Landlords and tenants will be feeling financial stress right now, and it is important that both parties recognise this and interact in a fair and transparent manner. Sean O’Neill, director at real estate adviser TWM, believes a strong landlord and tenant relationship can be built now and endure beyond if both parties are respectful of each other’s position.
What are the first steps landlords and tenants should take?
Landlords: Assess your tenant's ability to pay and engage with your bank. For private residential landlords with mortgages in place, flexibility is more short term (most likely assessed on a month-to-month basis) than for commercial-type landlords, given the reduced security they have from tenants on short-term tenancies.
What residential landlords can do will also very much depend on Government policy and bank/funder support. Following a meeting last week between representatives of the banks, the Banking and Payments Federation of Ireland (BPFI) and Minister for Finance Paschal Donohoe, the main banks are to introduce a range of measures to help those affected by the current situation.
These measures include a payment break of up to three months and the deferment of court proceedings. The non-bank lenders and credit servicing companies have also agreed to these measures. To avail of the payment break, you need to make contact with your bank or loan servicing company.
Tenants: Assess how much rent you can pay and engage with your landlord as early as possible. While landlords need to provide tenants with significant notice periods to vacate, tenants can, in many cases, leave on a month's notice at their lease end. Therefore, the ability for landlords to be flexible is limited as they have very little guarantee that any rent-free periods can be recouped. As already mentioned, most landlords will be dependent on their banks to be flexible.
It is understood the Government will announce a temporary ban on evictions for an initial period of three months and possibly the introduction of a rent freeze. It is interesting to see that landlords who are members of the Irish Institutional Property (IIP) organisation have said that they will support tenants who are affected by the disruption caused by the coronavirus pandemic through measures such as deferral of rent payments and payment plans.
They have also committed to temporarily suspending the issuing of notices to leave to affected tenants going through short-term financial stress as a result of the pandemic. The body is also to suspend any pending rent increases during the acute phase of the outbreak.
I recently served notice to my tenant to quit my buy-to-let property as I intend to sell it. Can I still proceed, or am I obliged to house them during this crisis?
You should contact your solicitor to clarify your legal position. However, it is understood that there will be a ban on evictions for three months. Therefore, it is likely you will have to put this on hold for the time being.
My landlord has refused to reduce my rent as I haven’t lost my job or seen my income reduced so far. I’ve noticed there are other properties in my area now where the rent is cheaper. Can my current landlord do anything beyond holding on to my deposit if I break my current lease?
Check your lease to see if you have a lease break option, lease expiry or if you are in a periodic tenancy (in occupation after the end of a lease). If in doubt you should get legal advice. Generally, you cannot terminate your lease during the contracted term unless your landlord is in breach of the lease obligations.
If you do want to break your lease, you will remain liable for the rent until the end of the lease term. The landlord may be agreeable to letting you break the lease but there is likely to be a cost associated with this. This could include the landlord keeping your deposit to cover expenses such as re-advertising, re-letting costs or lost rent but, as mentioned, may also leave you exposed to a claim for the remaining rent or part thereof. Engaging with your landlord is advisable.
