# LPT: Every tenant of mine is paying it.



## oldnick (6 Apr 2013)

Yes - every tenant of mine is paying it. Seriously.


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## mandelbrot (7 Apr 2013)

oldnick said:


> Yes - every tenant of mine is paying it. Seriously.



How are you managing that - Are they not paying rent under a lease?


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## oldnick (7 Apr 2013)

I told my tenants over a year ago that I could not absorb the forthcoming property taxes, and being the kind LL that I am would not raise rents  in 2013 ,despite the general increase in rents in the  area (mid Dub and suburbs),  except for the property tax..

Each LL can have their own approach to rent reviews . I suppose it depends on how well one gets on with tenants, how greedy one is and ,of course, what  prevailing rents in the area are.  

To me it was important that the tenants know that the govnt is taking this-and-that out of my pockets,  and that any extra rent goes straight to the govnt. The tenants may not give a hoot; it's my foible that they should be informed .

Anyway, I originally thought the property tax would be much higher , and that it would be introduced at the start of 2013. I was telling apt tenants that the rent increase in 2013 may be a much as a 100 euros per month per apt, and house tenants twice that amount.

So tenants were delighted when I postponed the increase till 1 July  at much lower rates  (20- 30 per apt per month -50 for the house.)
_
Any LL who does not cost the property tax into rent  is losing too much money._


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## oldnick (7 Apr 2013)

A question for accountants:-

I state in my last post that I am charging just what the tax is.

But should LLs charge *more* -to take into account the fact that this is a non-deductible cost ?

EXAMPLE -on monthly basis.

1) Pre-property tax
==============
Rent= 1.000 minus costs 900 =  income of 100,  at 50%  tax = *50 NET PROFIT*

2) With property tax
==============
if property tax amounts to 40  per month and LL increases rent by same amount....

Rent 1040  minus deductible costs 900 = income of 140, at 50% tax = 70 profit MINUS THE 40 LL pays for property tax*. ACTUAL NET PROFIT = 30.*

So, LL netts only 30 euros per month  as opposed to  50 euros , even if he charges tenants the proeprty tax amount.

Have I got my sums  right? Can this be right? 
If so, LLs should charge 20 % more than the property tax!! (depending on amount of rent, costs and tax level)


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## Joe_90 (7 Apr 2013)

If you are a 50% taxpayer then you will have to charge twice the property tax.

If the property tax was €40 per month then rent of €80, tax of €40 and property tax of €40.


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## Dermot (7 Apr 2013)

I thought that the Minister indicated that the LPT might be allowed as a deduction. I forget the exact quote he made.


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## oldnick (7 Apr 2013)

Thanks Joe90. Am bad at mental arithmetic. The losses are worse than I thought !

I wonder if other LLs were as stupid as me ,not realising that one has to charge TWICE the property tax- in reorder to recoup the loss ?

I suspect some LLs were even stupider and haven't passed it on at all....

Yes, it was Noolan that said something would be done. But posters on AAM  so far seem to think not yet.

The LLs of houses, more than apts,  will suffer more because the yield is already much lower on houses -even in popular Dublin suburbs -than on apts.


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## seantheman (7 Apr 2013)

oldnick said:


> being the kind LL that I am would not raise rents in 2013


 
Tenants aren't liable for the Property tax, LL's are, so for the tenants renting the house you have increased their rent by €600 per annum


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## oldnick (7 Apr 2013)

Too little an increase it seems judging by my miscalculation....

If a house LPT is €600 p.a. and the LL is on the top rate of tax then the rent should have increased by €1.200 which would still mean no added income for the LL.
Every cent of this €1200 to the govnt in LPT and income tax - none for the LL.  Pretty fair ,eh? And pretty stupid of me to only add €600.

However, my tenants are not obliged to pay any extra rent if they don't wish . I give six months notice of any annual rent increase with a choice to vacate the property if they cannot pay that increase. That also seems pretty fair.

Obviously, the tenants are not asked to pay Revenue bills -like LPT - directly to Revenue, nor are they asked to pay the plumber directly for repairs to the boiler, or the shop for new furniture  etc

But tenants *are* liable to pay the rent and the rent *must* cover costs . If one of those costs is LPT then obviously this must be included in the rent.

How the LL addresses rent increases depends  -as I say in a previous post -on the LL. The LL can just raise rents with no explanation or, as I prefer, can explain certain costs to the tenants. 
Either way the LPT will be charged to the tenants; it is naive to expect them not to.

The exceptions , those LLs who'll absorb the costs, will be from ..
a)LLs who are making enough income that they're happy to absorb the extra cost, or
b) LLs who will make a loss on letting their properties. Sadly, there are too many of those ,especially the reluctant BTL owners who think any rent is better than nothing just so they keep up the interest payments to the bank.

I don't fit in either category.


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## delgirl (8 Apr 2013)

oldnick said:


> I suspect some LLs were even stupider and haven't passed it on at all....


To be fair, I don't think 'stupid' is the correct term here oldnick.

My tenant has a fixed-term lease in which the monthly rent is stated and until such time as that lease expires, I cannot increase the rent.

I'm not going to increase the rent either - I have very good tenants and am competing with many non-compliant landlords in the area who do not declare their rental income, pay no NPPR or PRTB fees, etc. and are therefore able to keep their rental demands low.

I have to keep my rent in line with what they are charging, otherwise I will lose my tenants.


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## mandelbrot (8 Apr 2013)

delgirl said:


> I have very good tenants and am competing with many non-compliant landlords in the area who do not declare their rental income, pay no NPPR or PRTB fees, etc. and are therefore able to keep their rental demands low.


 
If you know this for a fact, why not report it to Revenue?


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## Purple (8 Apr 2013)

Joe_90 said:


> If you are a 50% taxpayer then you will have to charge twice the property tax.
> 
> If the property tax was €40 per month then rent of €80, tax of €40 and property tax of €40.


And if the tenant is a 50% tax payer they have to come up with €160 to give you €80 so you can give the government €40.
Yet another reason why the householder should pay the tax.


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## oldnick (8 Apr 2013)

I did say in a previous post that a LL's decision depends on prevailing rents in the area.
However, "stupid" was a crass and unfair term to use for those LLs in a difficult position and I apologise.

If ,after paying all costs including the LPT (which if it is non-deductible is costing far more than the actual amount, depending on one's income threshold) a LL is not making a  net profit then a better term would be  "unwise".

I agree with Mandelbrot re cheating competition. 
If people came into my house and stole something i'd report them. I'd do the same with those who are  depriving me of income, not by fair competition, but by avoiding all the  charges that I pay. Basically, stealing.


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## oldnick (8 Apr 2013)

Purple 

If my tenants were on the top threshold I'd probably upgrade the apts and charge them far more !


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## delgirl (8 Apr 2013)

mandelbrot said:


> If you know this for a fact, why not report it to Revenue?


I'm just in the process of doing just that. 

My rental property was recently inspected by the local County Council for compliance with Housing Regulations and I got some interesting information from the Housing Officer as to which properties they were planning to inspect in my small estate. 

They have compiled their information from the list of NPPR payees and the PRTB registration database. There are 11 properties which are not on either list and the Secretary of the Resident's Association has been told by some of the LL's that they are 'flying under the radar'.

I'm not reporting them to be vindictive, I'm just finding it very difficult to compete with them and had to spend just over €2,000 this year on new windows etc, to bring the property in line with Housing Regs, which are only being enforced on compliant, registered LL's.


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## Boyd (8 Apr 2013)

oldnick said:


> But tenants *are* liable to pay the rent and the rent *must* cover costs . If one of those costs is LPT then obviously this must be included in the rent.



I don't think thats entirely correct, regarding rent covering the cost. There are plent of loss-making LLs out there and IMO the rent shouldnt be increased just so a LL can cover their costs i.e. without a proper reason. I wouldnt be happy at all to hear that.

Also I dont think its very fair that a tenant paying X in rent should have to pay more LPT just because LL is on higher rate of tax.......thats LLs problem IMO.

As I tenant I know we will never agree on the above points but I wanted to get a balanced view on this thread, which I think is sorely lacking.


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## AlbacoreA (8 Apr 2013)

username123 said:


> I don't think thats entirely correct, regarding rent covering the cost. There are plent of loss-making LLs out there and IMO the rent shouldnt be increased just so a LL can cover their costs i.e. without a proper reason. I wouldnt be happy at all to hear that.
> 
> Also I dont think its very fair that a tenant paying X in rent should have to pay more LPT just because LL is on higher rate of tax.......thats LLs problem IMO.
> 
> As I tenant I know we will never agree on the above points but I wanted to get a balanced view on this thread, which I think is sorely lacking.



Why is covering costs not a proper reason?  or in other words, whats the point in being a LL if you're making a loss?

The LL is limited to when they can increase the rent. The rules are here...

http://www.citizensinformation.ie/en/housing/renting_a_home/rent_increases.html?tab=


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## T McGibney (8 Apr 2013)

alaskaonline said:


> Am I delighted that I am no longer a tenant. I'm shocked about some of the posts from LLs here. If you own a residential property in the State you will be liable for payment of the tax - you the person who owns it, not the person who rents it! People can rephrase it all they want but if you made the choice to buy x amount of properties, than you're liable for the tax. You can't just have the pro's for an investment and then find other people to pay for your liabilities. Full stop.



Every business passes on its costs to its customers. This is not an opinion, it is basic economics.


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## alaskaonline (8 Apr 2013)

To a certain degree, yes maybe - but 100% of these costs, I don't agree. Surely as a LL people knew that it's not just profits. If it was, we all would be LLs


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## Boyd (8 Apr 2013)

AlbacoreA said:


> Why is covering costs not a proper reason?  or in other words, whats the point in being a LL if you're making a loss?
> 
> http://www.citizensinformation.ie/en/housing/renting_a_home/rent_increases.html?tab=



Obviously there isn't a point! However, I never said this was the intention of LLs......I meant the ones whom due to having bought the property at inflated price and now the rent wont cover the mortgage, due to previous falls in rent. I dont think LL should be just able to put it up in this scenario simply to cover the fact they they made a bad investment and are having to pay for it.


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## T McGibney (8 Apr 2013)

username123 said:


> Obviously there isn't a point! However, I never said this was the intention of LLs......I meant the ones whom due to having bought the property at inflated price and now the rent wont cover the mortgage, due to previous falls in rent. I dont think LL should be just able to put it up in this scenario simply to cover the fact they they made a bad investment and are having to pay for it.



But we're not talking here about covering investment losses, merely covering overheads.



alaskaonline said:


> To a certain degree, yes maybe - but 100% of  these costs, I don't agree. Surely as a LL people knew that it's not  just profits. If it was, we all would be LLs



Passing on 100% of your overheads doesn't mean making a profit, it simply means breaking even. Again this is very basic economics.


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## mandelbrot (8 Apr 2013)

^^^^^ +1

This thread is gas - would people be up on their high horses if house insurance costs (or any other overhead of owning rental property) were being increased by several hundred a year and LL's were saying they'd have to pass it on in increased rents..!


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## AlbacoreA (8 Apr 2013)

username123 said:


> Obviously there isn't a point! However, I never said this was the intention of LLs......I meant the ones whom due to having bought the property at inflated price and now the rent wont cover the mortgage, due to previous falls in rent. I dont think LL should be just able to put it up in this scenario simply to cover the fact they they made a bad investment and are having to pay for it.



This has got nothing to do with mortgages. Its about the LPT. The LPT is simply another cost to the business. Costs get passed on to the customer. Its that simple. There are rules as to how much and how often the rent can be raised. So they can't simply put it up. They can however increase the rent to the market rate when it next comes up for renewal. 

The market rate is likely to increase due to the LPT. How can it not.


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## AlbacoreA (8 Apr 2013)

alaskaonline said:


> To a certain degree, yes maybe - but 100% of these costs, I don't agree. Surely as a LL people knew that it's not just profits. If it was, we all would be LLs



How do you figure a business can survive if it doesn't cover it costs or make a profit?


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## oldnick (8 Apr 2013)

Gosh - I read Alaska's and username's pots and I realise  how little tenants understand  -or care - about LL's problems.

There's this attitude that LLs are rich,greedy,selfish and that tenants are poor and exploited.

The fact that spending more than you earn means you end up broke  is something that some posters don't understand when it applies to LLs

They understand it with businesses-large or small.
They understand it when it comes to their own personal finances.
But when it comes to landlords they just don't get it. LLs are supposed to rent for less than the costs of running their business !!

Is it an Irish thing based on the past?  Landlords, like "informers" being inherently on the wrong side ?


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## ajapale (8 Apr 2013)

This is what Treshold.ie the private rented housing sector charity has to say:



			
				Threshold said:
			
		

> If your landlord seeks to pass this tax on to you directly please contact your nearest Threshold office for further advice.



and from Citizens Advice.



			
				Citizens Advice said:
			
		

> Under Section 19 of the Residential Tenancies Act 2004 (pdf)* Landlords cannot charge more than the open market rate for the  apartment or house.*
> 
> Tenants should note that the provisions of the Residential Tenancies  Act only apply to mainstream private rented housing - local authority  tenants are covered by different laws. You can find out more about your landlord’s rights and obligations here.
> 
> ...


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## Dermot (8 Apr 2013)

Why then have the Dept of Finance left it optional for Co Co's to pass on the LPT to Local Authority Tenants.

What Section of what act might Threshold be quoting to back up their position.

Nobody can give a definitive answer as to the open market value of a property rental. There could be 50- 75 pcm of a variation at the lower end and greater as you go more up market


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## oldnick (8 Apr 2013)

Ajapale ..

I'm unsure of the purpose of your post. 

It gives the rather insulting impression that LLs on AAM don't know that LLs can't raise rents more than once a year, must give at least 28 days notice , can't charge above market rent (the bit you highlight in red !) etc etc.

And, whilst it is the owner's legal liability to pay the LPT directly to Revenue,  I am unaware ( and Threshold have not declared ) that the LL cannot  include this -or any other cost -in the rent , as long as the LL follows the other conditions of rent reviews.


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## Luternau (9 Apr 2013)

^^^^^^ agree!

I don't get the point of your post Ajapale. 

Oldnick has stated he gives 6months notice. The law/guidelines state that he can raise rents once per year. Tenants don't have to pay the increase if they feel its not a fair rent. Simple economics on both fronts! No mystery-nothing underhand.

LLS get too much stick. Most are professional and look after their tenants. Their tenants realise the benefit of this and are happy to pay a Market rent to live in well managed and mainatained property. Threshold have a vested interest to beat down landlords-any comment that make does not necessarily mean it applies to the whole rental sector. 

By the way, I am a landlord, and would gladly exit the sector, was there a viable exit path. Sadly there is not. In the meantime, I along with other good LLS will continue to charge what we believe are fair rents that both reflect the quality and location of the property and that cover all costs, new or old. If threshold have a problem with rent increases, they should lobby the Govt/Trioka. It has been well documented and reported that the LPT would lead to increased rents-so why the surprise that it has come to pass?


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## mandelbrot (9 Apr 2013)

freeandclear said:


> Wrong , but like most things in Ireland their is a rogue element that are badly in need of been properly regulated so that they cant do exactly what you have done . Attitudes like yours will bring that day much closer to the detriment of us all .


 
What do you mean unregulated? Ever heard of the PRTB??

I'm a tenant myself, have never owned a house, and TBH I can't make any sense of what you've posted. It stands to reason that some LL's will need to pass on the cost of LPT in increased rent.

At the end of the day, rents are always dictated by supply & demand, and LPT will feed into that - as previous posters have said this is very basic economics.


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## Boyd (9 Apr 2013)

oldnick said:


> Gosh - I read Alaska's and username's pots and I realise  how little tenants understand  -or care - about LL's problems.
> 
> There's this attitude that LLs are rich,greedy,selfish and that tenants are poor and exploited.
> 
> ...




Well in fairness you did say earlier 


> Each LL can have their own approach to rent reviews . I suppose it depends on how well one gets on with tenants, *how greedy one is* and, of course, what prevailing rents in the area are."!!



I think the point is that the tax is on the ownership of the property, something you as a LL have chosen i.e. to buy a property. Hence you are liable for said tax. You get the benefit of owning the house, what benefit does the tenant get for paying your taxes?

How is it different from passing on your PRSI to the tenant?


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## murphaph (9 Apr 2013)

freeandclear said:


> Wrong , but like most things in Ireland their is a rogue element that are badly in need of been properly regulated so that they cant do exactly what you have done . Attitudes like yours will bring that day much closer to the detriment  of us all .


Germany has a pretty highly regulated rental sector according to most observers. In Germany the LL can pass the entire cost of his property tax on to his tenant (so long as he mentions this in the lease agreement, which obviously most landlords do!)

Most things can be passed on to the tenant in fact. These include:

-Property Tax
-Water, heat and warm water heating costs
-Lift repairs
-Street cleaning
-Waste disposal
-Sewage treatment
-Street lighting
-Chimney sweep/boiler servicing
-Garden/grounds upkeep
-Buildings Insurance
-Liability Insurance
-Building superintendent/janitor
-Communal TV aerial/Cable installation
-Communal washing  machine etc.
-Building cleaning
-Pest control costs

All these things are billed apart from the rent. The rent must be paid and then an estimated amount is added to cover the above things and then once a year the landlord will send a refund if the estimate was to great or a bill for the difference if too small.


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## murphaph (9 Apr 2013)

username123 said:


> How is it different from passing on your PRSI to the tenant?


It is no different...but the tenant IS paying the PRSI already!!! PRSI is a cost to the LL, just like the LPT. Costs get passed on to the customer in every line of business. Do you think Dunnes pays it's taxes out of something other than what you spend in their shops?


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## AlbacoreA (9 Apr 2013)

username123 said:


> ...I think the point is that the tax is on the ownership of the property, something you as a LL have chosen i.e. to buy a property. Hence you are liable for said tax. You get the benefit of owning the house, what benefit does the tenant get for paying your taxes?...



Use of the house. Its called rent. 

The only benefit of owning a house is making money. If its not making money there no point. How do you think the LL pays their bills, food, clothes, a car, tax, pension, medical bills. The rent. Its the LL income. Its all the same pot of money.


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## AlbacoreA (9 Apr 2013)

ajapale said:


> This is what Treshold.ie the private rented housing sector charity has to say: "_If your landlord seeks to pass this tax on to you directly please contact your nearest Threshold office for further advice._"



The LL may not pass it on directly. But it will be passed on indirectly, in the form of rent increases. It would be naive to think otherwise. Its simple economics.


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## murphaph (9 Apr 2013)

AlbacoreA said:


> The LL may not pass it on directly. But it will be passed on indirectly, in the form of rent increases. It would be naive to think otherwise. Its simple economics.


Indeed. It would be more transparent for the tenant if the LL could bill things out of his control separately to the rent as in Germany, but Threshold don't appear to want that. They want the LL to suck up all the new/increased costs of running his business and effectively insulate tenants from the real world. As I said over on boards.ie, landlords in Ireland are becoming more and more like surrogate mammies.


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## serotoninsid (9 Apr 2013)

murphaph said:


> ...but Threshold don't appear to want that. They want the LL to suck up all the new/increased costs of running his business and effectively insulate tenants from the real world.


Not just threshold but some posters on this thread also.  

I'm not a landlord - but it's obvious to anyone - all costs have to be passed on.  The laws of supply and demand will dictate - but ultimately, costs are going to have a bearing on that (unless there is massive oversupply in the market).

Someone took umbridge at oldnick's use of the word "greedy" - and it's really a non-argument.  Landlords and tenants enter into an agreement of their own free will.  Just like in the couple of years following the tiger, tenants were in a strong position and could negotiate rents downwards, landlords can and will up the rental if the market will sustain that.  If that's deemed to be 'greedy', why would a tenant enter into such an agreement??


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## AlbacoreA (9 Apr 2013)

The market value ultimately determines the rent.


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## BudgetBrenda (10 Apr 2013)

I am a small landlord - one property. My tenant has agreed to pay the LPT because (a) it is for local services (in theory anyway!) - she uses local services, not me and (b) her rent is below the going rate anyway and she know she has a good deal. She will give me a cheque for the LPT which i will forward to revenue - i don't need to charge double to allow for tax as i wont receive it as rental income.


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## mandelbrot (10 Apr 2013)

It doesn't work like that.

The cheque she writes, notwithstanding that it's for the amount of the LPT would be viewed as a payment in the nature of rent - it would be the same if the ESB account / bill was in your name and she gave you a cheque to cover it every 2 months.


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## 44brendan (10 Apr 2013)

BudgetBrenda said:


> .. i don't need to charge double to allow for tax as i wont receive it as rental income.


Just be aware that the revenue would regard this as RI. Just because it's paid separately, doesn't mean that it's not income!!


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## oldnick (10 Apr 2013)

I can understand utilities, rubbish,TV  being compulsory costs to the tenant (depending on the agreement). They're all part of the rent and the deductible costs.

LPT is not the obligation of the tenant we are constantly told.
If someone feels that they wish to make a purely voluntary gift of LPT payment to someone how is this rent ? It's not in any agreement, there's no obligation, it's purely a voluntary gesture.

If it is certain that  this is not a gift , how about book tokens ? Can Brenda's tenants give her book tokens? 

 As this is not a deductible cost (although I wonder about that) I feel it behooves both LL and tenant to help reduce the cost of making this payment. A voluntary gift would seem a reasonable way of doing this.


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## AlbacoreA (10 Apr 2013)

oldnick said:


> ...LPT is not the obligation of the tenant we are constantly told...



Who is constantly telling you that?


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## oldnick (10 Apr 2013)

Sadly -and wrongly in my opinion - it is the legal obligation/responsibility of the LL to pay LPT -  as per the websites of Revenue, Citizens Advice and Threshold,  plus the usual anti-LL lobby as represented by a few posters on this thread.

There's no getting away from it. 
If no LPT is received then Revenue will go after the property owner - not the person who benefits from the LPT i.e. the tenant.

My point in the above post is if, indeed, the tenant is under no obligation to pay the LPT but wishes to pay it then why should this be regarded as rent. It has nothing legally to do with rent we  or so we are told by the above authorities.

Now sensible people know that ,of course, LPT is a cost to the LL and ultimately has a lot to do with rent. But if the law says there is no connection then ,fine - let a tenant pay it if he/she wishes  but it ain't rent. Possibly a gift but under the gist tax level.

I'm just wondering if this is a way for Brenda  to avoid a rental tax problem.


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## murphaph (10 Apr 2013)

I think the tenant would have to pay the charge directly if even that would be legitimate. You could otherwise claim that all your rent was merely a gift and pay no income tax on it.


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## AlbacoreA (10 Apr 2013)

oldnick said:


> ...I'm just wondering if this is a way for Brenda  to avoid a rental tax problem.



Do you mean income tax?


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## Boyd (10 Apr 2013)

oldnick said:


> My point in the above post is if, indeed, the tenant is under no obligation to pay the LPT but wishes to pay it then why should this be regarded as rent. It has nothing legally to do with rent we  or so we are told by the above authorities.
> 
> Now sensible people know that ,of course, LPT is a cost to the LL and ultimately has a lot to do with rent. But if the law says there is no connection then ,fine - let a tenant pay it if he/she wishes  but it ain't rent. Possibly a gift but under the gist tax level.
> 
> I'm just wondering if this is a way for Brenda to avoid a rental tax problem.



Ugh all of the above merely enforces my point the its the LL who should pay it upfront. Its a straight forward property ownership tax, LL pays it for benefit of owning the house. If they want to try to pass it onto tenant thats LL/tenant problem. There's no 100% agreement in this matter, its up to the individual tenancy relationship


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## oldnick (10 Apr 2013)

Yes, Albacore I mean tax on rental income.

Username 
- nobody is disputing that LPT is LL's legal liability. And LLs should- legally,not morally - pay it.
The result is is that basic economics dictates that  the tenant will pay it via higher rents.

As LPT is not tax-deductible  LLs  will realise ,like belatedly I did, that the LPT is actually costing up to twice the amount of the LPT -which ,again, will end up costing the tenant.

It's been said that "the market dictates the rent" .
But if costs are greater than income then the entity concerned , whether a shop, hotel or rental property will eventually cease operating. 
The market may  influence the rent if a properties are available for rent. But if they're not?

Most  people expected a higher LPT percentage.  In U.K it's about 1% of value,but there it's the resident who pays.
If the  LPT increases after 3 years  and is still not tax -deductible then either LLs will go out of business or tenants will pay much much more .


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## AlbacoreA (10 Apr 2013)

The LL will pay it out of their income. Where does a LL income come from. Rent.


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## mandelbrot (11 Apr 2013)

Yikes, we're getting into silly territory now...

It's very simple - if Revenue perceive that a tenant is making good to the LL the cost of the LPT, regardless of what way it's dressed up, the additional amount/value changing hands will be assessed as rental income. 

If you ask someone to give you a gift, of an amount equivalent to the LPT charge, in order to not have their rent increased at the next review, what other conclusion can there be.


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## mandelbrot (11 Apr 2013)

oldnick said:


> - nobody is disputing that LPT is LL's legal liability. And LLs should- legally,not morally - pay it.



Why should the LL not both legally and morally have to pay it?

If, as you keep repeating, it's not tax-deductible (which I'd say is still unclear) and results in a LL needing to recover double the amount from the tenant to cover the cost, this presupposes the LL is 1) making a net profit and 2) a high rate taxpayer. Plenty of LL's may be neither.

Anyway that's not really relevant - the tenant pays a market rent for a property. If its in a nice area with good services the market rent will be higher - presumably the property value (and hence LPT) will also be higher. I don't see why the LL shouldn't be liable for the LPT though - they benefit from ownership of the asset being taxed, and can dispose of it if they want.

To me it's no different than if the commercial rates for a restaurant increased, and the restaurant owner has to increase his prices accordingly - it doesn't confer a moral imperative on the customer to pay his rates - they either dine there and pay his price, or they go elsewhere.


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## T McGibney (11 Apr 2013)

mandelbrot said:


> It doesn't work like that.
> 
> The cheque she writes, notwithstanding that it's for the amount of the LPT would be viewed as a payment in the nature of rent  .



That point is highly debatable in a context where the amount of the rent is recorded in lease contract, and registered accordingly with the PRTB. I cannot see how the landlord and tenant can conspire to vary the agreed rent without altering the terms of the tenancy,and I don't see how Revenue can pretend that such a variation exists when it clearly hasn't - the tenant has merely voluntarily agreed to pay a cost attaching to thr property.

The same principle would apply if the tenant breaks something in the property and volunteers  or agrees to pay the cost of repair. It would be a nonsense to count this as additional rent.


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## oldnick (11 Apr 2013)

Mandelbrot 

- The moral question of LPT is a matter of opinion. In normal economic circumstances  there are good arguments for it. I can't find any in the present situation. But I repeat it's a matter of opinion.

- But is it a tax just because one owns property , or is it a tax on residents in order to provide a better local service ?   This is the part that confounds me. 

If it is a combination of both then let the tax be divided  as per France tax sejour/tax fonciere. In U.K. it is entirely on the resident whether owner or tenant. In USA I pay big LPT equivalent but it is expected to be passed on to tenants. 
 In Ireland  ? -it's  purely on the owner  and we must not ask tenants to pay it !! I think that's crazy !!

-If LPT is tax-deductible, great !  Is it ?

- regarding the voluntary payment by tenant to pay the LPT: This is purely amn argument that I was making. I think it has some validity but of course I'm not sure. I think we should try anything that lessens the cost to the owner (and ultimately the tenant), whilst still paying the tax. (At least until Revenue firmly declares one cannot do this).

- Finally, your last point about the example of rate increases for ,say, a restaurant. First of all rates are a deductible cost - are you sure that LPT is ??

But the key point is the restaurant must include the extra rates  unless he is already making great profit  and is happy to absorb them. I doubt many LLs are making that much profit that they can absorb LPT without increasing the rent.

If you wish to compare LLs with a commercial bsuiness then let the tax deductible items be the same. rates, interest on loans etc etc.

Anyway that's me finished on this topic for some time.


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## murphaph (11 Apr 2013)

mandelbrot said:


> To me it's no different than if the commercial rates for a restaurant increased, and the restaurant owner has to increase his prices accordingly - it doesn't confer a moral imperative on the customer to pay his rates - they either dine there and pay his price, or they go elsewhere.


...and the restaurant owner pays the rates regardless of whether or not he owns or rents the premises as he gets the benefit of the services provided. 

It's called the local property tax and is intended to fund the same things as the rates!


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## DerKaiser (11 Apr 2013)

This is all moot.

The rent that can be charged is simply a function of demand and supply with possibilities ranging from excess supply, and a likelihood that costs exceed rents, to excess demand, where the landlord can make a good profit.

In the medium to long run, insufficient profits or excess profits will be driven out and rents will tend to a level that covers costs and delivers a reasonable profits.

The introduction of the LPT will have no immediate impact on the market levels of rent as it affects neither supply nor demand in the short term - it is simply another cost. 

Oldnick's ability to pass on additional costs in the form of a rent hike only exists because he would probably otherwise have been charging rent below what the market is willing to accept.


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## ajapale (11 Apr 2013)

DerKaiser said:


> This is all moot.


+1
Excellent post DerKaiser! But is the residental private rental market a "free market" in which the laws of supply and demand prevai? Or is it closer to a "cost plus" model as articulated by OldNick and others here?

Either way economics is rarely "simple" in my opinion!


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## mandelbrot (11 Apr 2013)

T McGibney said:


> That point is highly debatable in a context where the amount of the rent is recorded in lease contract, and registered accordingly with the PRTB. I cannot see how the landlord and tenant can conspire to vary the agreed rent without altering the terms of the tenancy,and I don't see how Revenue can pretend that such a variation exists when it clearly hasn't - the tenant has merely voluntarily agreed to pay a cost attaching to thr property.
> 
> The same principle would apply if the tenant breaks something in the property and volunteers or agrees to pay the cost of repair. It would be a nonsense to count this as additional rent.


 
If a tenant breaks something they either are obliged to pay the cost of repair/replacement - not a payment in the nature of rent, or they aren't obliged to - a payment in the nature of rent.

See para (b) of the definition of rent in the TCA:
"rent" includes-
(a) any rentcharge, fee farm rent and any payment in the nature of rent, notwithstanding that the payment may relate partly to premises and partly to goods or services, and
(b) any payment made by the lessee to defray the cost of work of maintenance of or repairs to the premises, not being work required by the lease to be carried out by the lessee.


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## AlbacoreA (11 Apr 2013)

DerKaiser said:


> ...... rents will tend to a level that covers costs ...
> 
> The introduction of the LPT will have no immediate impact on the market levels of rent as it affects neither supply nor demand in the short term - it is simply another cost. ....



An immediate effect no. Medium term probably.


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## ajapale (26 Apr 2013)

This question was raised today by a Tenant in the Property Investment & Tenants rights forum.


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## ajapale (28 Apr 2013)

[broken link removed]
 Public information guide from the society of chartered surveyors and the Irish Tax Institute.



> *My landlord is increasing my rent to cover the LPT – can he do this? *
> 
> The LPT is the liability of the landlord/owner of the property. It is not payable by the tenant.
> 
> ...


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## Luternau (28 Apr 2013)

There is nothing in the legislation that precludes a LL from increasing rents according to Market norms and increases in costs etc. And LL's will do this so long as doing so keeps the rent at an appropriate level for the area/property. Thats sound management.
If I recall correctly, oldnick said he gives 6 months notice of such an increase. That's more than fair and reasonable.


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## Brendan Burgess (29 Apr 2013)

I have sketched a FAQ on the issue to separate the FAQs from the arguments

Landlords, tenants, The Local Property Tax and Income Tax


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## Bronte (29 Apr 2013)

oldnick said:


> I wonder if other LLs were as stupid as me ,not realising that one has to charge TWICE the property tax- in reorder to recoup the loss ?
> 
> I suspect some LLs were even stupider and haven't passed it on at all....
> 
> .


 

Well thanks to you we now know to charge double. But if it's tax deductable then you'll have to do a new calculation. 

Actually in my own situation I never increase rents for sitting tenants so I'll just take the hit. Plus I've good tenants so no need to upset them. I don't have leases as they are not worth the paper they are not written on so I can have a rent review anytime (subject to proper notice) I just hope it will be tax deductable. I have in any case some social welfare tenants and they cannot have their rents increased. But if water charges come in than they will have to pay for that. I see that as a utility.

I think the poster Brenda is on shaky ground getting the LPT as a separate payment from her tenant and not declaring it as rent. And I think Thresholds advice is nonsense.  Landlords can increase rent to market value.  You don't have to say it's to cover the LPT that's all.  It's another cost of business.


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## ajapale (30 Apr 2013)

Hi Bronte, I agree with everything in your post and its a good summary of the discussion so far.

But...


Bronte said:


> And I think Thresholds advice is nonsense.



What part of Threshold's advice on LPT and Tenants do you consider  nonsense? They dont seem to say very much in their website beyond "_If your landlord seeks to pass this tax on to you directly please contact your nearest Threshold office for further advice_." And their advice doesnt seem much at odds with that availiable on other sites such as citizensinformation and Society of Chartered Surveyors and the Irish Tax Institute.

aj


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## oldnick (1 May 2013)

Perhaps the wording of 
".. if your LL  seeks to pass  this  etc  ..."  can be confusing.

a) Does it mean if the LL tells the tenant to "directly" pay it ? Which the LLs cannot do and LLs know this.
or
b) Does it mean that if the LL tries to recoup the loss through increased rent   contact  your nearest office for further advice... ?

-which suggests that it is wrong for the LL to raise the rent to recoup the loss, something that the LL is perfectly entitled to, as long as the LL follows the other guidelines in the Threshold quotes.

Perhaps it is the better LL who is trying to keep rents down and who follows all the rules who may feel  somewhat over-sensitive (not me of course!) to comments from Threshold
that may mislead some tenants into thinking that the Ll may act wrongly in seeking rent increases to recoup the LPT cost.


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## AlbacoreA (1 May 2013)

Its really very simple. LPT will be paid from the LL income. LL income is rent. 

Saying the LL can't pass it on to tenants, is meaningless in that context.


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## Bronte (3 May 2013)

ajapale said:


> What part of Threshold's advice on LPT and Tenants do you consider nonsense? They dont seem to say very much in their website beyond "_If your landlord seeks to pass this tax on to you directly please contact your nearest Threshold office for further advice_."


 

If they had any way of stopping landlords being allowed to charge this it would be stated on the website.  Landlords are not going to charge the LPT to the tenants, they are going to increase the rent to market value, which there are entitled to do.


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## oldnick (3 May 2013)

I notice on the latest Daft report (quite good one on state of rental market) that one of the comments on the report  states...

_"... according to Threshold LPT is not a cost that should be passed on to the tenant.."_

This is why Threshold's statement was not only nonsense  -it was misleading nonsense , giving the false impression to tenants that the cost of this tax could not be passed on ,and that by doing so LLs were acting wrongly or illegally.


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## ajapale (3 May 2013)

But Threshold dont state this on their website!

This is what they do say:





			
				Threshold said:
			
		

> If your landlord seeks to pass this tax on to you  directly please contact your nearest Threshold office for further  advice.


 I dont see whats nonsensical or misleading about that statement.

The threshold website does not go as far as the public information guide from the society of chartered surveyors and the Irish Tax Institute which states:



> *My landlord is increasing my rent to cover the LPT – can he do this? *
> 
> The LPT is the liability of the landlord/owner of the property. It is not payable by the tenant.
> 
> ...






Bronte said:


> Landlords are not going to charge the LPT to the  tenants, they are going to increase the rent to market value, which  there are entitled to do.


 Agreed, thats my understanding of the situation.


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## oldnick (4 May 2013)

I think, ajaple, that LLs and you are not going to agree as to the probity of the "advice" given by bodies such as Threshold.

We feel that Threshold's advice is written in such a way that it gives the false impression to tenants that LLs cannot pass on the costs to tenants  -and that to do so is wrong/illegal.

Indeed,  that is why I quoted  a tenant ,writing on the latest Daft report on the rental market, who got precisely  such an impression based on Threshold's  statement.

It is not only Threshold - but generally the advice and statements given by "helpful" bodies is construed in such a way by tenants that they do not feel or understand that the LPT will be ,ultimately, paid by them.

Therefore the advice by the experts has proved most unhelpful and misleading.


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## ajapale (4 May 2013)

The daft rental report (pdf) makes for very interesting reading.

However the quote you refer to is merely a post (by Joan) in the comments section of the daft.ie site and not part of the report itself.

I have quoted threshold.ie, the society of chartered suveyors/ tax institue  above and dont find any of them to be misleading or nonsense.

Perhaps you could link to statements at threshold or other bodies you consider to be nonsense or misleading and we can judge for ourselves.


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## Dermot (4 May 2013)

Being a landlord is a business. To stay in business you need to make a profit. If it becomes unprofitable you go out of business.
The demand for higher standards costs extra money to provide them and this in turn has to be passed on in the form of higher rents.
The business of being a Landlord is very marginal at the moment and for some it has been unprofitable.
The extra costs that are being imposed by Government have to be taken into consideration by a Landlord when calculating the rent for their property. That is the reality of business so Government should take note of their cost impositions on Landlords as the costs will eventually be passed onto Tenants.
The debate on this thread is about charging the LPT to Landlords and Landlords getting Tenants to pay it is somewhat technical and legalistic when in fact there is no need to mention it when discussing it at letting time or rent review time. The market will dictate the rent but costs to the Landlord will also be reflected otherwise landlord goes out of business.
The views of experts and quangos etc will be quoted in the media but the costs incurred on the Landlord have to be reflected in the rent charged


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## Alexmartin (5 May 2013)

Any business has a responsibility to shareholders to maximize profits.
The LL is the sole shareholder in their business.
They should charge the max amount that they can, so it doesnt matter at all whether anyone thinks tax and other costs are included or not.  

At the moment rents in Dublin are going up, partly because of the increased costs on landlords, who need to increase rent to stay above water.  Those who are ok at the moment are also increasing rents, simply because they can.  They are maximising profits.  Rents are rising.  Now any landlord in Dublin that couldnt pass on the extra taxes and charges before, probably can now.  

And this crap about not being able to charge above market rates is just that - crap.  It means nothing at all.  Imagine 5 apartments in a building that are renting for €1000PM.  Most would say thats market rate and you cant charge more.  Well something has to give or rents would never go up if noone can charge more than €1000.  What if the landlords furniture is better quality than the rest.  His is worth more.  If he asks the tenant for more and gets it, then thats the market rate.  If he advertises for more and someone will pay, then thats market rate.  Upper market rates must be tested, in order to raise the market rate.  If noone but, then thats another story.

Threshold really just make it up as they go along and should be exposed for the chancers they are.


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## Dermot (5 May 2013)

Where is the legislative backup to support the proposition about market rents and how they are determined?. Can someone post a link


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## ajapale (5 May 2013)

Dermot said:


> Where is the legislative backup to support the proposition about market rents and how they are determined?. Can someone post a link



Hi Dermot,

See             #*27* in this thread LLPT: Every tenant of mine is paying it.



			
				Citizens Advice said:
			
		

> Under Section 19 of the Residential Tenancies Act 2004 (pdf)* Landlords cannot charge more than the open market rate for the  apartment or house.*



19.
—(1)  In setting, at any particular time, the rent under the tenancy of a dwelling, an amount of rent shall not be provided for that is  greater  than  the  amount  of  the  market  rent  for  that  tenancy  at that time.


aj


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## oldnick (5 May 2013)

ajapale - you state in post 73 that the comment made was by a person called Joan and not by Threshold.
That was exactly my point- to show how Threshold's statements misled people. You may not think they were misleading.

Most LLs I know believe they were misleading-and numerous posts on many websites have similar nonsensical comments to Joan - i.e. LLs can't pass it on. 

A nonsensical belief that -in my opinion- Threshold's statements encourage.


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## Dermot (6 May 2013)

Thanks ajapale for the link.  

I cannot see how it can work in practice. A professional landlord will be unlikely to deliberately price his/her property well over the market price and equally I cannot see a tenant with all the information at their disposal will go madly over the top in paying the rent. There can be exceptional reasons why a property could rent higher than any other property in an area.

I cannot see how any organisation could rule that a particular house/apartment was over the open market rent and make that stick in the courts.
Has there been a successful case taken against a landlord? 

I just feel that organisations who keep stating that Landlords cannot charge more than the open market rate for the apartment or house are giving false hope to Tenants and like to feel that they can bully landlords.

To stay in business landlords need to make a profit, to make a profit they must keep their properties let, to keep their properties let they will charge the market rent. 

No need for advice from Quangos who do little for either good Tenants or good Landlords other than to add on costs which either the Landlord has to absorb or the Tenant has to pay or a bit of both.


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## ajapale (6 May 2013)

Off topic post and a reply moved to Landlord increasing rent.

This thread deals with the LPT, landlords and their ability to recover the some or all of the tax from tenants.


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## ajapale (6 May 2013)

OK so Threshold.ie is an advocacy group for tenants and PRTB is the industry regulator and the Dail is our national parliament which has imposed the wretched LPT on us property owners.

But the _*Irish Tax Institute and the Society of Chartered Surveyors of  Ireland*_ in their useful, independent and comprehensive online guide [broken link removed] state the following:



> *My landlord is increasing my rent to cover the LPT – can he do this? *
> 
> The LPT is the liability of the landlord/owner of the property. It is not payable by the tenant.
> 
> ...


I dont think any of the three sentences quoted are false, misleading or nonsense.


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## oldnick (6 May 2013)

You just haven't got the point Ajaple. So I'll have one last go and then I'll give up.

In all these helpful advice snippets that you quote every word of what is said is ,of course, accurate.  
But they do not give complete advice. A half-truth is as bad a lie.

By posing and answering the question in the manner quoted a tenant may believe that there should be no rental increase as a direct result of the tax.

There are comments on several websites suggesting that LLs are wrong in passing on the tax inside a rent increase, which of course a LL is entitled to do.

If the so-called helpful advice snippets wanted to be properly informative they should have written something like this....

_
The LPT is the liability of the LL/owner of the property. It is not directly payable by the tenant.
However, the LL/owner is entitled to raise the rent to cover the cost of LPT if he/she so wishes_

-Now that would tell tenants that ,yes, the LLs can and probably will increase the rents -something that tenants should be made aware of.  That would be proper ,full and sensible advice as regards passing on the cost of the LPT,  along with the last two lines.


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