Lease renewal due on my property / rent increase

Eistigi

Registered User
Messages
14
Hi All

I am an Irish landlord living overseas renting a property in Wicklow (3 bedroom house / very good condition).
I have been renting the property for 4 years. Same tenants.
Lease renewal is due and the letting agent who is managing the property on my behalf has informed me of my option to increase rent (4% max increase) for Wicklow area.
Current rental is 1,300 PM. 4% increase would bring it to 1,404 PM (RTB calc).

The increase seems like a steep jump. I am happy with my tenants and I want to be fair with any increase. I have done a search on similar properties around the same area and some of them are well above this amount (I appreciate that this doesn't mean these prices are fair). Not sure to keep increase to a minimum given good tenancy or go with the 4% max. The letting agent believes its a fair increase.

I don't make any 'cashflow profit' from this rental. Rent comes in and goes straight back out into mortgage repayments, letting agent costs, insurance and all the usual expenses. Then I'm hit with a hefty tax bill each year.

Just wanted to get people's thoughts before I renew - appreciated.

Eistigi
 

cremeegg

Frequent Poster
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3,123
Get a new letting agent, the one you have doesn't know what he or she is talking about.

It is entirely up to you whether you wish to charge less than the maximum possible, there is much to be said for keeping a good tenant happy. Although that idea has lost a lot of credibility with recent legislative changes, just my opinion.

I suggest that your tenant would consider a 4% increase reasonable.

If you wish to change the rent you must do a rental review, according to the rules laid out.

Go to the RTB website and look at the rental increase calculator to work out the max rent.

Do a market review of similar properties. The higher figure, max rent from the calculator, or similar property review is the most you can set as the new rent.

Then decide what rent you want to set based on the above maximum and your own ideas of what is "fair".

Then figure out the notice period you must give your tenant for the increase to come into effect. Its not the lease renewal date.

Then issue notice of the rental review in the correct manner.

The RTB website lays all this out fairly clearly.

Then fire your agent.
 

Dermot

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1,051
Just bear in mind that there is a majority in the Dail that have voted in favour of freezing rent for 3 years. That could be longer if it is legislated for. I suppose that will solve the housing problem. I'm sure it's nothing got to do with populist politics.
 

AlbacoreA

Frequent Poster
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3,359
Why fire the agent?

If the current tenant leaves. You will be locked into your current rent. Fall behind for a few years and it could take years to catch up.
That assuming they don't freeze it at the current rent. (Very likely).
If for some reason you need to sell, or the market falls, yours will be worth less because its rent is locked lower.

But only you know the tenants and thus their value to you.
 

Eistigi

Registered User
Messages
14
Thank you all for the feedback - appreciated. I had not considered the implications of a potential rent freeze so I'm glad I asked And also, the implications if current tenants move out - thank you.

I'm not sure why the heated comments around the letting agent? My letting agent has simply notified me of the upcoming lease expiry and the rental review, and they have provided their review summary based on RTB guidelines. The agent handles all dealings with the tenants including lease, rent collection, notice of rental review etc.

However thanks Cremeegg - I have done some research as you suggested.

I wanted to ask another question around Letting Agent fees and what is considered a 'reasonable fee for managing a property, but I may create a separate post for this. thanks
 

NoRegretsCoyote

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1,057
Letting agents are always keen to push the rent to the max as they are paid a % of the rent.

Bear that in mind, and remember it's your choice.
 

Feemar5

Frequent Poster
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349
Don't forget whatever rent increase you get Revenue will get a good percentage of it. If you are happy with the tenants is it worth the hassle - on the other hand if it is a fair rent in the area they might be glad to accept it and stay.
 

AlbacoreA

Frequent Poster
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3,359
Don't forget whatever rent increase you get Revenue will get a good percentage of it. If you are happy with the tenants is it worth the hassle - on the other hand if it is a fair rent in the area they might be glad to accept it and stay.
That fine short term. But the effect of the rent freeze is long term. Not simply that your rent falls behind. But you've devalued your property for another investor. So if you have to sale, it's likely other landlords won't be interested in it. So you've reduced the potential buyers for the property.

If the tenant leaves. The next tenant gets the same rent + the tiny account your allowed to increase it buy. If they don't freeze rents.

If you intend never selling it. None of this matters and you can ignore all of the above. Which might be true if you intend using it yourself some day if you return.
 
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cremeegg

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3,123
I'm not sure why the heated comments around the letting agent? My letting agent has simply notified me of the upcoming lease expiry and the rental review, and they have provided their review summary based on RTB guidelines. The agent handles all dealings with the tenants including lease, rent collection, notice of rental review etc.

However thanks Cremeegg - I have done some research as you suggested.
I will admit that I have a bias against agents, but from my understanding of your original post the agent's advice about a 4% max increase is wrong. Obviously I don't have full details for the calculator and I may have misunderstood the details you have given. If you do the calculations yourself do you get 4%.
 

AlbacoreA

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3,359
If I had a good tenant long term and I wasn't blocked by the rpz for the next tenant then maybe you'd not put it up. But the rpz and a possible rent freeze, mean it makes more financial sense to increase it at every opportunity. Because you may not get another for a long time.
 
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