Implications of Long Term Lease on rented house

Hi,

Apologies if this is in the wrong section. I'm wondering if you could offer any advice or give your opinion on long term leasing of a house.

In short I have my 4 bed house up for rent at the moment and a couple have offered to take it, but only if I'll agree to a 5 year lease. They aren't doing this through any welfare or other scheme, it just suits them due to one of them having a 5 year work contract.

In once sense I think it sounds fantastic as it would mean I don't have to worry about renting out the place again for 5 years. On the other hand I'm worried as 5 years is a long time. My concerns would be that the mortgage could have gone way way up over the next few years and I'd have no option to put the rent up. Of course that's a gamble I'd have to take and at the moment with no other viewings and a mortgage very close to going into arrears I'm seriously tempted.

Has anyone done this before and are there any drawbacks to agreeing to let someone rent your place for such a long time? Hugely appreciate any advice. Thanks

leevancleef said:

On the other hand I'm worried as 5 years is a long time. My concerns would be that the mortgage could have gone way way up over the next few years and I'd have no option to put the rent up.

Click to expand...

Your mortgage rising or falling has no impact on the rent you can charge,the market determines this,currently rents have steadied having fallen significantly due to a dramatic oversupply,there is nothing in the medium term that suggests to me that rents will rise.

Put it another way,you have tenants in your property for a year,they are model tenants in every regard however your mortgage has gone up e200 since the tenancy commenced and you are now repaying E1550 on your 2 bed apt,the minute you attempt to pass in full your mortgage payment onto them its adios to the decent tenant and hello long void.

If I got an option of a 5 year tenancy Id grab it with both hands...having checked all refs that is.

Thanks for the reply.

What I meant really is that I'd be worried about rents in general going up, whatever the factor is and me being stuck only being able to get the same amount in. Of course it could go the other way too that rents could drop and i'd still be getting in my steady amount so I suppose it works both ways. The mortgage I know isn't directly linked to what rent I get (Mortgage is over 1100- I'm only going to get 750 in rent) , I just kind of assumed if say ecb rates were double what they are now in 3 years that in general rents would go up as landlords would be paying out more on their places, but as you say its more about supply and demand really.

I'm pretty much decided to go with it assuming they are all ok reference wise and whatever else - is there anything else I'd need to be wary of you reckon - ie is it harder to get someone out of your place if they have a long term lease should things go awry. These guys are older so I can't see them being the type to trash the place and party every night but you never know with people.

Its unlikely that rents will go up in the short to medium term, that's just my opinion though.

Get employer refs and check them.

Trust your instincts...if you have any nagging doubts about a tenant then pass.

Take photos of all rooms and note condition of each item in the Inventory description,get tenants to sign off on this also.

Familairise yourself with the 2004 Residential Tenancies act.

Familiarize yourself with HOUSING (STANDARDS FOR RENTED HOUSES) REGULATIONS 2008.

Know all regs inside out and you wont go far wrong.

Heres a site tailored for your immediate requirements..


http://www.irishlandlord.com/

I would have a Lease Contract in place, (samples are available on the Irish landlord site). Included in that should be a clause which allows for a rent review on a regular basis (in the current climate, I would say on a 2-yearly basis) which gives an opportunity to review the rent. In the meantime, market forces could also affect the rent, whereby the long-term tenant may look for a reduction on the agreed rent.
Reference checking is vital (previous landlord, employer, bank).
Video/photographic inventory of status and contents of house is a must, signed and agreed by tenant.
Good luck.

Thanks a lot, I'm new to all of this so a little bit wary, especially for such a long term. I'll see how they react to a suggestion of a rent review after say 2 years. They seem nice people so hopefully my instinct is right, fingers crossed!

I've dealt with "nice" people who later on turn into major problems to deal with. A 5 year lease is very long and you will need to have a water tight lease drawn up which protects you as much as possible.

You are entering a 5 year contract with two strangers so do your homework on who they are. Get references etc.

Personally I wouldn't give a 5 year lease. A year by year one is more common.

Lucky you getting tenants for 5 years. You can agree that the rent goes up or down based on the inflation index if you wish. But rents are not going up any time soon so I wouldn't worry about this.