RTB - Registration and RPZ

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Simpli

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Hi All -

What rules are there against inserting an amount into the tenancy contract (EG 2000 pm), but verbally agreeing with the tenant to pay 1500pm, as a way to insulate against the 2% RPZ limit if they ever left? We registered our tenancy with the RTB a year ago at 2k per month and it's time to renew, tenants are staying and we're not upping the rent, but considering just continuing with the same contract, 2k per month, albeit collecting 1500pm.

Any reason why more don't do this? Are there any obligations on the landlord to collect the agreed amount in the contract?
 

Guide to Rent Pressure Zones | Residential Tenancies Board

RTB operates Ireland's National Tenancy Register and resolving disputes between Landlords, tenants and third parties. Governed by residential Tenancies Act 2004. View more information on landlords and tenancies.
www.rtb.ie www.rtb.ie
Investigations and Sanctions

The RTB has an Investigation and Sanctions unit dedicated to investigating certain potential breaches by a landlord of the RTA 2004. The breaches of the RTA 2004 that the RTB can investigate are referred to as “Improper Conduct”. Improper Conduct includes where a landlord does not comply with the RPZ rent increase restrictions.

Where it is found that Improper Conduct has occurred, the result can be a sanction of a caution, and/or a fine of up to €15,000 and up to €15,000 costs against the landlord. Any monetary sanction imposed is paid to the exchequer.

The Investigations and Sanctions unit can start an investigation either as a result of information received from members of the public or as a result of information gathered from records that the RTB has access to under the RTA 2004, including registration data and RPZ exemption data.

A potential breach of rental law as outlined above can be brought to the attention of the Investigations and Sanctions unit by:

  • calling the dedicated unrecorded phone line on 0818 776297 or 01 6753724;
  • emailing the RTB at [email protected]; or
  • making a formal complaint.  
For further information on what can be investigated and how to inform the RTB of potential Improper Conduct please click here.
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RTB Publishes Details of Sanctions Imposed on Landlords who have Breached Rental Law | Residential Tenancies Board

RTB operates Ireland's National Tenancy Register and resolving disputes between Landlords, tenants and third parties. Governed by residential Tenancies Act 2004. View more information on landlords and tenancies.
www.rtb.ie www.rtb.ie
 
Thanks for the links, but i'm not sure you've read the question.

I'm inherently not breaching rental law or the RPZ laws, because i'm collecting 75% of the contracted amount. Therefore i'm adhering to RPZ rules. If the tenants ever leave, I can increase the collected rent, up to and including the contracted amount - never breaching the 2% threshold, because the contracted amount stays the same, always.

Are there rules against collecting less money than you've contractually agreed to, is the question.
 
I thought that you were talking about collecting €1.5k in addition to the €2k specified in the lease. My mistake.
 
I don't believe so.

But I wonder would you be stuck trying to explain to Revenue how your lease / RTB registration says 20k pa and you tell them you are only getting (say)15k pa.

I don't know either way, but I'd make sure on that point.
 
DannyBoyD said:
I don't believe so.

But I wonder would you be stuck trying to explain to Revenue how your lease / RTB registration says 20k pa and you tell them you are only getting (say)15k pa.

I don't know either way, but I'd make sure on that point.
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Fair point, but it's fairly hard to prove the presence or explain the absence of something that doesn't exist. I wonder if you literally told them the reason, would that be breaking any laws or rules, I think not. Hence, I don't know why more (new) tenancies don't do it - thus the question here
 
As a tenant I would never agree to this.

Huge risk of landlord claiming accrued arrears of €500pcm at a future point.
 
Simpli said:
Hi All -

What rules are there against inserting an amount into the tenancy contract (EG 2000 pm), but verbally agreeing with the tenant to pay 1500pm, as a way to insulate against the 2% RPZ limit if they ever left? We registered our tenancy with the RTB a year ago at 2k per month and it's time to renew, tenants are staying and we're not upping the rent, but considering just continuing with the same contract, 2k per month, albeit collecting 1500pm.

Any reason why more don't do this? Are there any obligations on the landlord to collect the agreed amount in the contract?
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This is exactly what I do with one of my properties. I have a verbal agreement with the tenant that I will not take any shortfall from their deposit. The tenants were so happy that I didn’t increase the rent they certainly didn’t complain. Coincidentally this was done with the acknowledgment and thumbs up from their local HAP housing officer.
 
Leo said:
Or threatening to report the landlord to the RTB for attempting to circumvent the RT legislation.
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People up and down the country are going out of their way to circumvent RT legislation, 100% legally.
 
Leo said:
Or threatening to report the landlord to the RTB for attempting to circumvent the RT legislation.
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How does it circumvent? Legislation says you cannot increase the rent by more than 2% in an RPZ. Assuming you are a new tenancy, or left idle for 2 years, and you set the rent 25% higher than what you actually collect, you're not breaking tax laws so revenue have no case and you're not breaking tenancy laws so RTB have no case.

Where's the circumvention?
 
It's definitely being done, I haven't heard any horror stories so far. You would need to have a good / trusting relationship with your tenant. Once you do, I think that they will just be glad, even appreciative that you are not upping the rent on them. Explain the rules to them and why you're doing it and I think you are okay, as far as the relationship with he tenant goes.

I'd like to know for sure if by law, you are required to collect the full amount of rent? Surely not. The only issue I imagine could potentially arise is with tax. If you are not collecting the full contracted amount from them, is that seen as a gift and as such would gift tax be applicable? Even if it were, you could keep the amount "gifted" below €6K (3K from you and 3K from your wife) then that should fall in under the amount you can freely gift somebody each year anyway.

That's really getting down into the nitty gritty of it though and I'm no expert, but I'd like to know the answer if anyone else here can say for sure because I'm in the same situation with a place I have.
 
Wouldn’t this approach create a tax issue?

My understanding is that tax is payable on the full contracted rent, less allowable expenses.

Where less than the full contracted rent is received due to a tenant default or where rent is waived to avoid hardship then tax can be refunded but that wouldn’t appear to be the case here.
 
Sarenco said:
Wouldn’t this approach create a tax issue?

My understanding is that tax is payable on the full contracted rent, less allowable expenses.

Where less than the full contracted rent is received due to a tenant default or where rent is waived to avoid hardship then tax can be refunded but that wouldn’t appear to be the case here.
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No. Tax is payable on rental income. What's on the contract is neither here nor there. Substance over form.
 
T McGibney said:
No. Tax is payable on rental income. What's on the contract is neither here nor there. Substance over form.
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Are profits not taxable on an “arising” basis and if you can sue for the rent (ie if it’s the contracted rent) then it’s “arising”?

If that’s not the case, what’s the point of the relief for rent not received provided for in Section 101 TCA?
 
Sarenco said:
Are profits not taxable on an “arising” basis and if you can sue for the rent (ie if it’s the contracted rent) then it’s “arising”?
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You tell me. This is the first I've heard of this term and I've been doing this since 1988.
Sarenco said:
If that’s not the case, what’s the point of the relief for rent not received provided for in Section 101 TCA?
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Presumably to stop Revenue raising assessments for waived rents?
 
Simpli said:
How does it circumvent? Legislation says you cannot increase the rent by more than 2% in an RPZ.
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You make an informal agreement to charge a tenant less than specified on the lease, so making them aware that you may increase the actual rent by more than the limits after they leave. They could choose to report you. The 2% limit applies to the rent being charged, not some notional figure.

It is also an offence to fail to provide an accurate notice of rent in writing to a tenant.
 
Leo said:
You make an informal agreement to charge a tenant less than specified on the lease, so making them aware that you may increase the actual rent by more than the limits after they leave. They could choose to report you. The 2% limit applies to the rent being charged, not some notional figure.
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So what if they report you?
 
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