notice period ends on or after the part 4 ends.

Then you don't need the normal specific reasons set down for termination of a part 4 tenancy.

Thanks.

I don't think we want to terminate. They're good tenants for the most part.

The problem now is we're faced with a large bill for a bathroom refit, and (tax deductible or not) it will take a few years to claw back.

If we changed tenants and did the refit during the changeover, we'd lose a months rent plus the cost of the refit.

If we refit while they are on holidays, we might be better off in the long run.

Thanks again.

D.

py · 26-06-2019 2:45pm

Have you looked to see if this would be covered under your insurance?

Fol20 · 26-06-2019 2:47pm

I would treat this similar to running a car
- expect to pay out for some jobs every now and again. I would take out 15pc per month for a maintenance budget. Some years. You might have very little. Others years, they might be painful for your bottom line.
- if your worried that the tenant isn’t reporting it on time, you need to be more proactive and do routine maintenance( quarterly inspections) > this would enable you to stop a bigger issue from happening. I don’t do this myself but if a cooker or similar worries you. It might be better to do. In my case this year. Iv has a washing machine break down within 13 months. A bed breaking with 14months of being new but these are just accepted expenditures.
-your better off doing this with tenants in situ, no downtime and you get the job done.

Personally based on your comments so far, it might be better if you sell or hand off to an agent. These types of issues are extremely common and shouldn’t phase you. In one weekend last year I had 3 separate leaks and you just get on with things.

Another point to note is an agency taking over management. It’s not relevant to how much your rental income is. They normally take a percentage of between 5-10pc of your gross income a month so if you only earn 1k or 3k it’s still the same percentage. It’s tax deductible also. In your case they may take about 125e per month which is also about 60net and you can then avoid all the hassle and heartache of knowing all the legislation.

Dinarius · 26-06-2019 2:48pm

py wrote: »

Have you looked to see if this would be covered under your insurance?

Very good point. Will do.

Thanks.

D.

Dinarius · 26-06-2019 3:22pm

Fol20 wrote: »

Another point to note is an agency taking over management. It’s not relevant to how much your rental income is. They normally take a percentage of between 5-10pc of your gross income a month so if you only earn 1k or 3k it’s still the same percentage. It’s tax deductible also. In your case they may take about 125e per month which is also about 60net and you can then avoid all the hassle and heartache of know all the legislation.

Thanks for the reply.

My point was that it's very relevant how much my (rental) income is. 10% of our €1250, when it's below market average, is a lot.

To be honest, in 14 years of letting, we've had very little in the way of hassle. The timing and scale of the problem this time are both terrible!

Stuff happens, I guess.

Thanks.

D.

Fol20 · 26-06-2019 4:53pm

Dinarius wrote: »

Thanks for the reply.

My point was that it's very relevant how much my (rental) income is. 10% of our €1250, when it's below market average, is a lot.

To be honest, in 14 years of letting, we've had very little in the way of hassle. The timing and scale of the problem this time are both terrible! Stuff happens, I guess.

Thanks.

D.

Completely understand what your saying. Similar to insurance. Hopefully you will have another 14 years of hassle free tenants however it’s that “one” tenant that can cause mayhem for you and if your not up to par in knowing the rules or how to play the game, this is when a tenant can really take advantage of a situation and when knowing a good ea can prove very useful.

I manage mine also but if it’s just for one place , it may make more sense to just offload the work for 700 net a year.

Even if they are good tenants, I would have a friendly chat with them that you’d love to keep the rent the same however all this legislation and the implications of the RPZ are forcing my hand. Increase by the max level until you get it somewhat close to market level. If you go onto the RTB website, they have an rpz calculator. If you haven’t increased it for years, you might be entitled to increase by my more than 4pc depending on time frame.

Spanish Eyes · 26-06-2019 5:01pm

Bear in mind, that if you decide to sell, the notice periods for Landlords have increased substantially since June 4th this year. Just a heads up.

https://onestopshop.rtb.ie/ending-a-tenancy/notice-periods-that-a-landlord-should-give/

Dinarius · 26-06-2019 5:05pm

Spanish Eyes wrote: »

Bear in mind, that if you decide to sell, the notice periods for Landlords have increased substantially since June 4th this year. Just a heads up.

https://onestopshop.rtb.ie/ending-a-tenancy/notice-periods-that-a-landlord-should-give/

Thanks for that.

Is it any wonder the rental market is screwed?

There is every incentive to sell and leave it or switch to AirBnB type rental.

When I'm mortgage free, mine will provide a small pension. At that stage I'll probably want to offload it to an agency also.

D.

The_Conductor · 26-06-2019 7:19pm

OP- its very hard to make any suggestion other than to sell.
You're locked into a rent level of considerably below market rate.
The market has peaked.
The tenants, while they're not bad, have probably caused thousands in damage (I put a reclaimed oak floor in a property last year- the materials alone, despite being reclaimed- came to 12k- thankfully, it wasn't my money.........)
You have an emotional attachment to the apartment- which simply put, is a massive hindrance to letting it. You've also let it with remarkably high specifications (such as the aforementioned oak floor)- which tenants do not appreciate- or treat with the respect that they deserve.
Damage to the floor alone- could very well be thousands (and you have the bathroom refit etc to factor into the equation too).

Its very hard to suggest that its a good idea to continue letting this property- the best decision you probably could make, cognisant of the fact that you're locked into a rent level below market rates- is to sell.

beauf · 26-06-2019 7:27pm

If you have a mortgage on something else have to consider if selling the property and clearing all mortgages costs you less tax than paying the tax on the rental income

Dinarius · 27-06-2019 10:19am

beauf wrote: »

If you have a mortgage on something else have to consider if selling the property and clearing all mortgages costs you less tax than paying the tax on the rental income

Interesting point. We have mortgage on both apartment and house. Both variable rates. But, both mortgages are at the same residential variable rate. The apartment mortgage is not at a buy to let rate.

Selling apartment would just about clear both mortgages, after paying capital gains.

Thanks.

D.

Dinarius · 27-06-2019 10:20am

The Student wrote: »

They are entitled to stay in the property for six years so you wont be able to renew on a monthly basis (welcome to the landlords world).

You can only terminate the tenancy for one of the three reasons. In my view I think you have a few options either sell the property or have more inspections. For what its worth I would be advising the tenant the cost of the replacement of the floor would be coming out of their deposit.

They have a responsibility to advise you if there are any leaks etc. They are not obliged to fix the leaks but if you don't know they exist how can you mitigate their damage.

If you are going to keep the property I would reiterate to the tenants their responsibilities and get the tenants to pay for the floor damage.

PM sent.

Thanks.

D.

The_Conductor · 27-06-2019 10:23am

Dinarius wrote: »

Selling apartment would just about clear both mortgages, after paying capital gains.

Sounds like a very enviable situation to be in, to be honest.
I'd strongly encourage you to take this course of action.

beauf · 27-06-2019 10:30am

One long term view is to sell up, then buy back into the market a more suitable and profitable rental property once the market has eased in a year or two. I'm not expecting the prices to fall that much, but I am expecting a rent freeze, and if that happens the only way to set a reasonable rent (if you are locked into a low rent) will be to come to the market with a new rental. I wouldn't expect to make any money from buying and selling, just that you'd re-position yourself better. of course it depends if you can get a mortgage, and your own income can change and scupper that plan.

Maybe thats a lot of hassle, and the plan should be to just pay out the expenses and continue to rent as is. Just accept a more modest return.

ste · 27-06-2019 10:49am

Dinarius wrote: »

Thanks.

I don't think we want to terminate. They're good tenants for the most part.

Also you say you haven't updated in 14 years. The work you need done now is perhaps bad enough timing personally but in the scheme of things if you look at how much maintenance cash you spent (net,tax deduct.) I think you'll see you're doing rather well.

Also ppl commenting on the quality of interiors in there, it's because you lived there for 5 years. Fair play for buying high quality gear.

my advice is get over the bit if the shock of a big outlay & keep trucking. Max out annual rent increase & prepare for other maintenance hits in years to come.

If it's worth while get an agent & suck up cost for a slightly easier life.

Good luck

marieholmfan · 28-06-2019 11:45am

Dinarius wrote: »

ISelling apartment would just about clear both mortgages, after paying capital gains.

Do it.
You have to let out either five apartments or zero and they have to be in the same town.

Landlord looking for advice.

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