What is the validity of a tenancy contract after the first year?

I have a query regarding the continuation of tenancy contracts.

We have a tenant who has just entered the third year renting our apt. He signed a contract at the outset of the tenancy but since then has renewed only by email (i.e. he has not signed a new contract). The original contract was for 12 months.

One month into the third year he has decided to leave and has given us 28 days notice. This means we now need to pay for an agent to let the place and find a new tenant. It also means that we may have to pay the full rent if a new tenant cannot be found during the notice period.

Under the terms of the original contract the tenant is liable for all of these costs until a suitable tenant is found to take on the lease. On this basis we have informed him that we will not be returning his deposit until this matter is resolved. We do not want to be unfair to him and are doing all we can to find a new tenant. But we also do not to be unfairly out of pocket. That said, if we are in the wrong and we should have had a new contract signed each year then we will do the right thing by him.

This wasn't intended to be an investment property. It was originally our home but the only way my wife and I could make the payments on the mortgage (after losing our jobs in the recession) was to emigrate for work and rent it out. We make no profit at all. In fact we are sending a significant sum home each month to subsidise the costs. We are just about getting by but unable to save for unexpected costs.

Can anyone clarify if the contract is still valid and the tenant should abide by its terms? Or, is he correct and leave with just giving 28 days notice?

Many thanks

Hi Northenlight,

I am in a similar situation in that I also bought my house to live in, but had to rent it out in order to keep covering the mortgage, and I also have to pay a large portion of the mortgage on top of the rent to continue covering it.

My understanding is that if you don't renew the original 12 month lease, the tenancy automatically becomes what's called a Part 4 Tenancy which can run up to 4 years. Based on this type of tenancy, the tenant has to abide by the amount of notice required. Given that he is in the apartment over 3 years, he actually has to give 8 weeks notice to you.

Take a look here for further info - http://www.citizensinformation.ie/en/housing/renting_a_home/types_of_tenancy.html

I normally get tenants to sign a 1 year lease, after that I'm happy enough if they give a months notice, I do understand that they are obliged to give longer but given they have stayed the year, I don't see that I'm out of pocket.

Your tenant has stayed for 2+ years, If they had left after 1 year, you probably would have had redecorating costs etc & that tenant may also have left after 1 year.

I think you can technically force him to give you more notice, but I reckon you'd be better off seeing if he will facilitate viewings in order to get a new tenant during his notice period (bear in mind, he is not obliged to facilitate viewings)

As sam mentioned I think your tenant is being more than fair and given that you do not have a signed annual contract I believe he is within his rights.

This means we now need to pay for an agent to let the place and find a new tenant. It also means that we may have to pay the full rent if a new tenant cannot be found during the notice period.

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You would have to do this anyway if he left after year one or two. I'm afraid that is the reality of being a (albeit reluctant) landlord. I think you shuld do the right thing as you mentioned.

The tenant is within their rights to give notice as no new rental agreement is in place.

Re-pay the deposit anyway as it's the right thing to do but also in light of the following:

If everything is not ship-shape legally with your letting ie registered with PRTB, NPPR paid, Agent appointed to collect your rent (or the tenant witholding 20% of the rent and paying it to Revenue) then s/he could inform the relevant authorities of these facts and you will have a much more sizeable bill than the deposit.

You should be happy you had a good tenant for two years.

The tenant is bound (as is the landlord) by part 4 tenancy rules which dictate the length of notice required.

It is true to say that the landlord could find himself in trouble if everything is not square with PRTB and NPPR, but it is the tenant who will find himself with an enormous tax bill for not withholding the 20% and the landlord could even be due a sizeable rebate if he has a large interest bill on the property.

I would agree with the sam h that you may be best off by agreeing with the tenant to have access for viewings before he leaves and keep it amicable if at all possible.

Sybil

The tenant would have no tax liability whatsoever. That's the landlord's problem.

I'd also second the advice above from sam h

RIAD_BSC said:

The tenant would have no tax liability whatsoever. That's the landlord's problem.

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It is deeply unfair, but yes, he [broken link removed]

Mrs Vimes said:

It is deeply unfair, but yes, he [broken link removed]

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Touche.... in this case, he probably does, although if the OP is currently using an agent (this is unclear from the posting) then the tenant definitely has no obligation.

What I should have said is that normally, tenants don't have any responsibility. Those rules only apply when the landlord is non-resident in the state for tax purposes, and is therefore not obliged to file a tax return. In such circumstances, the tenant does then becomes responsible for collecting the tax. The OP has indeed emigrated (I only copped this on second reading, so apols.....) so in this case, then the tenant could theoretically be hit with the bill. But even the ombudsman says this is an anomaly, and in the case you refer to in the link, Revenue seems to have backed off anyway. If the Revenue did chase the tenant for the tax, then the tenant could similarly chase the landlord for the overpayments (and keep possession of the apt until he was repaid). That's what I'd do.

But in the vast majority of tenancies, the landlord is tax resident in Ireland, and the tax is then their problem, not the tenant's. But in this case, you're probably right, and I was probably wrong. So, again, touche........

Has there been an actual case where a tenant innocently and honestly paid rent to an overseas landlord and then was punished/fined by Revenue for not, in effect, collecting the tax /doing form R185 etc ??

I imagine that the landlord has to pay tax to whatever is his/her country of residence, and that ,as per mutual tax agreement, would have the 20% deduction-if made- taken into account. Is that so?

Is it the case that if a landlord appoints an agent (which means anyone he/she chooses) then the tenant has no responsibility to collect/withhold 20% tax ?

oldnick said:

Is it the case that if a landlord appoints an agent (which means anyone he/she chooses) then the tenant has no responsibility to collect/withhold 20% tax ?

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Yes (if you're talking about an overseas landlord). It becomes the agent's job.

oldnick said:

Has there been an actual case where a tenant innocently and honestly paid rent to an overseas landlord and then was punished/fined by Revenue for not, in effect, collecting the tax /doing form R185 etc ??

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Yes - see the Ombudsman's annual reports for [broken link removed] and [broken link removed]

oldnick said:

I imagine that the landlord has to pay tax to whatever is his/her country of residence, and that ,as per mutual tax agreement, would have the 20% deduction-if made- taken into account. Is that so?

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Depends on the Double Tax Agreement, if one exists, between Ireland and the other country.

oldnick said:

Is it the case that if a landlord appoints an agent (which means anyone he/she chooses) then the tenant has no responsibility to collect/withhold 20% tax ?

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Yes.

Thanks TMcGibney .
Reading the Ombudsmans' reports makes me still wonder, though, whether Revenue has succesfully pursued and obtained this tax money from the tenants, other than by withholding rent-relief refunds.

Hi oldnick,

Revenue don't just withhold rent relief rebates, they can also disallow any credits at all until the amount due has been collected which could take several years.

@Riadbsc,
AFAIK a non-resident landlord is obliged to make a tax return but I'm not sure.

oldnick said:

Thanks TMcGibney .
Reading the Ombudsmans' reports makes me still wonder, though, whether Revenue has succesfully pursued and obtained this tax money from the tenants, other than by withholding rent-relief refunds.

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I haven't read the 1998 report for a while but I seem to recall that in that case the tenant's 'liability' in respect of withheld tax was waived by Revenue following the Ombudsman's intervention.

Thanks for replies -sorry I went off original OP's topic a bit with my curiosity about this ridiculous Revenue rule which I'm now convinced is rarely, if ever, fully observed.

I think the tenant of a non-resident landlord could be chased for tax (that he didn't withhold from the rent paid) by the Revenue only if:


the landlord is in fact liable for tax - may not be the case here if OP is registered with PRTB and their mortgage interest x75% is greater than the rent received

the landlord doesn't pay the tax due

and

the Revenue is unable to collect the tax from the landlord.

So I doubt it is relevant in this case. The best advise for OP is to register the tenancy with PRTB if it's not already registered, and similarly to pay NPPR charge if not yet paid. And submit all relevant tax returns if not already submitted.
It's far better that way, and then they'll have nothing to fear from the tenant re tax

Re notice period I don't quite see why landlord should be expected to waive their right to receive proper notice (8 weeks' in this case) from their tenant while had it been the other way round, the tenant would have been fully entitled to receive the notice twice as long from the landlord, before the landlord could get their house back, and even then only under special circumstances (such as wanting the house for own needs, for a family member, to sell etc.).

My point is the notice rules are already skewed in favour of tenants, so I don't think landlords should be expected to waive whatever little rights they have. On the other side, if the tenant leaves early but facilitates viewings and replacement tenants are quickly found, then the landlord should refund the deposit. If the tenant is not cooperative and/or replacement tenants are not quickly found, then landlord is fully entitled to retain the deposit to compensate for loss of rent caused by their tenant moving out without giving notice required by law.