Renovate or sell investment apartment

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banchang

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Tenant has moved out & we’re considering whether to renovate or sell our 1-bed, which is achieving 1450/month in Dublin 3. I’m aware that’s below where the market is for this location. Kitchen would benefit from replacing & we were considering nice new wooden floors throughout to replace the tired carpet.

However based on my understanding of the past, I thought that making those 2 changes would enable us to increase rent to market levels, but reading definition of ‘Substantial Change’ on today’s RTB website, I’m not sure it will.

Thoughts appreciated.
 
No, they wouldn't. You have to increase the floor space significantly or bring up the BER by 7 ratings.

With the proposed changes you have the following choices:

1. Re- rent now within the current RPZ rules. Your rent won't increase but it seems that the current rules on no fault evictions will continue for the duration of this lease.
2.Wait until post 1 March 2026 and re-let at market value. Keep in mind that if you are a small landlord (3 properties or less) you will be entering into a fixed term lease with minimal rent increases and minimal rights to evict during its duration. At the end of 6 years, you can evict for sale etc. and increase the rent to MV. If you don't end the lease, a second 6 year term starts on the same basis. Keep in mind you may find a Sinn Fein government with an eviction ban and rent freeze in place at the end of the six years.
3. If you lease post 1 March 2026 and you are a large landlord, the rules are more stringent. You can never evict save for tenant breaches. Otherwise the 6 year rules re. rent increases apply.

Honestly, I think I would sell. I don't think the temporary increase to mv is worth the lack of flexibility or the risk.
 
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Thanks for reply & detailed information. Yes if I can’t increase rent I think I’ll sell. It was bought in May 2014 so will benefit from reduced CGT provision. Hassle with properties & tenants makes this a very unattractive investment proposition to continue, & I think watching a bunch of Berkshire Hathaway shares on my phone is eminently more attractive - certainly better capital appreciation!
 
I think that is the best choice. These new rules have actually made the whole situation much riskier for landlords. I have persisted through all the previous hoo-ha and have benefited from the capital appreciation, but as my tenants leave (I've been very careful to only take short term people in recent years), I'll be exiting myself. It is way too risky an investment at this point. Berkshire Hathaway or even AIB would be a better choice
 
...I'm not sure that by waiting until March 2026 you could go to market rent with existing properties. I initially thought so too, but on re-reading, it seems that if you start a new tenancy after March 2026, it may still be six years from that point until you get to market - i.e. 2032.. - I hope I'm wrong. This whole thing just gets more confusing...
 
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