We have two tenants in a three-bedroom house in an RTB (Residential Tenancies Board) area paying low rent. They have been renting it from us for the past 12 years. Originally there were three professionals renting the property but one of them got married and moved out leaving the other two, who kept paying the rent. The same lease has been signed each year for the whole house. The problem we have is the low rent they are paying and the fact that they are now renting out the third bedroom themselves. Any advice you can give would be greatly appreciated.
First of all when you say that the house is in an RTB area, I will assume what you mean is that the property is located in a rent pressure zone (RPZ) which places restrictions on landlords on how much they can increase the rent. I will also assume from the content of your question that the third tenant moved out a year ago and the remaining two tenants continue to live in the house and pay the full rent between them. However, the original two tenants have moved in a third person who now occupies the property too.
Your question deals with two aspects of the landlord and tenant relationship, namely a breach of tenants’ obligation and a notice of rent review. First and foremost, there is the matter of the potential breach of tenants’ obligations. This situation is not unusual, and I have come across it before. However, there is one important factor that will dictate what action you take next. If you were contacted by the other two tenants and they informed you of this person moving in and you did not object then in essence you have given “consent” for this new tenant to slot into the shoes of the person who left.
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Therefore, this new person becomes the third tenant inheriting the previous tenant’s security of tenure and everything that goes with that. In summary, there is not much that you can do about that situation if you did give permission for them to move in. That said, I would suggest you formalise the situation so at least you are aware of who they are, what they work at and that they have a good reference from a previous landlord.
The other scenario is if this person has moved in recently and the other two tenants did not ask your permission in advance, and your original lease agreement does not allow for any sub-letting/rent-a-room. If that is the case, then you must inform your tenants that this is a breach of their lease agreement with you. Not only that, you need to formally write to the tenants by way of letter and keep a record of same. Your letter should inform them of the breach and give them a reasonable amount of time to rectify the breach in question. In these circumstances I would suggest that one month would be a fair and reasonable amount of time. In this letter, it will also state that if the breach is not rectified within the time allowed, then you as landlord will have the right to end the tenancy by serving a 28-day termination of tenancy notice.
Although my answer to your predicament sets out the legislative aspect of the landlord-and-tenant relationship, I would always encourage open and honest communication with tenants on matters like this. For all you know the new tenant could be a very good match for the house and the other two tenants. Therefore, once you have done some proper vetting and regularising of the tenancy, everything could continue as previously.
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With regard to the second matter in your question about the rent being low, I would advise that once you have sorted out the new tenant’s position you have every right to issue a rent-increase notice to the tenants. There are also rules around increasing the rent. In issuing this notice, you must not have increased the rent in the last 12 months, you must give 90 days’ notice of the increase, and you must provide the rent levels for three suitably comparable properties of similar characteristic in the same location as your house. This is to show the tenants that the rent calculated is not above the market rent for similar properties.
In cases where a landlord has not increased rent for a number of years - which very much seems to be the case here - this will work in their favour when they calculate the new rent through the RTB RPZ Calculator. It could potentially be more than you think but don’t expect a windfall.
However, when it comes to just annual rental increases in RPZs, rents are capped in line with the rate of general inflation or 2 per cent a year, whichever is lower. So, if a landlord reviews their rent every 12 months and the rate of general inflation is 1.5 per cent, then the rent can only be increased by a maximum of 1.5 per cent. However, if the rate of general inflation is higher than 2 per cent, for example, 3 per cent, the rent can only be increased by a maximum of 2 per cent. This is all in place since 11th December 2021.
For both of the situations outlined in your query, the RTB website has all the appropriate notices available on its website to download and fill in to match your own circumstances along with information on breach of tenants’ obligation and issuing rent increases.
Marcus O’ Connor is a chartered surveyor and member of the Society of Chartered Surveyors Ireland
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