# What value do landlords place on good tenants?



## samfarrell (21 Jun 2017)

I imagine most landlords want to get as much money as possible for renting out a property. But I have heard many landlords also state they put a high value on having what they call "good tenants". Some have told me they would rather have a good tenant and make a few less quid than visa versa
Just wondering what value landlords here put on their tenants being good and well behaved ?


----------



## odyssey06 (21 Jun 2017)

It's been complicated by RPZ... now a landlord who gives a good deal to keep a reliable tenant would have to offer pretty much the same rent to the next one too - who is of unknown reliability.


----------



## LS400 (21 Jun 2017)

As Above,
More harm has been done to the relationship between LL and Tenant with the intervention of rpz, than can be imagined. Which, although not implemented with malice, it was just pure short sightedness implemented with a knee jerk reaction.
And so to answer your question, I believe its become a colder relationship, through no fault of LL or Tenant


----------



## Gordon Gekko (21 Jun 2017)

I place huge weight on it.

As an example, I'd prefer to get €1,400 from a stable tenant rather than €1,600 from a flake.

On foot of tax, it's less than €100 in the difference.

However, the RPZ rubbish has coloured it to the point where I feel compelled to hit the tenant with every potential increase with a view to preserving the value of my asset.

A shame.


----------



## AlbacoreA (21 Jun 2017)

No choice now. 

Have to increase the rent to the max otherwise you devalue the property if you let it fall significantly below the rent. 

Any LL that was renting out at below the market rate now has to play catch up.


----------



## paddyd (21 Jun 2017)

I place the highest possible value on a good tenant. 
Finding someone with cash in hand is easy - finding a good tenant is VERY difficult in the current environment.
I rent multiple high-quality family semi's in the commuter towns.

I currently have tenants easily 20-30% under market value and I wouldn't imagine raising the rent.
One family have been there 2-3 years, have never called me once, and when I do my 6-month inspections, the place is pretty much in the same (newly renovated) condition that they received it, if not better.

The value of a good tenant cannot be overstated.


----------



## AlbacoreA (21 Jun 2017)

The problem is if they leave, the next tenants get the same rent more or less. Even if they turn out to be problem tenants. If you want to sell, how does it effect the value of the property.


----------



## SqueezedMiddle (22 Jun 2017)

I got stung badly by the RPZ changes for giving discounts in rent to valued tenants.
I would never do it again.


----------



## Steven Barrett (22 Jun 2017)

As part of my job, I speak to a lot of people who have investment properties. Having a good tenant is priceless. Many clients are willingly undercharging good tenants because they want to keep them there and don't want the hassle and uncertainty of trying to replace them. However, the "discount" rent has to be earned over time by the landlord trusting you to be a good tenant. The RPZ is now rewarding new tenants for the good behaviour of past tenants. The government shouldn't be the ones to decide who gets a discount rent and who gets the market rate. 

Steven 
www.bluewaterfp.ie


----------



## paddyd (22 Jun 2017)

To give a real example, I changed tenants recently and the effects of the RPZ were as follows:
Old rent: 1200
Potential market rate: €1500
RPZ result: €1345

It's still below the market but not much when you account for the high rates of tax.

However I f I use the example of the 2011 lease when I had charged €900, the RPZ would only allow for rent of €1140 in January 2018


----------



## Moon light (22 Jun 2017)

Having been a landlord for a number of yrs now with a few rental properties, 
We always look after good decent tenants, and we have been lucky for the most part finding nice people, 
We had one group of tenants stay with us for 9 yrs and were sad to lose them when they returned to their home country, 
The minute anything goes wrong myself and my husband resolve it asap, and we even call round with Xmas presents for them to say thanks for minding the place for us,

We always gave a discounted rent of 20-30%, however I do feel my views on this are now changing unfortunately, and I can see I have been stung for being a decent landlord, 
I will make sure now to increase the rent by 4%, in order to try and hold the value of the property, 
None of my tenants have moved out now in a good number of yrs, They all know they are getting cheap rent,

I do think it’s very unfair though that a new potential tenant avails of the cheap rent if current tenants move out, 
I have a feeling though none of my tenants will be moving out for a long time, so I am stuck playing catch up now  !
I will be playing catch up either way now – with current and potential new tenants,

Looking back I should have been more business like and wouldn’t be in this position today, Lessons learnt,


----------



## odyssey06 (22 Jun 2017)

Should the question pivot to... given RPZ, what can be done instead of discounted rent in recognition of 'reliable' tenants?


----------



## Seagull (22 Jun 2017)

I suspect there will be a number of imaginative ways come up with to increase the official rent without actually increasing the total that good tenants are paying. 

One effect of the RPZ has been to reduce the incentive to be a good tenant, as you now know that rents will almost invariably go up regardless of your behaviour, and how well you keep the place.


----------



## Sarenco (22 Jun 2017)

paddyd said:


> To give a real example, I changed tenants recently and the effects of the RPZ were as follows:
> Old rent: 1200
> Potential market rate: €1500
> RPZ result: €1345


By my calculations, you must have left the rent unchanged for around 6 years to get that RPZ result. 

Market rents nationally have increased by around 25% (per the RTB index) over the last six years so that checks out with your potential market rate figure.

However, all property markets are local - market rents in Dublin have increased by around 30% over the same period.


----------



## paddyd (22 Jun 2017)

Seagull said:


> One effect of the RPZ has been to reduce the incentive to be a good tenant, as you now know that rents will almost invariably go up regardless of your behaviour, and how well you keep the place.



It's an interesting point - my experience from other landlords is that "everything was going ok with the tenants until I increased their rent - then they started calling me almost every month with things to resolve"

That said, good decent people will always be good decent people. If there was a big gap in rent to the market value, it hardly makes sense to close that gap entirely. If you must increase the rent on a good siting tenant, then it's better to negotiate the middle ground.

What I've done in the past is renew a new lease at the same rent but tell them that I probably wouldn't be able to renew at that same level again, so that they are aware of my stance. That assumed a change in my costs too, which in that case was the (non tax deductible) LPT.


----------



## paddyd (22 Jun 2017)

Sarenco said:


> By my calculations, you must have left the rent unchanged for around 6 years to get that RPZ result.



In both examples above I just plugged the numbers into the RTB calculator.

The people paying €900 moved out and to be fair, if they hadn't I would have had to increase the rent as my costs changed (LPT, drop in deductible interest from 100% to 75%, etc) and the gap to market rate was too obvious. I'm sure there are plenty landlords in a similar situation who didn't increase the rent though, although I track the rents in my areas daily since RPZ and I don't see many places advertised clearly below market rate


----------



## Leper (23 Jun 2017)

We all dreamed that one day we would own a second property and augment our pension/earnings with some rental income. The dream was great but the reality is different. One bad tenant can wipe out a landlord pretty fast.I would bet that most of the posts here concern rental properties in Dublin or the greater Dublin area where increased rental charges are guaranteed.  Outside of the greater Pale landlords struggle to keep up with overheads never mind profit.

My hard earned advice (albeit having rented out a remote holiday home we bought, refurbished and sold it years later):- If you have a good tenant cherish him/her, be reasonable and don't kill the goose that lays the golden egg eventhough not as golden as you thought.


----------



## Steven Barrett (23 Jun 2017)

Leper said:


> Outside of the greater Pale landlords struggle to keep up with overheads never mind profit.



Taxation is a huge issues for landlords. I've lost count of the amount of times accidental landlords tell me "I wouldn't mind paying tax if I was actually making money off the apartment (it's always an apartment), but I'm hardly covering the mortgage AND I have to pay income tax". 


Steven
www.bluewaterfp.ie


----------



## odyssey06 (23 Jun 2017)

paddyd said:


> It's an interesting point - my experience from other landlords is that "everything was going ok with the tenants until I increased their rent - then they started calling me almost every month with things to resolve"



If this was an IT business who had to charge the same price for their product, what they would do for 'reliable' customers is offer their 'premium' support service for free (or discounted). This support service would have shorter response times for issues (even minor ones). People on the basic support service would be responsible for fixing some of their own issues, minor (cosmetic) issues would be dealt with within a couple of weeks etc.

Not sure how much scope there is in landlording for such a pricing mechanism though... you would to split out 'support' \ service charges from 'core' rent.


----------



## Firefly (23 Jun 2017)

odyssey06 said:


> If this was an IT business who had to charge the same price for their product, what they would do for 'reliable' customers is offer their 'premium' support service for free (or discounted). This support service would have shorter response times for issues (even minor ones). People on the basic support service would be responsible for fixing some of their own issues, minor (cosmetic) issues would be dealt with within a couple of weeks etc.
> 
> Not sure how much scope there is in landlording for such a pricing mechanism though... you would to split out 'support' \ service charges from 'core' rent.



What about increasing the rent but it includes the lecky / gas, bin collections etc so that the cost to the tenant remains the same? That way the LL can book a higher rent and maintain the value of the asset.


----------



## cremeegg (23 Jun 2017)

What do we mean by a "good" tenant. Usually someone who pays the rent on time, keeps the place well and doesn't annoy the neighbours. Most landlords don't expect any more than this.

This should be the basic standard that a landlord could expect from any tenant.

What we are calling a discount for a "good" tenant is really just the lack of a premium for a "bad" tenant. If you take on a new tenant, you have no idea how they will behave. The RTB will not protect you if they turn out to be a nightmare. Therefore you must include some element of a premium to cover any problems that might arise. If the RTB would allow you to evict "bad" tenants this would not arise. Rents might drop to "good" tenant levels across the board.


----------



## The Horseman (23 Jun 2017)

Good tenants are those who treat your property with respect. They undertake minor cosmetic upgrades (eg painting, cleaning gutters etc).

With our dysfunctional rental market there are no options available to reward these good tenants. If you keep the rent down for a good tenant the next tenant benefits if in a RPZ. This is almost like selling your car and giving your No Claims Bonus to the new owner.

Cremeegg I completely agree with you regarding the eviction of the bad tenant but our Govt seem intent on housing everybody no matter how bad they are as tenants. If the RTB had any real powers bad tenants and landlords should be held to account equally rather than the rather one sided position we find ourselves in. Getting an order from the RTB is only the first step in recovering your property and any rent you are owed which in the main needs the involvement of the Courts and the expense of same.


----------



## galway_blow_in (23 Jun 2017)

in ireland , the landlord is expected to be an angel , the tenant is viewed as a good tenant if he pays on time and doesnt wreck someone elses property ( when i go into tesco to buy groceries , im not seen as a good customer if i pay what i owe or dont smash up aisle 6 )

one is held to an incredibly high standard , the other to an incredibly low one


----------



## odyssey06 (23 Jun 2017)

paddyd said:


> When i go into tesco to buy groceries , im not seen as a good customer if i pay what i owe or dont smash up aisle 6 )



Eh, yes you are! Tesco doesn't expect you to take care of its store as if it is your own property. They treat the engagement as a business transaction. 
What do you think a hotel would consider a good guest to be???


----------



## galway_blow_in (23 Jun 2017)

odyssey06 said:


> Eh, yes you are! Tesco doesn't expect you to take care of its store as if it is your own property. They treat the engagement as a business transaction.
> What do you think a hotel would consider a good guest to be???



my point was , not wrecking a place is a very low standard to hold someone to , nor is them paying an agreed price for a service


----------



## Twoflutes (23 Jun 2017)

galway_blow_in said:


> in ireland , the landlord is expected to be an angel , the tenant is viewed as a good tenant if he pays on time and doesnt wreck someone elses property ( when i go into tesco to buy groceries , im not seen as a good customer if i pay what i owe or dont smash up aisle 6 )
> 
> one is held to an incredibly high standard , the other to an incredibly low one



This type of argument just sounds moronic to me. All tenants are required to pay deposits to landlords in advance in case any damage is done to property. Tesco dont ask for a deposit when you go in their shop as far as I know. Unless they ask you for one


----------



## cremeegg (24 Jun 2017)

A deposit is very little protection for a landlord against damage to property. You typically have to pay a greater deposit to hire a car than rent a house.


----------



## Seagull (27 Jun 2017)

Twoflutes said:


> This type of argument just sounds moronic to me. All tenants are required to pay deposits to landlords in advance in case any damage is done to property. Tesco dont ask for a deposit when you go in their shop as far as I know. Unless they ask you for one


One month's rent doesn't go very far when you have a bad tenant who overstays for 2 years without paying rent, and then trashes the place on the way out.


----------

