# Should I reduce the rent?



## twofor1 (17 Nov 2008)

Has any Landlord been asked to reduce rent during a one year lease?    (5months in this case) Tenants are having difficulties with the current downturn.

If so how did you deal with this request? Or how would you deal with it if asked? Is there any good reason why I should reduce the rent?

There are plenty of similar houses advertised in the area, but nothing cheaper, though they claim some of these would accept less. They have paid on time and have not given me any problems.

Any opinions appreciated.


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## j26 (17 Nov 2008)

If they're good tenants, keep them.  There's a surplus of rental accommodation at the moment, and you might face having to drop the rent to that level anyway, and end up getting muppets in.


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## cancan (17 Nov 2008)

A lot of tenants chance this to see if you will move. No loss to them if you say no.
If their financial situation is dire, it would be wise to see some proof of this. That being the case, it's up to you to decide if it's genuine or not. 
Being a landlord is a business at the end of the day.
Would you rather your tenant to have to make cutbacks, or you?

So seek proof of their situation, and decide at that point what is right for you.
Also, could this just be the start of it - you could be facing late payments and a host of other things down the line, if their situation is deteriorating.
Business is business at the end of the day.
If their financial situation had improved, would you have jacked up the rent after 5 months?

As a compromise, if they are geniunely in trouble, you could always ask them to paint the place and do odd jobs in return for lowering the rent.
If they refuse, you know what to do....


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## brazen_dude (17 Nov 2008)

new neighbors of us recently got the rent reduced by 11% by their landlord... D15 area... they are just 4months into the house... most of the suburbs see decline in rents... so if you can get new tenants, dont decrease... if not better to have them on a reduced rent... atleast you are guaranteed regular rent...


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## rmelly (17 Nov 2008)

cancan said:


> A lot of tenants chance this to see if you will move. No loss to them if you say no.
> If their financial situation is dire, it would be wise to see some proof of this. That being the case, it's up to you to decide if it's genuine or not.
> Being a landlord is a business at the end of the day.
> Would you rather your tenant to have to make cutbacks, or you?[/quote]
> ...


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## badabing (18 Nov 2008)

The tenant is a few months into an agreement they signed. They are liable to pay what they signed up to in full till the lease runs out. If they leave they are obliged to pay rent till the contract runs out or find someone else, nevermind loose their deposit. 

Having said that, you will probably want to act in a way that maximises the amount of money in your pocket at the end of the day, and if their case is genuine it may be in your interest to cooperate. I too rent out a house in 15 and have droped rent by circa 10%. Having said that, I've had a pick of em at that level


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## Bronte (18 Nov 2008)

twofor1 said:


> Has any Landlord been asked to reduce rent during a one year lease? (5months in this case) Tenants are having difficulties with the current downturn.
> 
> If so how did you deal with this request? Or how would you deal with it if asked? Is there any good reason why I should reduce the rent?


 I've had tenants ask for a reduction before they moved in which I agreed to. Due to the current economic situation I am expecting more requests including for sitting tenants to which I will probably agree. It's tough out there and I'd rather have my rent on time, plus good tenants staying, than lose them and face the prospect of trying to pick good one's again plus having a vacant period. I personally would not ask a tenant for proof of their straightened circumstances as I think it's fairly obvious in Ireland right now anyway.


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## aircobra19 (18 Nov 2008)

Haven't been asked. 

Have you done any research yourself into the rent of similar properties in the same area. That should tell you if you should reduce the rent or not. If it was a genuine request and the research backs it up, I'd reduce the rent. Better to have a tenant than spend a few months looking for a new one. Compare the costs of reducing the rent vs a few months rent.


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## twofor1 (18 Nov 2008)

Thanks for the replies.

My tenants have asked for a reduction, or when their current month ends in two weeks, could they leave, would I give them back their deposit, and they would then rent similar in an adjoining estate cheaper. 

They are already paying less than the cheapest advertised, I do believe though in the current climate some of these would reduce their asking price below what I currently get.

If I agreed to them leaving, I will loose at best several months rent, and probably have to accept a lesser rent in order to get new tenants in the new year.

If I tell them I will not return their deposit, then there would be no financial gain for them in moving, so they would probably stay. Although I am entitled to do this I’m sure it would be seen as unreasonable with their current difficulties. It is far better for all to keep relations good.

 I am satisfied it is a genuine case and I understand they need to save wherever they can. I need rent to pay the mortgage, there is no obligation on me to do so but I think my best chance in these difficult times is to reduce the rent as requested, and hope they stay and pay.


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## cancan (18 Nov 2008)

Two things.
If their situation is genuinely dire, are you not just going to put off the inevitable for a few months, and create more headaches for yourself?
I don't see a fractional reduction in rent is going to do much.

Also, I still feel that asking them to do some work for you in the house, in liu of reduced rent is fair. Thus, they get something they want and you get something you want, which is good for both parties.

I just think you are setting a precident that may come back to bite you further down the line.

Perhaps restarting a 12 month lease at the lower rate is fair, if that is the direction you wish to take.


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## aircobra19 (18 Nov 2008)

I think its says something that they discussed it with you and gave you the option.


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## aircobra19 (18 Nov 2008)

cancan said:


> ...
> Also, I still feel that asking them to do some work for you in the house, in liu of reduced rent is fair. Thus, they get something they want and you get something you want, which is good for both parties....


 
I don't think thats a great idea unless you are sure of the standard of the work they will do. Some bad DIY or painting will be more trouble than its worth. 

Its a fair point to consider this maybe the start of a slippery slope. But then on the flipside perhaps its the start of a rental slide in general and then what do landlords do.


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## cancan (18 Nov 2008)

aircobra19 said:


> I don't think thats a great idea unless you are sure of the standard of the work they will do. Some bad DIY or painting will be more trouble than its worth.


 
It's only an example. Maybe the tenant is an accountant and can do your books for free. Barter something instead.
Prima Nocta maybe


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## aircobra19 (18 Nov 2008)

Thats a different slippery slope.


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## MrMan (18 Nov 2008)

There are plenty of reasons for the request and one of them could be that their friends have recently done it so they are taking a punt aswell. What you need to weigh up is the liklihood of getting in another tenant at the current rent and whether the current tenants are going to be in a worse situation again in the next 4 months, it might be worth considering putting it on daft again to see what interest is out there.


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## murphaph (18 Nov 2008)

Just how much cheaper do your tenants reckon they'd get a place for in the adjoining estate though? If they break the lease they are liable to lose the deposit at least so (assuming 1 month's deposit) they'd want to be paying well over 100 less a month next door before they even break even by moving at this stage. Moving is a hassle and they won't do it unless they have to, so leave them as they are and tell them the rent may be reviewed when the lease is due for renewal. They may be in financial trouble but they did sign a lease. If you are in trouble you can't go ask your bank for a mortgage reduction. The time for rent reviews is at renewal time, not mid-year. They won't leave just for spite at the end of the lease period if you are prepared to lower the rent at that time.


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## coppers (18 Nov 2008)

I would be inclined to negotiate a decrease with a new 12 month lease. This is assuming the decrease is modest and that the tenants are worth keeping. There is definetly downward pressure on rents atm and even one month vacant is likely to amount to more than the decrease they would accept.
If as you say there are plenty of other houses in the area at similar prices then it stands to reason that one or more will accept a lower price.

What rent are you charging and have they indicated how much of a decrease they are hoping for?


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## Duplex (18 Nov 2008)

According to today’s Daft.ie Rental Report; rents have fallen by 11.7% from their peak in June 2007 and the rate at which rents are falling is gathering pace. The supply of rental properties has grown from 5,000 in January 2007 to over 18,000 in November 2008. Tenants should be aware that they are in a stronger position to haggle, when it comes to agreeing a rent .



http://www.daft.ie/report/Daft-Rental-Report-Q3-2008.pdf


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## aircobra19 (18 Nov 2008)

Someone in the office was just telling me that rent in their properties area (for similar properties) has fallen in the past few months  a couple of hundred euro. I hadn't heard about it. But it seems to be a general trend. I just wonder how landlords deal with it.


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## aircobra19 (18 Nov 2008)

Would that cover the cost of renting it?


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## badabing (18 Nov 2008)

SPC100 said:


> I'd compromise. Reduce the rent slightly, but get them to sign a new longer lease. you are both gaining something.



Best advice I've seen on this thread so far


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## murphaph (18 Nov 2008)

...but a lease in which the tenants feel free to seek reductions in rent at will is pretty useless. Reviewing the rent downwards in a renters market is natural and correct but only when the lease is up for renewal, not anytime the tenant feels like it. If the landlord suggested a mid-lease increase in a landlord's market they'd be told where to go.


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## MrMan (19 Nov 2008)

SPC100 said:


> I'd compromise. Reduce the rent slightly, but get them to sign a new longer lease. you are both gaining something.



But what is the landlord really gaining? A lease is really only there to protect tenants, at the end of the day if the tenant ever decides to simply up and leave, all they have to do is stop paying rent.


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## Duplex (19 Nov 2008)

Landlords are prohibited by the Residential Tenancies Act 2004 from charging above the market rent for a tenancy.   As asking rents have fallen by approximately 11% in the past year I don't think it's unreasonable for tenants to ensure that the rent they are paying is the going rate.


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## MrMan (19 Nov 2008)

Duplex said:


> Landlords are prohibited by the Residential Tenancies Act 2004 from charging above the market rent for a tenancy.   As asking rents have fallen by approximately 11% in the past year I don't think it's unreasonable for tenants to ensure that the rent they are paying is the going rate.




One could argue that the market rent is what you can get for a property and there are many variables to be considered i.e whats included with rent, location, fit out of property etc.


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## Duplex (19 Nov 2008)

MrMan said:


> One could argue that the market rent is what you can get for a property and there are many variables to be considered i.e whats included with rent, location, fit out of property etc.


 

See section 24. (1)  Regarding the basis of rental valuation for 'market rent'.  

http://www.oireachtas.ie/documents/bills28/acts/2004/a2704.pdf


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## Brendan Burgess (19 Nov 2008)

I suggest leaving the rent as agreed under the lease as is. 

But defer the payment of 10% of the rent until completion of the lease. 

if they continue to pay promptly and act as good tenants, you won't pursue the deferred rent.

This means that if they break the lease, then you will be able to go after them for the full amount. 

In my business I have given people discounts. I have had to subsequently sue them but could only sue them for the discounted amount. now I only give settlement discounts. 

So you could say that the rent remains at €1,000 per month. If they pay on time, they can pay €900. 

Brendan


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## MrMan (19 Nov 2008)

Duplex said:


> See section 24. (1)  Regarding the basis of rental valuation for 'market rent'.
> 
> http://www.oireachtas.ie/documents/bills28/acts/2004/a2704.pdf



It basically is what I said no?


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## Duplex (19 Nov 2008)

MrMan said:


> It basically is what I said no?


 
The reviewed rent under the Act is established by reference to comparable lettings evidence.  If 'what you can get for it' exceeds the market rent as defined in the Act then there's a problem.


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## MrMan (19 Nov 2008)

Duplex said:


> The reviewed rent under the Act is established by reference to comparable lettings evidence.  If 'what you can get for it' exceeds the market rent as defined in the Act then there's a problem.



Yes but the rent already in existence is in the lease so has to be paid until the end of the lease and market rent as defined in the act isn't black and white and i would bet that both sides could provide comparables to back their claim to a fair market rent. I know what your saying is right in theory but in practice it's a different ballgame.


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## Duplex (19 Nov 2008)

MrMan said:


> Yes but the rent already in existence is in the lease so has to be paid until the end of the lease and market rent as defined in the act isn't black and white and i would bet that both sides could provide comparables to back their claim to a fair market rent. I know what your saying is right in theory but in practice it's a different ballgame.


 
If you can provide indisputable, verifiable evidence that a previously agreed passing rent is in line with current market rents then all is well.  However I believe that residential rents are falling, as does the CSO and the Daft.ie survey.  Tenants should be aware that they are protected by the Act with regard to the rent they pay and they should verify that the aren't paying a rent above the market rent.


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## MrMan (19 Nov 2008)

Duplex said:


> If you can provide indisputable, verifiable evidence that a previously agreed passing rent is in line with current market rents then all is well.  However I believe that residential rents are falling, as does the CSO and the Daft.ie survey.  Tenants should be aware that they are protected by the Act with regard to the rent they pay and they should verify that the aren't paying a rent above the market rent.




They have come back in some areas and are likely to come back some more but the way things are in Irish property circles it is easy enough to find a rental price to back up your claims. Tenants have more than enough rights as it stands.


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## aircobra19 (19 Nov 2008)

Duplex said:


> If you can provide indisputable, verifiable evidence that a previously agreed passing rent is in line with current market rents then all is well. However I believe that residential rents are falling, as does the CSO and the Daft.ie survey. Tenants should be aware that they are protected by the Act with regard to the rent they pay and they should verify that the aren't paying a rent above the market rent.


 
Does this mean that every month the landlord should be reducing the rent? Thats unworkable. If you sign a contract/lease you should be bound by the conditions of it, for the term. fine if you want to renegotiate say after a year, or 6 months. But not renegotiate every month.


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## Duplex (19 Nov 2008)

aircobra19 said:


> Does this mean that every month the landlord should be reducing the rent? Thats unworkable. If you sign a contract/lease you should be bound by the conditions of it, for the term. fine if you want to renegotiate say after a year, or 6 months. But not renegotiate every month.


 

Part3 section 20 (1)  states that the rent may be reviewed by either party once every 12 months.


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## aircobra19 (19 Nov 2008)

Duplex said:


> If you can provide indisputable, verifiable evidence that a previously agreed passing rent is in line with current market rents then all is well. However I believe that residential rents are falling, as does the CSO and the Daft.ie survey. Tenants should be aware that they are protected by the Act with regard to the rent they pay and they should verify that the aren't paying a rent above the market rent.


 
But doesn't this mean that as soon as you agree a rent, and the market is failing. Then from that point on the tenant will be paying above the market rate.


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