To HAP or not to HAP?

Discussion in 'Property investment and tenants' rights' started by Drakon, Dec 4, 2017.

  1. Drakon

    Drakon Frequent Poster

    Posts:
    259
    I live in Cork and have a rental property in Dublin (it used to be my home). It's been rented out for the last five years to the same tenants, a family of three, from the area. They've always paid their rent and have never asked for anything. When I moved out of the house I'd intended using a letting agency as I live so far from the property, but these tenants presented themselves and have been ideal in all regards. I gave them a favourable rate and haven't increased the rent once. There are few house available in Dublin for less than €1,000 per month, I'd say? For the last five years good tenants rather than good rent has been my priority.

    Their employment has been precarious over the five years. When employed they've paid the rent themselves; when not employed they've received Local Authority (LA) assistance. Anytime they've been late with the rent, it's only been for a few days and have contacted me in advance.

    Recently they've suggested HAP, but want me to concur. I suppose I've taken the view "leave well enough alone", but now I'm thinking of what the pros could be, and the cons. My own financial situation is becoming squeezed by young children getting older.

    They way I see it, the advantages to me are:
    • Tax free rental income for three years.
    • I can increase the rent by the RPZ amount (4%?). I would have been unable to increase the rent in the past without squeezing them, but now that the LA is paying for it it's not a concern.
    • The above two points can be done with the same tenants.
    The disadvantages are:
    • My fear of not "leaving well enough alone".
    • My concern that the LA inspection may demand silly fixes (I've no problem fixing genuine problems). I'm hoping as that there is no change in tenants the inspection will be a formality.

    Are there any pros and cons I'm missing? Are their any landlords out there that have had been in similar circumstances?

    Thanks.
     
  2. Learner2015

    Learner2015 Frequent Poster

    Posts:
    161
    I signed up a tenant on HAP last year. No issues so far, rent comes direct from the scheme. The inspection didn't throw up any issues for me and getting tax clearance was a simple as clicking a button on ROS.

    How is the rental income tax free though?
     
  3. Drakon

    Drakon Frequent Poster

    Posts:
    259
    Oh, I thought I heard that on a TV show last week. Now that I look at the website, it just appears to be 100% tax relief on mortgage interest.
    Hmmmm. Must double check that on the player.
     
  4. Bronte

    Bronte Frequent Poster

    Posts:
    12,081
    What inspection? I've never been inspected.

    The 100% mortgage interest relief applies to social welfare tenants, and is a new thing, but you have to register with the PRTB. There is a thread on the matter.

    There is no tax free rental income.
     
  5. Learner2015

    Learner2015 Frequent Poster

    Posts:
    161
    Bronte, yes my one was inpsected by the County Council shortly after the tenant moved in to make sure it complied with current standards. Apparently all are ment to be inpsected within 8 months of the tenant moving in although I doubt that happens.

    Drakon as far as I know once the tenant has been in situ for 3 years you can claim the 25% mortgage interest for each of the three years and then 100% thereafter. There is a form you have to fill out and send into the prtb see link below.

    https://www.rtb.ie/landlords/helpful-info-documents/declaration-of-undertaking-form
     
  6. robert 200

    robert 200 Frequent Poster

    Posts:
    154
    I had a DCC inspection after I accepted HAP. I had to replace a new fridge with a 2 door fridge , replace smoke alarms with 10 year battery ones and provide fire escape plans for a 2
    story property.
    They also work on a back month, so the tenant moves in on October 1st and the rent is €1000 , you will receive €2000 rent and deposit immediately but your next payment will be
    on December 1st - so you are not paid in advance as is the norm.
    As they used to say on Blind Date " The decision is yours "
     
  7. Tomjim

    Tomjim Frequent Poster

    Posts:
    38
    In relation to the maximum amounts paid by the Council under the HAP Scheme, are the amounts quoted the maximum amount the Council will pay, for example it is quoted on the website the max amount the Council will pay in Westmeath is €650 per month. Is this the absolute max or will the Council pay more?
     
  8. landlord

    landlord Frequent Poster

    Posts:
    793
    I have found through negotiation that they have a discretionary extra but for obvious reasons they do not advertise this.
     
    Tomjim likes this.