Would it make sense to leave a rental empty for 2 years to avoid the RPZ rent limits?

[AlbacoreA]

I've said before the rpz don't just effect rent they effect capital value of a property of selling to another LL. Leaving a place empty is really only the loss of net income. If selling to an owner occupier it won't be effected. But it does have the effect of further reducing rental supply and cheaper rents from the market. Losing that cheaper rent and the property from the rental supply will raise the average rent.

I'd say many people inherit a rental with a very low rent. It's really no an issue for them to leave it empty or sell it.

But the govt doesn't care. If they did they'd be trying to increase new construction. Really made little effort with that.

 

[AlbacoreA]

If you're an investor it's has to be money or income your not relying on. As such it more about capital losses if the market fails. Because that would wipe out any profits from income. But even if it does you can sell and not lose that much. So medium risk overall.

 

[lff12]

I think so.

Once there is no registered tenancy for two years you can start again at the market rate.

You could live in it yourself, loan to a friend or family member. Lots of my neighbours who were investors in my last tenancy were evicting their tenants to move in their adult children for 2 years, during which the adult child got free rent, could save towards their own deposit, and after 2 years able to drop back onto the market at current market rates - win-win for them.

 

[lff12]

I've said before the rpz don't just effect rent they effect capital value of a property of selling to another LL. Leaving a place empty is really only the loss of net income. If selling to an owner occupier it won't be effected. But it does have the effect of further reducing rental supply and cheaper rents from the market. Losing that cheaper rent and the property from the rental supply will raise the average rent.

I'd say many people inherit a rental with a very low rent. It's really no an issue for them to leave it empty or sell it.

But the govt doesn't care. If they did they'd be trying to increase new construction. Really made little effort with that.

My last landlady actually inherited the property from her elderly mother with me in situ at a rent sent in 2012 (lucky me).
Depends on the circumstance - you cannot evict unless you want to either move in yourself, sell or move in family.
But I did work out that even if she increased the rent by the allowable amount every year it would have taken 14 years for her to recoup the cost of capital gains tax (if she paid the maximum amount) after tax. So she offered to sell it to me, and I can see why. (In the end there were planning issues with it so I left & bought a house, but you see my point).

 

[Bronte]

True, but how common would this scenario (of leaving property empty for 2 years) actually occur in practice? Maybe it's just a very rare edge case?

I'm doing it, as is my sibling. I'm also aiming for the renovation grant. I need to renovate, impossible with a sitting tenant. Or possible at incredible stress and extra cost. Places are being left empty all over the place if you look. One auctioneer refused to even advertise a property for me unless I got rid of the tenant first. Another told us after some grief in getting rid of tenants via the RTB and purchasers pulling out that this was why he won't take on any more properties with tenants.

I'm now going to look into the Ukrainian option, mentioned above, as a stop gap as it will heat the place for next winter.

 

[Mamamia22]

Has anyone any experience of the Ukrainian option. I have a relative in the same dilemma. Leave empty being the current no 1 option. Although it seems extreme given the current shortage of places to rent.

 

[DannyBoyD]

From what I understand, they are still looking for placements.

There is a matching process & you are not obliged to take on anyone you're not happy with.

And I'm currently in the 'leave it empty' camp. I'm doing a refurb anyway, but I'm happy to take my time.

In a normal business environment, I'd be paying someone to turn it around quickly, so as not to have a void.

But with our bonkers rules, its worth having a 2 year void.

 

[AlbacoreA]

My last landlady actually inherited the property from her elderly mother with me in situ at a rent sent in 2012 (lucky me).
Depends on the circumstance - you cannot evict unless you want to either move in yourself, sell or move in family.
But I did work out that even if she increased the rent by the allowable amount every year it would have taken 14 years for her to recoup the cost of capital gains tax (if she paid the maximum amount) after tax. So she offered to sell it to me, and I can see why. (In the end there were planning issues with it so I left & bought a house, but you see my point).

Property being now empty. Could be left empty for two years.

Properties like this will eventually disappear from the market, either no longer rented, or brought up to the market rate.

 

[lff12]

Property being now empty. Could be left empty for two years.

Properties like this will eventually disappear from the market, either no longer rented, or brought up to the market rate.

Rented again pretty soon actually, the estate agent actually dropped me an email asking about how much the new tenants might expect to pay on utilities (landlady was the owner of the estate agent's brother, and they are old family friends of my mother's family).

 

[lff12]

I'm doing it, as is my sibling. I'm also aiming for the renovation grant. I need to renovate, impossible with a sitting tenant. Or possible at incredible stress and extra cost. Places are being left empty all over the place if you look. One auctioneer refused to even advertise a property for me unless I got rid of the tenant first. Another told us after some grief in getting rid of tenants via the RTB and purchasers pulling out that this was why he won't take on any more properties with tenants.

I'm now going to look into the Ukrainian option, mentioned above, as a stop gap as it will heat the place for next winter.

Its a point but I wouldn't assume that some difficulty may arise in the future even with a Ukrainian tenant.
I can see your point though, my conveyancing solicitor's pre buying questionnaire had specific questions about who, if anyone, was living in the property so I can only assume her advice would have been to avoid any property that had a sitting tenant.

That said, a colleague absolutely insists that his mate bought a house end of last year and managed to evict a sitting tenant from previous owner even though there was an eviction ban in place.

 

[AlbacoreA]

Rented again pretty soon actually, the estate agent actually dropped me an email asking about how much the new tenants might expect to pay on utilities (landlady was the owner of the estate agent's brother, and they are old family friends of my mother's family).

They weren't serious about selling it so...

The trend is still to sell and get out of the market...

Rental crisis: More than 4,700 notices to quit issued in first three months of 2023

Residential Tenancies Board figures show about half were served due to a landlord’s intention to sell the property

www.irishtimes.com

 

[Bronte]

Its a point but I wouldn't assume that some difficulty may arise in the future even with a Ukrainian tenant.
I can see your point though, my conveyancing solicitor's pre buying questionnaire had specific questions about who, if anyone, was living in the property so I can only assume her advice would have been to avoid any property that had a sitting tenant.

That said, a colleague absolutely insists that his mate bought a house end of last year and managed to evict a sitting tenant from previous owner even though there was an eviction ban in place.

It's requisition 10. I had to fill it in recently - had to list all tenants in the last 2 years and RTB details etc.

People got confused over the eviction ban. Tenants who already had been served notice didn't count, there was all kinds of complications on the rules.

My solicitor told me a load of investors like me are selling.

 

[Bronte]

assume her advice would have been to avoid any property that had a sitting tenant.

My sibling was selling, purchaser (sale agreed) wanted vacant possession, couldn't get (one) tenant out . So took it off the market, then purchaser decided he'd ignore his solicitor (cash buyer) but it was too late as sibling had a separate legal issue and also had put money in to renovate it. No logical reason for vacant possession, but having said that I'm selling with vacant possession. One auctioneer refused to put it to market otherwise.

 

[AlbacoreA]

Banks used to have an issue with mortgages unless you had vacant possession. No idea if thats still the case.

 

[lff12]

They weren't serious about selling it so...

The trend is still to sell and get out of the market...

Rental crisis: More than 4,700 notices to quit issued in first three months of 2023

Residential Tenancies Board figures show about half were served due to a landlord’s intention to sell the property

www.irishtimes.com

Oh I think they were, but it transpired to have major planning issues that made it impossible to sell - it had been illegally separated from the adjoining apartment, and attempts to normalise the PP failed. So they just went back to renting it.

 

[AlbacoreA]

Apologies I've lost track of what your point was in relation to the RPZ.

 

[lff12]

Banks used to have an issue with mortgages unless you had vacant possession. No idea if thats still the case.

A lot of solicitors don't want to get involved. I have heard of at least one case of someone buying bang in the middle of the eviction ban with a mortgage, and somehow managing to dislodge the tenant. I would assume the banks might not always know the full truth, but the solicitor probably will. I wasn't asked for any evidence, mind, when I applied for the mortgage or went to buy a formerly tenanted property that was at the time still registered as a rental on RTB.

 

[AlbacoreA]

A lot of solicitors don't want to get involved. I have heard of at least one case of someone buying bang in the middle of the eviction ban with a mortgage, and somehow managing to dislodge the tenant. I would assume the banks might not always know the full truth, but the solicitor probably will. I wasn't asked for any evidence, mind, when I applied for the mortgage or went to buy a formerly tenanted property that was at the time still registered as a rental on RTB.

Quite hard to get the RTB to correct and update their records. Which makes me dubious of their statistics.

 

[Bronte]

That's it. It's what I mean. If a property can attract only investors, RPZ clearly limits its selling price. The impact is not such an issue when a property can attract owner-occupiers. This impact can be seen in the current market. And then it could be really beneficial to leave a property vacant.

I wonder would the constitutional provision on property rights be an arguable case.

 

[ClubMan]

I wonder would the constitutional provision on property rights be an arguable case.

Minister O’Brien receives Government approval for significant changes to RPZs | 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

“The linkage with the HICP respects the constitutionally protected property rights of landlords and aims to safeguard continued investment in the sector by existing and new landlords to deliver the requisite supply of high-quality rental accommodation.