Renting to a relative.

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breege

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Daughter and her partner trying to save for a deposit on a house and I would like to help.
I have a rental property in a rent pressure zone.
If I rent it to them below the market rate, as I understand it, the next tenant will have to be offered a low rent.
If I let them live there rent free, they will have to pay benefit in kind and my income will be reduced.

Is there any way renting to them can be structured without adverse consequences?
 
If you let them live there rent free, as licensees that will not affect any rent you may charge to any future tenants.

The thing about the tax on the adult child living in the parents property was recently featured in a newspaper report, as far as I know, no one has ever been charged to tax on this. A strict interpretation of the law might support this situation as a taxable gift (not benefit in kind) but that would also have to include any adult child living at home, it will never happen.

Also even if it was taxed the first €3k each would be exempt.

If you want to let your daughter live there free of charge, there is no practical reason not to. Its not a tenancy, do not register with RTB.

Im an not a lawyer, but I am an experienced landlord and I try to keep up to date with the law in the area.
 
Giving her back some of the rent after I pay tax on it isn't practical.

As I understand it, when you rent to a relative, you do not have to register with RTB. In that case is no tenancy created?
 
The fact that the person is a relative is not relevant. If you rent the property you must register it, you must pay tax on the rent, and it affects future rents due to the 4% rule.

However you can just let someone live in your property with out charging them rent. Then they are called a licensee, you do not have to register it, it has no effect on any future rents.
 
cremeegg said:
The fact that the person is a relative is not relevant. If you rent the property you must register it, you must pay tax on the rent, and it affects future rents due to the 4% rule.
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Are you sure that's correct?

The original legislation, the 2004 Act, states (at section 3(2)):

"Subject to section 4 (2), this Act does not apply to any of the following dwellings:
...
(h) a dwelling within which the spouse, parent or child of the landlord resides and no lease or tenancy agreement in writing has been entered into by any person resident in the dwelling,"

Unless that provision was subsequently amended, which I don't think it was, then the RTA 2004 doesn't apply to a letting to a child that isn't effected in writing.

The provisions to introduce the cap on rent increases were transposed into the RTA 2004. Therefore if the dwelling is excluded by virtue of being let to a child, then the rent increase provisions don't apply.
 
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Thank you for your replies.
Thirsty, I know it's not ideal, but moving in with me, the other option, would be stressing for all. Or me at least
Cremeegg, I cannot afford to let them live there rent free, I need some income from the house.

Torblednam, I hope you are right and the rent increase provisions would not apply to the next tenancy.
It would make sense, why should I be penalised in the future for helping my child try and save towards owning a home. But as landlords know, tenancy laws are a minefield.
 
breege said:
Cremeegg, I cannot afford to let them live there rent free, I need some income from the house.
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There is no reason why your daughter and her partner could not gift you up to €3,000 each in a year. This would have no tax implications, so long as it was a gift and not rent.
 
Thank you for that Torblednam.

I had understood that any person living under licence did not give rise to a tenancy. Obviously there is specific provision for spouse parent and child.

From what you say it would seem that the daughters partner could pay rent so long as there was no written lease or agreement. The 4% would not apply. I presume that income tax would.
 
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