# Rent increase but landlord does not collect the additional money



## Learner2015 (22 May 2018)

So I have a tenant coming up on their 2 year anniversary. By rights I will be able to increase the rent by 4%.

However I don't want to. They are a young family, excellent tenants but I know money is very tight.

But I also don't want to have a situation in a few years where because I have not increased the rent a potential purchaser might be stuck with my below market rent. (it will still be below market value even with a 4% increase on it now btw).

So my questions are:

1) If I don't increase the rent for many years can I then increase it in one go taking into account all the years it didn't change i.e go up more than 4% in say 5 years time?
2) Could I increase the rent now but not collect it. So tell the RTB it has increased 4%, tenant still pays me the regular amount.
3) Re question 2 what are the tax implications - would I have to declare to Revenue the increase amount even though I won't be receiving it and if I have to do that can I write off the bad debt part against income?

I know some people might think I'm mad not to want to get the extra money but things are going OK for me right now so I can comfortably survive without the extra money.

Appreciate any advice.


----------



## moneymakeover (22 May 2018)

You can increase it by 8% in a years time


----------



## Thirsty (22 May 2018)

Why tie yourself in knots.

Increase by 4% per PRTB rules.

On €1k that's €40


----------



## Sarenco (22 May 2018)

moneymakeover said:


> You can increase it by 8% in a years time


That is not correct (assuming the property is in an area that continues to be designated as an RPZ in 12 months' time).

The OP would be ill-advised not to increase the rent as per the RPZ formula as soon as he is entitled to do so - otherwise he would be needlessly de-valuing his property.
https://onestopshop.rtb.ie/calculator/rpz

It's a shame that the RPZ regime effectively forces landlords to raise their rents regardless of their relationship with their tenants - but there it is.


----------



## moneymakeover (30 May 2018)

Why is that not correct

if t = 24 then it would appear to be 1.08 times the old rent = 8%

[broken link removed]

Example 4: Tenancy commenced 29 December 2016; 
landlord is entitled to serve a rent review notice on 29 December 2017 providing a minimum of 90 days notice. 
The new rent will come into effect on 5 April 2018. 
In order to ascertain the new rent amount as permitted under the regulations the landlord inserts all the relevant information in to the formula. 
R = €1300, the current rent amount t = 15 months (29/12/16 to 5/04/2018) m = 12 months – as this tenancy commenced after 24/12/2016 this landlord is entitled to review the rent annually. 
Therefore:  1300 x (1 + 0.04 x 15/12)  15/12 = 1.25 then  x 0.04 = 0.05 then  + 1 = 1.05 then  x 1300 = 1365 
1300 x (1 + 0.04 x 15/12) = €1365 is the new rent amount permitted *please note that you should do your calculations working from right to left


----------



## Sarenco (31 May 2018)

moneymakeover said:


> Why is that not correct


I'm not sure I follow you – €65 is obviously considerably less than 8% of €1,300.

Are you are making the point that a landlord in a RPZ can increase the rent by a cumulative ~8% over 3 years, following two rent reviews?  That's obviously not quite the same as saying





moneymakeover said:


> You can increase it by 8% in a years time


----------



## Gordon Gekko (31 May 2018)

I’m speaking as someone who was a decent skin and kept rent low because I’d a degree of sympathy for my tenants and didn’t particularly need the extra €48 that a €100 rent increase would give me;

There’s a word to describe landlords who don’t charge market rates given the anti-landlord environment we live in: idiots.

The value of your asset is generally a function of its ability to generate income; take two identical properties beside each other: one is owned by a nice guy who has sympathy for his tenants and charges below market rent. The other is owned by a ruthless b..tard; he simply charges market rates. Mr Ruthless’ property is now worth substantially more than Mr Nice’s.


----------



## Sarenco (31 May 2018)

Gordon Gekko said:


> There’s a word to describe landlords who don’t charge market rates given the anti-landlord environment we live in: idiots.


Except that the RPZ regime prevents landlords charging market rents in many instances.


----------



## Gordon Gekko (31 May 2018)

Sarenco said:


> Except that the RPZ regime prevents landlords charging market rents in many instances.



I’m aware of that!

I’m referring to circumstances where a landlord has flexibility (e.g. not quite in an RPZ, can increase the rent by 8%, etc).


----------



## DB74 (31 May 2018)

Maybe you could say, change the waste disposal charge to your name and pay that for the year or something like that

That way the rent would still be increased by 4% but you would be giving the money back in another way


----------



## Dinarius (8 Jul 2018)

Interesting thread. 

I’m in a similar situation. Tenants have been in the apartment for four years. Lease is due for renewal September 1. 

Rent is €1200 p/m. Apartment is fabulous - own front door; only 4 apartments in the development. Each time we’ve let it pretty much day after advertising it. 

Just did a quick search on My Home - only 4 one bed apartments to let in Dublin 6, where this apartment is. Cheapest is €1404 p/m and that’s it D6 West, which is NOT the same. Mine is Terenure/Rathgar.

Fell asleep at the wheel on the rent rise restrictions; so, it’s way below market value. 

That said, they’re great tenants. But, an extra €48 for the next two years (4% of €1200) is peanuts. I’d settle for €1300. 

What are my options? Not renew lease and put it back on the market? Ask for €1300 and see what happens?

If I understand the legislation correctly, then 4% every two years isn’t even keeping up with inflation. 

Thoughts?

Thanks. 

D.


----------



## Thirsty (9 Jul 2018)

> That said, they’re great tenants. But, an extra €48 for the next two years (4% of €1200) is peanuts. I’d settle for €1300.
> 
> What are my options? Not renew lease and put it back on the market? Ask for €1300 and see what happens?


You need to make yourself more familiar with the legislation before you get yourself into trouble.

For your existing tenants or new tenants the most you can increase every two years is by 4%.


----------



## Dinarius (9 Jul 2018)

Thirsty said:


> You need to make yourself more familiar with the legislation before you get yourself into trouble.
> 
> For your existing tenants or new tenants the most you can increase every two years is by 4%.



Thanks.

4% every two years is about 1.98% per annum compounded - a little above the rate of inflation.

In situations like mine, that generates a huge incentive not to renew the lease and re-let the property at whatever I could get for it - I reckon about €1500 p/m.

This restriction, combined with the advent of AirBnB, is wrecking the market.

Is it any wonder there are only four(!) Dublin 6 one-bed apartments to let on My Home, and there are so many people living in hotels at the State's expense?

D.


----------



## Superstitious (9 Jul 2018)

I thought first rent review after 24 months( can be calculated if it is more than 24 months) at 4% then after every 12 months at 4%.


----------



## Sarenco (9 Jul 2018)

Thirsty said:


> You need to make yourself more familiar with the legislation before you get yourself into trouble.
> 
> For your existing tenants or new tenants the most you can increase every two years is by 4%.


That's not correct.

If a tenancy in an RPZ began on or after the 24 December 2016, a landlord can review the rent *each year* (every 12 months) and the landlord can apply the RPZ formula (annualised 4% cap) to determine the maximum rent increase.

If a tenancy in an RPZ began before 24 December 2016, a landlord cannot review the rent until 24 months have expired but thereafter can review the rent on an annual basis (subject always to applying the RPZ formula to determine the maximum rent increase).

The legislation currently provides that a RPZ designation will automatically expire after three years (i.e. by 24 December 2019 in most RPZs).


----------



## Dinarius (9 Jul 2018)

Hhhhmmmm..........

Well, here's my case.

They have been there for 4 years. The rent has been €1200 for the last two years (though a 12 month lease was signed in both 2016 and 2017)

So, the lease is due for renewal (year 5) on October 1 (not September 1 as I mistakenly wrote above).

1. Is it the case that I can only increase the rent by 4%. i.e. €48?

If so........

2. Would that €1248 (1200 + 48) be set until October 2019 or until 2020?

Many thanks.

Best wishes,

Denis


----------



## Sarenco (9 Jul 2018)

@Dinarius

When exactly was the current rent fixed - was it 1 October 2016?


----------



## Dinarius (9 Jul 2018)

Sarenco said:


> @Dinarius
> 
> When exactly was the current rent fixed - was it 1 October 2016?



Yes, October 2016. 

Thanks. 

D.


----------



## Sarenco (9 Jul 2018)

In that case you can review the rent again on 1 October 2018. 

Assuming the new rent is to take effect on 1 January 2019 (you have to give a minimum of 90 days' notice before any rent increase takes effect), the maximum new rent would be €1,252 per month.

Going forward from there, you can then review the rent on an annual basis (1 October 2019, 1 October 2020, etc.), subject to the RPZ cap where applicable.


----------



## Dinarius (9 Jul 2018)

Sarenco said:


> In that case you can review the rent again on 1 October 2018.
> 
> Assuming the new rent is to take effect on 1 January 2019 (you have to give a minimum of 90 days' notice before any rent increase takes effect), the maximum new rent would be €1,252 per month.
> 
> Going forward from there, you can then review the rent on an annual basis (1 October 2019, 1 October 2020, etc.), subject to the RPZ cap where applicable.



Thanks for the reply. 

In that case, given the state of the market, I think that a rise to €1250 is reasonable. 

D.


----------



## Thirsty (10 Jul 2018)

Thirsty said:


> You need to make yourself more familiar with the legislation before you get yourself into trouble.
> 
> For your existing tenants or new tenants the most you can increase every two years is by 4%





Sarenco said:


> That's not correct


@Sarenco 
I think we can agree the first paragraph is correct!

Re-reading my second para however & I can see it's unclear. What I was trying to say was that the existing tenants get a 2 yr rent freeze and with new tenants the 2 year clock would start again.


----------



## Sarenco (10 Jul 2018)

Thirsty said:


> What I was trying to say was that the existing tenants get a 2 yr rent freeze and with new tenants the 2 year clock would start again.



Sorry Thirsty but that's not correct. 

The rent in new (post-24 December 2016) tenancies within a RPZ can be reviewed an annual basis - there's no re-starting of any two-year clock.


----------



## Dinarius (10 Jul 2018)

Sarenco said:


> Sorry Thirsty but that's not correct.
> 
> The rent in new (post-24 December 2016) tenancies within a RPZ can be reviewed an annual basis - there's no re-starting of any two-year clock.



Ok. Now I'm confused.

As my tenants have been there since 2014 (i.e. pre- December 24 2016) are you saying that an increase of (approximately) 4% this coming October 2018 from €1200 (the level it has been at since October 2016 - i.e. two years) to €1250 would have to be frozen for another two years (until 2020), or could it be increased again by 4% in 2019?

I got the impression that it could be increased again in 2019.

Many thanks.

D.


----------



## Sarenco (10 Jul 2018)

Dinarius said:


> Ok. Now I'm confused.


I'm not sure where the confusion lies – you can review the rent on (or any time after) 1 October 2018 and annually thereafter, subject to the RPZ formula where appropriate. 

One quirk of the current legislation (at least how I read it) is that the ability to do an annual rent review continues after an area ceases to be designated as an RPZ, whereas rent can only be reviewed on a bi-annual basis in an area that has never been designated as an RPZ.


----------



## Thirsty (10 Jul 2018)

Now *I'm* confused - I thought when they introduced the RPZ you couldn't review rent until 2 years had passed....

Edit to add: I've re-read the RTB stuff now - they've created a 'rent calculator' which makes it a bit easier to understand - in fact a print out of that is a handy thing to include in your notice to your tenants.


----------



## Dinarius (10 Jul 2018)

I used the calculator here> https://onestopshop.rtb.ie/calculator/rpz

I used October 2014 as the start date and October 2016 as the date the current rent of E1200 was set.

As expected, the answer it gave was E1248, i.e. E1200 + 4%.

But, I am still confused as to whether this can be reviewed again in 2019, or whether I have to wait another two years until 2020.

Thanks for the feedback.

D


----------



## Dinarius (10 Jul 2018)

Sarenco said:


> One quirk of the current legislation (at least how I read it) is that the ability to do an annual rent review continues after an area ceases to be designated as an RPZ, whereas rent can only be reviewed on a bi-annual basis in an area that has never been designated as an RPZ.



Ps. One other thing...my area falls into neither category. It has been designated RPZ and it continues to be so. So, I presume that only bi-annual reviews are allowed?

Thanks.

D.


----------



## Sarenco (10 Jul 2018)

Dinarius said:


> I used October 2014 as the start date and October 2016 as the date the current rent of E1200 was set.
> 
> As expected, the answer it gave was E1248, i.e. E1200 + 4%.


That means you provided that the new rent is to take effect on 1 October 2018.  You are forgetting that (a) you cannot review the rent before 1 October 2018; and (b) the earliest that any rent increase can take effect is 1 January 2019 (you have to give 90 days' notice of any rent increase).


Dinarius said:


> I am still confused as to whether this can be reviewed again in 2019


Again, you can review the rent annually after the next rent review.  Where's the confusion?


Dinarius said:


> It has been designated RPZ and it continues to be so.


Yes but under the current rules the designation will automatically expire after three years.

Bottom line - after the next rent review, you can review the rent on an annual basis.


----------



## Sarenco (10 Jul 2018)

Thirsty said:


> I thought when they introduced the RPZ you couldn't review rent until 2 years had passed....


Well, you thought wrong!  As a wise man once said...


Thirsty said:


> You need to make yourself more familiar with the legislation before you get yourself into trouble.


----------



## Dinarius (10 Jul 2018)

If I input the "Date new rent to take effect" as October 1, November 1, December 1 and January 1, I get the following results: 1248, 1250, 1252 and 1254, which makes sense.

I'm still not clear as to how you establish that the reviews can be annual thereafter since the calculator will only accept dates that are 24 months apart - though I hope, obviously, that you are correct! 

While I understand that there must be 90 days notice of a rent increase; wouldn't it be logical that this be permitted to be given within 90 days of the current lease coming up for renewal (i.e. July 1 for lease renewal on October 1) rather than 90 days into the new lease? i.e. Notice on October 1 for implementation on January 1. Notice three months before the end of an existing lease would then allow tenants three months notice to make alternative arrangements, if they didn't wish to renew the lease on October 1, rather than renewing and finding they have to pay 4% more three months into the new lease. Or, perhaps I'm misunderstanding your point....

Thanks.

D.


----------



## Sarenco (10 Jul 2018)

Dinarius said:


> I'm still not clear as to how you establish that the reviews can be annual thereafter


Well, that's what the legislation provides for.


Dinarius said:


> the calculator will only accept dates that are 24 months apart


I'm not having that problem.


Dinarius said:


> wouldn't it be logical that this be permitted to be given within 90 days of the current lease coming up for renewal


Perhaps but I wouldn't look for logic in the RPZ legislation.

Bear in mind that the RPZ formula will equally apply to the rent charged to any new tenants.


----------



## Dinarius (10 Jul 2018)

Ok, thanks. 

So, last question....

Projecting forward a year...the lease will be up for renewal again October 1, 2019. 

Will any rent increase then be applicable from January 1 2020? i.e. one year after the January 1, 2019 increase?

Thanks. 

D.


----------



## Thirsty (10 Jul 2018)

@Sarenco - don't think the RTB would have a case for me NOT increasing the rent annually!


----------



## Sarenco (10 Jul 2018)

Dinarius said:


> So, last question...


Again, if you review the rent on 1 October 2018, you can review the rent again on 1 October 2019.  In each case, any rent increase requires 90 days' notice in writing to the tenant before it becomes effective.


----------

