Very low rent in Rent Pressure Zone

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CapitalK

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HI Everyone,

I live in the UK and have one btl in Dublin in Swords.

I was not aware there was a rent pressure zone there and had nt raised the rent for 7 years and its now E1100 v E1750 market rent.

I had a good tenant so left it and just thought ill raise rent when she moves out which I now realize I cant do apparently - and find it very unfair that just because i chose not to raise it and also wasnt even aware of this rpz - im now stuck at a very low rent.

Is there any way around this at all ?

I know the 2 year rule and refurbishing etc but I mean without that is there any way to bring it up near market rent.

Many thanks
 
CapitalK said:
without that is there any way to bring it up near market rent
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simple answer - no

Your best bet might be to leave the property unoccupied for the required period of time (assuming you can afford to do so); alternatively you might be able to AirBnB, and then bring it back to the rental market at the then prevailing rate.

All of which, when you consider the huge rental pressure at present, is simply bonkers; but that's what happens when you introduce rent control.
 
If you last set the rent in February 2015 and wanted to increase the rent in March 2022, the most you are legally allowed increase the rent to is €1,175.

So if you leave the property vacant for 2 years, you would be down €28,476 (gross). Breakdown below:
You would lose out on €1,175 for the next 12 months (March 2022 - February 2023) and
You would lose out on €1,198 for the next 12 months (March 2023 - February 2024) (with a 2% increase in rent again next year).

For the next 12 months (March 2024 - February 2025) you could charge market rent (approximately €1,800 say if you have left it vacant) or €1,221 (again another 2% increase in rent that year permitted). So you would be gaining €579 pcm, so an annual gain of €6,948.

Therefore, without continuing on with the calculations, it would take you until February 2028 until you were actually financially better off leaving your property empty for the next 2 rooms to circumnavigate the RPZ rules.


Alternatively, you can increase the rent must higher than permitted under RPZ rules and take your chances. As the actress said to the bishop; the choice is yours!
 
PebbleBeach2020 said:
Therefore, without continuing on with the calculations, it would take you until February 2028 until you were actually financially better off leaving your property empty for the next 2 rooms to circumnavigate the RPZ rules.
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But at some point the rent will have to be reset by taking it off the market. With the 2% of HICP (whichever is lower) your property is basically going to be stuck at 60% of market value forever more.

So if you want to make profit (long term) out of this property you will have to take it off the market for two years to reset the rent. The rules are daft but that's what they are.

@Thirsty 's idea of short-term letting is good. You may have a friend or family member who would occupy it rent free either who could keep it in good condition.
 
Isn't the whole point of the controls that market rate will fall eventually? So I don't believe the statement below is entirely true. OP is there an option to sell and buy a different property with a better yield? If you sell to an owner occupier the previous rent won't matter.
NoRegretsCoyote said:
But at some point the rent will have to be reset by taking it off the market. With the 2% of HICP (whichever is lower) your property is basically going to be stuck at 60% of market value forever more.
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Could consider selling it and then buying a similar apartment that is owner occupied and rent that out at full market rate (if you still want to be a landlord).
 
CapitalK said:
I live in the UK
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CapitalK said:
I was not aware there was a rent pressure zone there
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CapitalK said:
Is there any way around this at all ?
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The legislation is tightening all the time and small landlords are being driven out of the market. You should sell up and follow them.

You had a good tenant. But the next tenant might stop paying their rent and it will be very difficult to do anything about it from the UK.

The only reason you should consider keeping it is if you intend to return to Ireland in the immediate future and you intend to live long-term in the apartment.

Brendan
 
Thanks a lot everyone
It seems I'm a bit snookered... tbh landlords that are obviously under rented should at least be able to bring up in line and then 2% increase
Any idea if or when the rpz may end ? If at all
Many thanks
 
@CapitalK

I think 2% or HICP (whichever is lower) is going to be with us for a decade or more. No politician will be brave enough to legislate for rent increases any time soon. You will be stuck well below market rent for a very long time.

If you live in the UK you could become a landlord there. AFAIK the tax and regulation regime is a bit more landlord-friendly.
 
NoRegretsCoyote said:
I think 2% or HICP (whichever is lower) is going to be with us for a decade or more. No politician will be brave enough to legislate for rent increases any time soon. You will be stuck well below market rent for a very long time.
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Well rents could and hopefully will drop relatively similar to the last bust. At that point they'll drop it and no-one will even notice.
 
elcato said:
Well rents could and hopefully will drop relatively similar to the last bust.
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2008 to 2011 rents "only" dropped 20% in one of the worst ever economic downturns to ever occur in a developed economy. Since then they are up 75%.

20% would not bring the OP back to market levels.


fredgraph.png
 
This graph tells you all you need to know about the outrageous rent increases.
Compared to salary development, we should sit about index=112 this year instead 140, and that's being generous already.

Poor landlords and their hardship of RPZ being imposed.
 
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