Rent supplement reduction of 8%

[Bronte]

I note that there is apparently an advertisment to landlords in the newspapers about the forthcoming reductions in rent to tenants which I am trying to understand. Recently two of my tenants have lost their jobs and switched to receiving the rent supplement. From the tenant's point of view they will now have to pay 24€ instead of 18€ (an increase of 6€) But the rent will be reduced by 8%. Landlords are apparently to be coerced into accepting a rent reduction of 8%, even if they have a valid lease. Tenant's are being told to leave a property if the landlord does not agree. Have I got this story incorrect. Is the rent reduction on the actual rent paid or on the amount the tenant receives? As landlords can have a rent review annually (something I've never done) can the landlord just increase the rent so as to cancel out this 8%. I charge a very reasonable market rent and have not had to reduce any rents even though they are apparently dropping on daft so I don't see why I should accept 8% less. In one case I have a tenant on well below market rent (on disability for a few years and I never increased the rent, it's 50€ but I'd easily get 100€). Any welfare people or landlords able to advise me, or a link to a website with the details.

 

[Howitzer]

It's unlikely landlords could just increase the rent to compensate for the reduced % in a falling rental market. It seems Welfare are unlikely to sanction increased payments in the current environment and will force tenants to look for alternatives.

That you charge below market rate is a point that may be tested over the coming year or so. In many areas the rental supplement has created an artificial bottom to the rental market. This can be seen quite obviously in D1/2 where many substandard units rent for disproportionate rates. Once this prop is removed, and I believe this 8% (I thought it was 10) is just the start, then we may see where the real bottom to the market is. You can rent 1 beds for under E400 in the centre of many European cities.

 

[gipimann]

Existing Rent Supplement recipients are facing a reduction in the amount of RS they receive from next week. There are 2 elements in the reduction -

- An increase in the minimum contribution they have to make (from €18 to €24 pw) and
- An 8% reduction in the amount of rent supplement they receive.

For example, if the rent is 130 pw, and the tenant was receiving 112pw rent supplement, from next week, their entitlement is 98pw.

There was an advertisement in the national papers this week, and Rent Supplement recipients are being advised by letter of their new reduced entitlements.

If you go to www.welfare.ie and follow the link on the home page to Rent Supplement Changes, you'll find all the information, including a copy of the advertisement.

For new Rent Supplement applicants from June 1st, the maximum rent limits will be reduced by between 6 and 10%.

 

[polo1]

Well my tenant just called me and told me she would have to reduce the rent by €100 per month. They (SW) told her that if I didnt accept it she should move out?
How can they do this - we have a fixed lease for a year and the sw/coco is telling her to move out if I dont take a rent cut?

The CoCo also told her the same when I wouldnt accept RAS.. They offered a ridiculous amount - standard amount for all two beds (either house or apartment)....non negotiatable

Can they do this? Does this mean that the PRTB doesnt really protect us landlords? I suppose at least I can keep the deposit? Not much good in this environment.

 

[minion]

I suppose at least I can keep the deposit? Not much good in this environment.

If you're charging market rate you should be able to let the place easily after the tenant moves out. Whatever you do dont make the classic mistake of letting the tenant use the deposit as the last months rent.
This is between the tenant and social welfare now.

 

[samanthajane]

I can understand where you are coming from, but lets look at it this way.....

You have an investment property that you rent out for 1000 euro ( i'm using a rough example). Your tennent wants a reduction of 100 euro, you refuse and they move out. I'm going on the assumption that your tennent will be looking for a new 2 bed house/apartment in and around the same area.

Since the tennent is now looking for a price around 900 euro even if other places are advertised at 1000 ( which "was" the going rate ) they are most likely to see a place they want and offer 900 euro.

Now do you know every other landlord in your area? I doubt it, and i'd say that 100% there will be some landlord that will take the 100 euro loss to rent the place out. After all only paying 100 euro a month is alot better than 1000 euro.

Unless all landlord unite and refuse to accept a lower price you dont really have much of choice on this one. And if landlords rent come down for people on rent allowance other people are going to be looking for reductions as well.

I'm assuming you still have a mortgage to pay on this investment property? Can you really afford not to have any rent coming in? If you can afford to hold out untill someone will pay the rent you want then your'll be ok. But i doubt it's the situation since you seem really peeved about it.

And then you have the other side of the story..... i personally think it's very unfair that in a way the goverment is forcing landlords to take a reduction, and they are doing this because they know a lot of people cant afford not to have rent coming in. This is what they are hoping for.

 

[cleverclogs7]

Yup,i got my letter the other day.i got 1,122 and its now down to 1,009. letter says have been ask to speak to landlord because of the rental the market decreasing.But nothing on the letter says that we should leave if landlord refuses.I have yet to speak to my landlord as hes away.

if the landlord refuses and the tenant leave,would the tenant get deposit back ???

 

[minion]

Yup,i got my letter the other day.i got 1,122 and its now down to 1,009. letter says have been ask to speak to landlord because of the rental the market decreasing.But nothing on the letter says that we should leave if landlord refuses.I have yet to speak to my landlord as hes away.

if the landlord refuses and the tenant leave,would the tenant get deposit back ???

If you signed a lease and are leaving before the lease is up then the landlord is entitled to enforce the lease.
You could ask social welfare for the deposit for the new place, should you decide to leave though. After all it was social welfare who forced you into this position.

 

[murphaph]

I don't see anywhere where the tenant is encouraged to leave, just to request a reduction. I have also just been asked and I can see similar properties looking for 100 less pm in the area so the market has made up my mind for me. I have written to the tenant and offered the reduction to what seems to me to be the market rate. If the market rises in 2 years then I'll be looking for an increase of course. Landlords can't 'stand united' to resist reductions-that's a cartel. The market can only go so low (as landlords who cannot make mortgage repayments are forced out of the game and the available rental stock diminishes) unless Banks start renting out repossessed homes/investment properties themselves. Hopefully it won't come to that.