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Temp rent reduction for tenant - how to?

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  • 30-04-2020 12:31pm
    #1
    j.s. pill II
    Registered Users Posts: 246 ✭✭


    I currently work overseas and I am renting my house in Dublin to two tenants.

    Good tenants so far and no issues. Today, one of the tenants advised that they have suffered a significant drop in income as they have been placed on the COVID-19 Wage Subsidy Scheme. They asked if I could consider a short term drop in rent in light of their drop in income.

    This is something I am positively considering. I have read some of the other threads here dealing with this issue. There are some unique factors to my own situation and I would like to hear people's thoughts before I proceed.

    I've done some calculations and I can take a short term hit. I am anxious to retain both tenants as living overseas means prospect of finding new tenants is greatly complicated (especially so in light of travel restrictions).

    What I intend to propose is a 1/3 drop in rent for the next 3 months, ex gratia (i.e. I am effectively knocking a calendar month off the year's rent). The situation is complicated by the fact that the second tenant is public sector and is still on 100% of their income. Tenants are two friends who took the house together. I think it is perfectly reasonable to offer a reduction in rent to the tenant whose income has taken a hit without expecting a demand for reduced rent from the other tenant..but maybe I'm being naive?

    If I go ahead with the reduction I want to do some due diligence. I would expect the tenant to provide me with proof of reduced income. I am thinking a letter from their employer. Is there any documentation from Revenue that the employee can get themselves confirming that they are on the COVID-19 Wage Subsidy Scheme? I am aware of their pre-COVID income level from their employer reference.

    I would also like to confirm our agreement in writing, with tenant signing and returning same. Is there anything I should be aware of from a tenancy agreement point of view? I want to make it clear that this is a once off ex gratia arrangement.

    The sector this tenant works in is likely to be severely affected by the current crisis and I would reckon that their financial woes might drag on for some months to come. I have of course thought about the whole 'give an inch, take a mile' aspect but this is (hopefully) an extraordinary circumstance. After the 3 months elapses, I may offer to continue the reduced rent but to take the difference from their deposit. Is such an arrangement permissible/above board?

    Comments and suggestions welcome

    Gracias
    Tagged:


Comments

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    #2
    Caranica
    Registered Users Posts: 10,026 ✭✭✭✭Caranica


    What you're proposing amounts to a rent review. You will not be able to raise the rent again this year and any further increases would be based off the reduced rent.

    Tread very carefully, you may be shooting yourself in the foot.


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    #3
    Dav010
    Registered Users Posts: 14,068 ✭✭✭✭Dav010


    Caranica wrote: »
    What you're proposing amounts to a rent review. You will not be able to raise the rent again this year and any further increases would be based off the reduced rent.

    Tread very carefully, you may be shooting yourself in the foot.

    Agree with this, op you need to read up on RPZ regs, there is a chance that at the end of the 3 month period that the tenant will not want to go back to the original rate or plead for a longer reduction period. You could be snookered with the RTB as they might see it as a rent review and limit you to an increase of 4% on the lower rate.

    Rather than reducing rent, offer a deferment on reduced amount for 3 months which is to be paid back when forlough period is over. You can always “forget” to ask for it once they are back up to normal rate. But do not put a rent reduction in writing, it may be construed as a rent review.


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    #4
    j.s. pill II
    Registered Users Posts: 246 ✭✭j.s. pill II


    Dav010 wrote: »
    Agree with this, op you need to read up on RPZ regs, there is a chance that at the end of the 3 month period that the tenant will not want to go back to the original rate or plead for a longer reduction period. You could be snookered with the RTB as they might see it as a rent review and limit you to an increase of 4% on the lower rate.

    Rather than reducing rent, offer a deferment on reduced amount for 3 months which is to be paid back when forlough period is over. You can always “forget” to ask for it once they are back up to normal rate. But do not put a rent reduction in writing, it may be construed as a rent review.

    Many thanks - written agreement may in fact have opposite effect to what I intended. Something I may approach over the phone instead


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    #5
    JimmyVik
    Registered Users Posts: 5,368 ✭✭✭JimmyVik


    j.s. pill II wrote: »
    Many thanks - written agreement may in fact have opposite effect to what I intended. Something I may approach over the phone instead


    Be careful what you say on the phone. Everyone keeps messages and records phone calls these days.


    Just say to them that you will defer whatever fraction of the rent you are willing to forego for 3 months and then you will discuss how you go on after that, whether they pay you extra for a year to make it up. Dont let it build up higher than their deposit is. And then when they leave, if they havent paid you what they owe you then you have their deposit.


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    #6
    handlemaster
    Registered Users Posts: 6,003 ✭✭✭handlemaster


    Have you proof of wage reduction. With their now salary and assistance what is the real drop ?


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