Question:
I have recently purchased an investment property in South County Dublin, I am a first time Landlord, never having let a property. When negotiating the rent for my new property with prospective tenants, I was asked what the previous rent was on the property? I was also told that I am restricted to rent controls as this property was let by the previous owner. This is surely not the case as I have not rented out a property before and the prospective tenants are new to this address?
Response:
If your property is in a Rent Pressure Zone (RPZ) and has been previously let by you or a previous owner, you must comply with the RPZ legislation.
Rent Pressure Zones (RPZs) are designated Local Electoral Areas where rents can only rise by up to 4% per annum, and the rent can be no more than market rent.
It is important that when you are purchasing an investment property you are aware of the previous rent as you will be restricted to this amount. The new rent you set for your tenant(s) will be based on how much and when the rent was last set for the property. You will have to use the RPZ Formula to determine the maximum new rent you can charge:
Rent Pressure Zone Formula.
R x (1 + 0.04 x t/m)
- R = The amount of rent last set under a tenancy for the dwelling (the current rent amount)
- t = The number of months between the date the current rent came in to effect and the date the new rent amount will come in to effect.
- m = the number of months since your last rent review – you must enter 24 OR 12
The rent set for the property must be in line with local market rents for similar properties.
The RTB provide an online calculator to assist in determining the rent – we suggest that you refer to it.
Click HERE to access the RTB Rent Pressure Zone Calculator.
Not all properties in RPZs are subject to the 4% restriction. Exempt properties include properties that have not been rented for a period of two years prior to the immediate tenancy commencement date (1 year in the case of a protected structure), and those that have undergone a \’substantial change in the nature of the accommodation\’.
If you need further advice – contact IPOA – info@ipoa.ie