Landlord renting out a self contained flat or apartment in his own home

[Millie*]

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I have just read this article on the citizens advice page regarding a landlord letting out an apartment in his own home.
This may well have been covered here before and I either missed or misunderstood it but is yet another example of how complex the new rules will be.
I had known and understood that if you rented a room in your home you were granting a licence.

But I wasn't aware of the following….

According to the article
1.the apartment in your own home has to be registered with the RTB

2.The landlord can choose to opt out of security of tenure rules but he must opt out BEFORE the start of the tenancy.
I would imagine a lot of people could get caught out by this.

This is the article..
Renting a self contained flat or apartment-

If you are renting a self-contained flat or apartment in your landlord’s home, your tenancy is covered by residential tenancies legislation. This means you and your landlord have certain rights and responsibilities.

Examples of a self-contained flat or apartment include:

• A basement flat
• A converted garage, which is attached to your landlord’s home

Flats that were originally part of the main house

If the flat or apartment was originally part of the main house, your landlord must register the tenancy. However, your landlord can choose to opt out of security of tenure rules, which give you the right to stay in your rented accommodation for a set amount of time. You must get notice in writing, before the start of the tenancy, if the landlord wants to take this option.

 

[Greenbook]

And if you don't opt out under the new rules, the tenant is there for six years. If you need to sell your own house, it'll be much more difficult to do so or the price may be less.

Yet another trap for the unwary

 

[LarryScott]

If it is a self-contained unit, then it counts as a tenancy.

The requirements for an exemption to the security of tenure rules are

Those conditions are—
(a) the dwelling concerned is one of 2 dwellings within a building,
(b) that building, as originally constructed, comprised a single dwelling, and
(c) the landlord resides in the other dwelling.

So, if you have a single dwelling and you split it into 2 "self-contained units", and the landlord lives in 1 dwelling, then you get the exemption.

(This might actually cause issues for semi-detached property owners, but probably not)

You must inform the tenant in advance to get the exemption though.

A different strategy would be to look at what makes it self contained.

If the licensee can live separately from the landlord, then it is self contained.

There isn't a clear definition, but things that suggest it is self contained are like the following

• private bedroom (automatic)
• private bathroom/shower
• private kitchen
• separate entrance

If the owner lives in 1 part of the house, and the licensee fully lives in another part, then that seems to strongly suggest it is self contained.

To avoid triggering that rule, the owner should make sure that there is at least some sharing. For example, the licensee doesn't get a private bathroom or kitchen.

Ironically, this means that even if there is a specific shower that the licensee uses, the owner would need to make sure to use it periodically to establish that the shower is common.

The owner should also make sure to sometimes use any washing machine in the common area. The licensee might be allocated a shelf in the freezer, rather than all of it.

Likewise, if there is a 2nd kitchen in the house that the licensee is restricted to, the owner should sometimes use that kitchen.

 

[JamieB_]

Imagine someone living in your granny flat attached to your house who has more rights to it than you have and you cant get them out. I see lots of granny flats now going empty. Next it will be rooms you've rented in your house.

 

[Sister Sara]

And if you don't opt out under the new rules, the tenant is there for six years. If you need to sell your own house, it'll be much more difficult to do so or the price may be less.

Yet another trap for the unwary

Honestly, this obsession with so-called landlords with wanting the ability to evict at the time of their choosing is evidence that such people should not get involved in the business of being a landlord. They are not suited to it.

The fundamental and primary issue of housing is to provide security of tenure for its tenants. Whether that is for life, 20yrs, 10yrs, 10months, or 10 ten weeks.

The law is being changed that security of tenure is assured for 6yrs for rental tenants. Landlords should be able to cope with this, other 'landlords' please exit the stage.

 

[Millie*]

The fundamental and primary issue of housing is to provide security of tenure for its tenants

The fundamental housing issue is an issue for the government.

 

[JamieB_]

Honestly, this obsession with so-called landlords with wanting the ability to evict at the time of their choosing is evidence that such people should not get involved in the business of being a landlord. They are not suited to it.

The fundamental and primary issue of housing is to provide security of tenure for its tenants. Whether that is for life, 20yrs, 10yrs, 10months, or 10 ten weeks.

The law is being changed that security of tenure is assured for 6yrs for rental tenants. Landlords should be able to cope with this, other 'landlords' please exit the stage.

You are totally missing the point. Landlords dont want to evict when they feel like it. They want control of their own property back when they need it back. They dont want the risk of delinquent tenants having more rights over their property than they do. They want equal liability and punishment for either the landlord or the tenant getting out of line. Fix that one thing and you have fixed the whole residential rental system.

 

[Greenbook]

The fundamental and primary issue of housing is to provide security of tenure for its tenants. Whether that is for life, 20yrs, 10yrs, 10months, or 10 ten weeks.

The government is trying to turn large landlords especially into social housing providers - life long tenancies inherited by tenant's children, uneconomic rents (anyone who believes that the increase to market at year 6 rule will happen is deluding themselves), no ability to evict squatters (that is what a tenant is doing if they don't pay the rent) or for anti-social behaviour and a duty to repair, maintain and improve the property from the ever dwindling rent.

That was the situation the local councils would up in and they quite rightly ran away from it and sold the houses for a song to tenants.

We'll end up in the same boat.

They are not suited to it.

I am suited to this business. I've been in it for decades. Aside from a couple of lunatics, I've had nothing but happy tenants. I have good quality properties which are well maintained and furnished. I would have always charged a little under the going rate to tenants in the past and never increased the rent during a tenancy. I'm out because these rules make the business impossible.

 

[Greenbook]

The law is being changed that security of tenure is assured for 6yrs for rental tenants. Landlords should be able to cope with this, other 'landlords' please exit the stage.

Here is an article about a Cyprus Fund which probably has hundreds of properties here evicting and selling up. You can bet it has economic and financial advisors coming out it ears. It obviously sees no future in the Irish market either. Exiting is not the eccentric view of the small Irish landlord.

The new system means that renting, unless it is a new A rated apartment in a major city centre that you can rent to a wealthy mobile tenant at a high rent, no longer makes financial sense. It is too risky and the government have already said they will change the rules if they don't get the results they want (in the Seanad during the week).

 

[Premos]

Landlords should be able to cope with this, other 'landlords' please exit the stage.

Landlords are exiting at this stage. So you should be glad. I don't think unfortunately it will not make life easier for tenants.
Honestly I don't understand the obsession from the public with the ability to evict. Eviction are limited to selling, needing the property for themselves or family or extensive refurbishment. They have been curtailed from 2022 with unlimited tenancy.
Most LL don't evict, don't want to evict and will never evict. The average of tenancy is 3.5 years. So the needs for security of tenure are actually limited.
If evictions happen outside these parameters, it should be controlled. If LL don't follow the tenancy rules, it should be controlled. If there are rogue landlords who impose unruly conditions, rent increases or fees, it should be controlled. However, imposing more and more restrictions to LL who already follow the rules is in my opinion totally counterproductive.
I don't believe that rogue operators who work outside the rules will suddenly abide by them.

The fundamental and primary issue of housing is to provide security of tenure for its tenants.

No it's supply and then cost. The only reason that security of tenure has become such a focus is because with the lack of supply it has become very difficult to find an alternative accommodation. The lack of supply also means higher costs. So alternative accommodation is often more expensive and perhaps unaffordable. If rentals (and housing) were plentiful, people would be able to find affordable alternative suitable accommodation.
Encouraging LLs to exit the market when there's a supply issue doesn't help any renters.

 

[Greenbook]

Most LL don't evict, don't want to evict and will never evict. The average of tenancy is 3.5 years. So the needs for security of tenure are actually limited.

To some extent, the RPZs have increased landlord's requirements to evict.

It would never be my intention to evict tenants, but I did evict one set. It was from a large four bedroom house which was begininng to need work. The rent was capped at €800 per month. It made no economic sense to continue with that house. Luckily the tenants found a new place pretty easily and I covered their moving costs and 'time and hassle' costs.

They would have paid more. I would have taken less than market value from them, but the RPZ system meant that there was no other solution but the evict and sell.

Keep in mind also that my net return from that house was less than €400 per month after tax and costs. Half the rent goes to the government. If you have two properties, you're actually working entirely for the Revenue with one of them.

 

[Greenbook]

In fact, when I think about it, in the past, up until 2015 or so, it was keeping tenants that was the problem. Tenants would leave for often whimsical reasons because there was so much supply out there.

We had to young bar guys as tenants in one of our houses. They left because they ran into a group of guys who had a couple of rooms to rent in their rental. It was a bit of a party house, so off our guys went. The new place would be much more fun! We offered them a discount to stay (this was around 2012 or so), but off they went anyway.

Evictions are a symptom of the lack of supply (caused by government policy) and the RPZs.

 

[LarryScott]

Most LL don't evict, don't want to evict and will never evict. The average of tenancy is 3.5 years.

Right. The key with eviction is that it has to be an option. With the option to evict, it aligns all the incentives.

Landlords "only care about the rent" is pretty reasonable. The rent is the only benefit they actually get from owning the property if they rent it out.

Obviously, they also care about the property not being damaged.

The whole security of tenure thing is only relevant for tenants who want to be lifelong tenants. Every tenant has to pay extra rent to buy security of tenure. Short-term tenants end up subsidizing long term tenants.

With the 6 year cycle, the first 3 years are likely to be above market rent and the second 3 years are below market rent. This means that short term renters pay more for security of tenure and then end up not actually using it. This is discussed in this thread.

The 2% cap is less important if market rent resets every 6 years are robust

From this article, a point occurs to me. It is possible that the 2% rule won't actually be that important if the rent resets are robust. That is a big assumption of course. This is a re-post of a comment I made in the article's thread. However...

www.askaboutmoney.com

 

[Sister Sara]

Landlords dont want to evict when they feel like it. They want control of their own property back when they need it back.

What I am missing?

They dont want the risk of delinquent tenants having more rights over their property than they do.

See @Greenbook comment below. Broadly speaking tenants are decent. Like any business there is a risk of poor customers particularly over a period of decades.
And that is the point, if the 6yr rule is dettering 'landlords' in a market where the average tenancy is 3.5 years (@Premos) , then I would suggest that these people/funds etc, are typically unsuited for the role and should exit.

I am suited to this business. I've been in it for decades. Aside from a couple of lunatics, I've had nothing but happy tenants.

The government is trying to turn large landlords especially into social housing providers

The government has failed in its task to induce a larger supply of housing. It has correctly identified the long-term need of housing as a critical social provision ahead of the individual financial and economic needs of the landlord.

The Cyprus Fund, which has 14 properties (lets not exaggerate unless we know for certain) is evicting 12 families. There is no indication in the article that any of them are delinquent or in arrears or anything like that.

If the Cyprus Fund has economic and financial advisors coming out of it ears it is likely in my opinion that that advice is poor advice if the reason to sell is on account of the new rules - although there is no indication in the article that it is because of the new rules.

Alternatively, in my view, the Cyprus Fund is not suited to the needs of housing market in this country and rightly, should exit.

 

[Greenbook]

If the Cyprus Fund has economic and financial advisors coming out of it ears it is likely in my opinion that that advice is poor advice if the reason to sell is on account of the new rules.

You are not a landlord. I assume that the Cyprus Fund knows its business, as do I.

That is a large part of the problem here. Civil servants, left wing sociology lecturers coming up with 'policy'

 

[JamieB_]

What I am missing?

You are doing the same thing that got every landlord, home buyer and tenant into the situation we are all now in. Thinking about one side of an equation and completely ignoring the rest of the equation. Assuming that the people and companies in the business for years are stupid and that its you who is the clever one. I feel its more that they (and you) are not interested in the big picture, as I just dont believe after reading everything on here and elsewhere that the info for you to figure it out isnt there. All of your question have been answered numerous times.

 

[Greenbook]

@Sister Sara I'm leaving for two reasons:

1. I am in my mid-sixties. I'd only be staying in for another 10 years anyway. At this point I've no belief that I'll be able to exit then. As a large landlord, I'd very likely have to sell with sitting tenants. They'll have messed up the PRS so much by then, I'll have no takers or only purchasers at massive discounts. That is too much of a risk for me to take. I don't want to be left trying to cope with this as I grow older.

2. If I was staying in over the next 10 years, I'll be subject to more and more anti-landlord restrictions. They've said as much (in the Seanad recently). The rules will be changed if the required results aren't achieved. They are addicted to annual meddling at this stage. It won't stop.

It is not that after nearly 3 decades in the business, I'm too dim to understand the new rules and their implications. Neither is it that I am greedy and selfish and want the PRS run entirely to suit landlords like myself. Again, we see the caricature landlord from the RTB ad; dodgy and not very bright.

 

[Premos]

What I am missing?

What you are missing is that while in theory I would not have an issue with 6 years tenancy. I know (and apparently the government has been clear on that), changes to these rules could happen at any time.
As everyone else in the world, I don't know what is going to happen in the 6 coming years. My husband and I could be sick or not even alive. If that happens, one of us or our children could actually have an issue accessing or selling the property.
Unlimited tenancies were actually already quite concerning to us as LL could get back their property only in very limited circumstances. Now, not only these circumstances are limited but the timing is also limited.

It has correctly identified the long-term need of housing as a critical social provision ahead of the individual financial and economic needs of the landlord.

But LL will try to protect their economic and financial needs. As any investor would. And that is what they are doing in leaving the rental market That does not improve the situation of renters, that does not improve the rental market.
I am going to be very clear. In my opinion, I have been subsidising my tenants for more than €500 a month for years as the rent is now at least €800 under the market rate. I bought and rented an accommodation that was never a primary residence before I bought it as it was a "private" holiday home. It was for sale for 2 years, empty and not used. What more have you done for the provision of housing?
My current tenants will be my last. That will not change anything to the housing situation as I will be keeping it (empty if needed) for my children.

 

[Greenbook]

Broadly speaking tenants are decent. Like any business there is a risk of poor customers particularly over a period of decades.

Tenants are decent. I've had a few appalling examples in nearly 30 years, all the rest I'd rank from okay to excellent.

The problem is that any other business can refuse to deal with a poor customer. I won't be able to.

A tenant who is very unreasonable, anti-social, damages the house etc., I'd very likely be stuck with him for life. The RTB would be on his side. I would not be able to evict.

Only extreme misbehaviour allows you to evict a tenant these days like not paying rent, squatting in effect. And that still takes years if the tenant digs in (ask Terry Gorry).

Of course ending up with a bad tenant is always a risk. I'm not asking for a risk free investment. But one you're entangled with for years or for life is another story entirely.

 

[Premos]

would suggest that these people/funds etc, are typically unsuited for the role and should exit.

Honestly, this obsession with so-called landlords with wanting the ability to evict at the time of their choosing is evidence that such people should not get involved in the business of being a landlord. They are not suited to it.

Alternatively, in my view, the Cyprus Fund is not suited to the needs of housing market in this country and rightly, should exit.

One would think that LLs are fighting over each other to enter the market. Which investors/LLs are suited for the Irish market? How should rentals be provided? Because at the end of the day, rentals are needed in a modern functioning society.