rented property significanlty under market rates

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aristotle

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I have a 3 bed house rented to a single tenant. One of the other bedrooms is used as storage and the other is also empty.

Rented for 900 per month and I see the going rent for 3 beds in the area is anything from 1800-2100 (based on current ads on daft).

Tenant is on a fixed term lease which has been renewed (this is the second year the tenant is there in a rental contract).

On one hand the tenant is excellent and causes no issues, rent always paid but on the other hand missing out on 900-1200 a month is material.

Not really sure what to do here. Keep the tenant as is or chance renting it out for full rental value.

I could make a justification on repairs\refurb to make it a 3 bed again (but it may or may not stand up if it was appealed) but I might be happy to take that risk given the rent I am missing out on.

Maybe I am getting greedy and its morally wrong, I would appreciate any views.
 
If the house needs new windows or some other significant work done, do it sooner rather than later and use that as basis for refurb increase?

If you had a dodgy tenant then a roll of the dice in justifying turning it back into 3 beds might be more appealing... but with a good tenant?

If the tenant in situ likes the house and the area, you could have a chat... they could be amenable to something whereby you turn it back into a 3 bedroom and bring in another tenant but reduce the sitting tenant's rent to 700-750. Other tenant is also charged 750 so you're at 1400-1500 instead of 900.
The tenants would be splitting the cost of heating bills so that might also appeal.
If you have two happy tenants no reason for anyone to raise a challenge with the appeals board about the whole making it 3 bed again...
 
"..its morally wrong,"

This argument fascinates me.

If you were to sell your house, do you believe it would be more ethical to insist on a ceiling price of 50% of the market value?
 
On a slightly side issue, is ther any potential tax issue here if not renting at mkt value?

When making your tax return for rental income will Revenue be suspicious of the fact that the declared rent is significantly below mkt value?
 
Thirsty said:
"..its morally wrong,"

This argument fascinates me.

If you were to sell your house, do you believe it would be more ethical to insist on a ceiling price of 50% of the market value?
Click to expand...

I am more thinking of the morality of lumping an excellent tentant out of the property just to get more money in the knowledge that they will not get a simailr property at the same rate.
 
IMHO, you signed a fixed term contract with your tenant, so it is unethical to try and change the terms of the contract before it expires. Once it expires, then obviously you can renew it or not as you please, within the rules and regulations governing the rental market.
 
jim said:
On a slightly side issue, is ther any potential tax issue here if not renting at mkt value?

When making your tax return for rental income will Revenue be suspicious of the fact that the declared rent is significantly below mkt value?
Click to expand...

I don’t believe there is. You pay income on money earned. Your arguememt could be applied to someone who earned 40k when the market rate for a similar role might be 60k. Impossible to quantify anyways.
 
jpd said:
IMHO, you signed a fixed term contract with your tenant, so it is unethical to try and change the terms of the contract before it expires. Once it expires, then obviously you can renew it or not as you please, within the rules and regulations governing the rental market.
Click to expand...

Yes correct and have no intention of trying to break the existing lease. This relative to when the lease expires later in the year.
 
aristotle said:
I am more thinking of the morality of lumping an excellent tentant out of the property just to get more money in the knowledge that they will not get a simailr property at the same rate.
Click to expand...
Blame Simon Coveney and his Rent Controls.
 
aristotle said:
I am more thinking of the morality of lumping an excellent tentant out of the property just to get more money in the knowledge that they will not get a simailr property at the same rate.
Click to expand...

the tenant has had a very sweet deal for a long time , they are owed nothing and if reasonable should be thankful they got such a cheap deal for so long , most tenants are nice as pie when they know they are renting for way below market rates , they show you who they really are when its time to pay a rate more reflective of reality
 
Decided to offer the property to the existing tenant at the same rent plus 4% increase.

Tenant causes no issues and I also would probably have to spend €3-4K on redecorating and fixing things if renting it out to new tenants.

For now it suits me to continue as is assuming the tenant wants to renew.
 
I think a fair compromise, when the existing lease is up, is to offer the property to the tenant at a rate below market value, 10 - 20% discount.
 
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