Landlord Costs To Bring Property Back To Rentable/Sale Condition

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Alistair

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As one of many landlords who has made the decision to exit the rental market after 20+ years, I decided to invest €10K to bring a 13 year old property up to condition suitable for sale. The cost of this task was fairly significant after "good" long term tenants (family of 2+2, 5 years) vacated. I have a long standing relationship with the maintenance company I use to renovate and decorate and have a high degree of confidence that the costs charged were fair.

I have another property that is about to undergo a similar investment in order to make it more attractive for sale once those long term tenants vacate in the next 2 months. The quotes are of a similar ball-park to the €10K just spent.

These properties have always had money spent on them to keep them in good condition, so its not as if they have been left unloved for many years. What I have noticed is that the reasonable wear and tear aspect that is expected, has become far more severe in recent years. I have always tried to be careful to ensure responsible tenants were in situ, but upon reflection it would appear that in my own experience, the condition rental properties are being returned by tenants has declined in recent years. The standard 1-month deposit falls far short of what is required, perhaps 3 months deposit would be more in line with the costs being incurred by landlords at end of tenancy to bring the property back into original condition.

In effect, with due consideration for tax liabilities and other servicing costs, it would appear that the costs to bring a property back up to original condition completely negate a full 12 months of rental. I am not referring to horror stories, just regular longer-term tenancies that terminate normally.

I would be interested to hear of other landlord experiences of similar, as I don't really understand why there is not more demand for increased deposit amounts to help encourage improved tenant behavior.

Thanks
(Looking forward to soon being an ex-landlord).
 
Should you really expect the house to be in "original condition" though?
Presumably your own house is similarly not in exactly the same condition it was 3 years ago. Is it not just part of the cost of doing business and why there's a 12.5% write-down per annum of fittings etc?
 
Thanks dereko1969. I suppose it may depend on the individual landlord. Personally, I want to protect my investment and am prepared to bring it back to the condition it was in at the start of the tenancy, hence the term "original condition", as opposed to new property standard.

Capitalizing fixtures over an 8 year period will at best provide something like a financial convex saw-tooth curve and will never fully cover reinstatement costs... in my experience at least. Nor does it sufficiently address the costs in re-skimming walls, or ceilings (after inevitable leaks) or landscaping etc.

Having had numerous BTLs over a long period of time, my observation is that its becoming more difficult to capture sufficient costs to reinstate the property to the condition it was at the beginning of each tenancy and that 1 month's deposit is insufficient to recoup costs.
 
1 month is totally insufficient. I too have good long term tenants but spend a couple of thousand each year doing improvements to the house. This helps reduce tax bill and maintains the selling value of the house.

If and when the current tenants leave, it will be three months rent as a deposit for certain.
 
Ive decided myself that its just not viable anymore.
You cant put the rent up enough to get back what it costs you to keep the place in good nick.
So you certainly cant afford improvements. Doubly so if you are stuck on a low rent in an RPZ.
Tenants just dont look after your property the way people look after their own property.
 
its becoming more difficult to capture sufficient costs to reinstate the property to the condition it was at the beginning of each tenancy and that 1 month's deposit is insufficient to recoup costs.
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As a renter, I understood that the purpose of the deposit was to cover the cost of excessive wear & tear or outright damage, not to restore the property to the condition it was at the beginning of the tenancy.
 
Walls should certainly not need to be reskimmed.
Holes in walls etc can all be repaired by DIY patches.

Is your problem the fact that (i) you bought a property built in 2005 (at height of the boom and also height of absolutely terrible craftsmanship) and (ii) the fact they had 2 kids there (kids = lots of wear an tear).

Fixtures & fittings are generally not high quality in Ireland and will not last. I had a plumber recently recommend an upgraded boiler. He claimed Vokera was a great brand. I checked reviews of the company in the UK and they all classed it as a mediocre. Unless you're buying a luxury property, the finishes will most likely be cheap but look nice on day one. That doesn't last. Regardless, €10k investment to bring it back to day one quality is not bad considering the expected capital appreciation in real estate over a typical 10 year period.
 
MugsGame said:
As a renter, I understood that the purpose of the deposit was to cover the cost of excessive wear & tear or outright damage, not to restore the property to the condition it was at the beginning of the tenancy.
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Outside of Ireland in certain countries you must return the property in the state you found it. No holes in walls, repainted, not a scratch or a mark on anything or you will be hit with a massive bill. Even down to the height of the hedges in the garden if you rent with one.

Like Alistair I know that I have to refurbish more than if I did myself. How do I know this, because I should have shares in Dulux. I paint rented properties more than most people have hot dinners. Often I give the tenants the paint themselves to do it. If they ask I just give it and I buy good quality paint too.

Alistair about 10 years ago I moved into one rental property over Xmas to relet and refurb while I stayed their during the holidays. Cost I think 7K or 8K and this was just cleaning, painting, new tiling in kitchen and hall, and tiling the bathroom. I have literally no idea what tenants do to tiles in bathrooms. They get so manky. My old home I was in recently and the bathroom ceiling is now black with damp, but there was none when I lived there. I think they never open the window and dry clothes on the radiators.

I saw the new parquet I put down is damaged as well, no idea why. It doesn't happen in my own home. And you can't fix that. I think I'll tile it next time. Costly but that's real difficult to damage, but it's very cold.

In Ireland as the landlord is responsible for everything tenant's don't seem to respect things. So now I buy the strongest of anything as regards furniture and I don't care what it looks like as long as it's strong and durable.

- Chimney on fire
- No idea what they do to vacuum cleaners
- Marks on everything
- Carpets filthy
- Cooker on fire and destroyed it
- Fridges, you do not want to know, revolting
- Cookers likewise, caked in stuff
- Rubbish from street blown into garden and left there
- Pulling out smoke alarms if they go off - very common this
- Covering electrical storage heaters, I've seen this in my brother's property
- If you've a soft internal door you can forget it, bound to be some kind of a tump in it
- Toilets, should also have shares in limescale remover, nobody every heard of toilet cleaner
- Seats of toilets having off
- Limolium damaged
- Holes in walls
- Tenant put a hole out the kitchen to string up an electric light outside
- Then ran a waterhose from back of house via kitchen window to front of house to set up a car repair business
- I reckon someone swings off curtains/poles

etc etc.
 
PaxmanK said:
Ive decided myself that its just not viable anymore.
You cant put the rent up enough to get back what it costs you to keep the place in good nick.
So you certainly cant afford improvements. Doubly so if you are stuck on a low rent in an RPZ.
Tenants just dont look after your property the way people look after their own property.
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Lot's of tenants do look after the property as they would their own, as much as they are allowed to, which they are often not. Landlords tell them that they can't paint, can't change anything, can't remove old/broken furniture, can't make any improvements, and then they complain that the property is not in the same condition it was 3, 5, 8 years ago. Well of course it isn't!

Yes, there are bad tenants, but there are more good ones. You just don't hear about them.
 
Magpie said:
Lot's of tenants do look after the property as they would their own, as much as they are allowed to, which they are often not. Landlords tell them that they can't paint, can't change anything, can't remove old/broken furniture, can't make any improvements, and then they complain that the property is not in the same condition it was 3, 5, 8 years ago. Well of course it isn't!

Yes, there are bad tenants, but there are more good ones. You just don't hear about them.
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I've never had one who looked after a property as well as people look after their own houses.

I let one paint ones. Cost me €750 to paint it properly afterwards. Never again.
And my pet peeve. How to they go through so many shower heads and shower hoses. And the timescale ... A wipe of a clothe on the taps and the odd clean of the toilet bowl is all it takes.

I could go on.

Read Brontes post above. It's very good.
 
Magpie said:
Lot's of tenants do look after the property as they would their own, as much as they are allowed to, which they are often not. Landlords tell them that they can't paint, can't change anything, can't remove old/broken furniture, can't make any improvements, and then they complain that the property is not in the same condition it was 3, 5, 8 years ago. Well of course it isn't!

Yes, there are bad tenants, but there are more good ones. You just don't hear about them.
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Don't think this is a landlord v tenant thing Magpie. Most of my tenants are great, absolutely. But that is not what this thread is about. Even my best tenant ever, who was very careful, that one cost me 7K to renovate after leaving. The tenant did nothing wrong or did no damage as such, but that was the cost it took to get the house back in shape after her. She even sent me a lovely card to thank me. And she got the full deposit back. I don't think I've ever withheld deposit ever, except for rent owing or a bill. Certainly not for broken anything or painting or filthy fridges. If you've been at this business as long as some of us have, we have lists of things tenant's did, that's all. I would rather move to the model of no furniture in the property, and it to be returned in the same condition it was let in. This has never happened so far to me that I can think of. I'm in my current home 13 years and only painted it once. This does not apply to my rental properties. And here when I left my rental property it was spick and span like the day I moved in or it would have cost me a lot of money.
 
PaxmanK said:
Read Brontes post above. It's very good.
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One I forgot, tenant left a hot iron on the sideboard in the kitchen. And that tenant took me to court. She was my nightmare tenant. And I agreed for her to get the deposit back to get rid of her.
 
I would like to clarify that this thread is not about landlord versus tenant. The purpose is to garner some feedback from the wider community to establish if my own experience is shared, of renting out a number of properties over the past 20 years whereby I have noticed a significant increase in the amount and cost of work involved in bringing a property back to rentable or saleable condition following a normal tenancy expiration. In my own experience, a budget of between €2K and €3K was expected upon each turnover, but now a budget in the order of €7K is required, which is a significant increase in costs. Additionally the tax treatment of this spend occurring when the property is untenanted is unfavorable to the landlord due to budget changes in recent years.

My view is that the European model whereby long term tenancies can require the tenant to provide a deposit of between 3 and 6 months rent, install the kitchen units, furnish the property completely (including all kitchen white goods) and to fully repaint the property upon lease expiry is a far better model and one the Irish rental model should move towards in return for security of tenure on a long term basis (i.e. 10 years).
 
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The three month deposit is already beginning. And if you've a HAP tenant you must have 2 months because the state pays rent a month in arrears. If I get new tenants I'm going to ask for 3 months deposit from now on. If they don't have the money I'll take one month and then ask for extra rent until they build up 3 months.

I have not noticed Alistair a higher turnover cost. And I don't get your point about tax treatment spend when the property is untenanted?
 
Is there any scope (I've a feeling the answer is no, but just to check) to put the costs of preparing a former rental property for sale against tax on the rental income ? It's treated as a cost of sale, but in my view it's a cost of renting as it was the renting of the property that has caused it to need to be done? There'll be no profit on this sale to put it against....
 
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