Property Clinic

We want to sell but my tenant has offered a 40% rent increase if they can stay. What can I do?

We have decided to sell the house because it’s not economically viable to be a landlord

The tenant is planning to retire abroad in a few years and doesn’t want the hassle of moving house. Photograph iStock

Marcus O'Connor
Mon Jul 1 2024 - 05:45

Our tenant is paying about 70 per cent of market rent due to being in a rent pressure zone (RPZ). We have decided to sell the house because it’s not economically viable to be a landlord, and have served an eviction notice. The tenant has offered us full market rent, an increase of more than 40 per cent, if they can stay in the house for another three or four years. The tenant is planning to then retire abroad and doesn’t want the hassle of moving house in the meantime.

Although the Government introduced the RPZs in 2016 with the best intentions, unfortunately, the reality is that it has somewhat backfired, and your situation is a good example.

Marcus O’ Connor is a chartered surveyor and member of the Society of Chartered Surveyors Ireland. Photograph: Andres Poveda

The introduction of RPZs has led to a situation where a considerable number of landlords are receiving a monthly rent from their current tenants that is significantly below the open market rate. To add salt to the wound, the landlord is also prevented from increasing the rent beyond the RPZ laws and calculations, even if their current tenants leave and they are creating a fresh tenancy with new tenants.

One of the other unintended consequences of this legislation is that the capital value of the property is also affected. In many cases when a property is placed on the market in an RPZ, it excludes investors as a potential buyer as there is no real value in the property for them. That said, one could make the point that this means other types of purchasers such as first-time buyers may not have to compete with investors when looking at certain properties. However, that is of little consolation to a seller who bought a property as part of their pension and wants to maximise its final selling price.

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The fact that the tenant has voluntarily offered the full market rent makes absolutely no difference. You are still curtailed from increasing the rent other than what the RPZ calculations allow for, even if there is a mutual agreement between the landlord and tenant on the matter. I have represented landlords in Residential Tenancies Board (RTB) disputes where the relationship between the landlord and tenant had broken down and even though a rent was set in the past by mutual agreement, the landlord ended up having to refund the tenant all the rent that was overpaid beyond the RPZ calculation.

Therefore, taking into account all of this information, the obvious answer here is that you cannot do it and you should under no circumstances enter into an agreement proposed by the tenant that goes outside the RPZ laws. You can also direct them to the RTB website so they understand that you are not being unreasonable about their proposal.

Another matter worth mentioning is that you have not served an eviction notice, as you’ve written. You have sent the tenant a termination of tenancy for the purpose of selling your property. The word eviction can sometimes evoke the wrong images of a landlord illegally removing a tenant from a property, which you are not doing here.

Finally, the task of issuing a valid termination of tenancy for a landlord who wants to sell their property has many strict steps that you need to follow so if you are in any doubt, you should seek professional guidance. For example, you must send the original statutory declaration out with the termination of tenancy to the tenants and not a copy. You also need to send a copy of the full notice served to the tenants to the RTB on the same day, otherwise you will invalidate the notice.

Marcus O’Connor is a chartered surveyor and member of the Society of Chartered Surveyors Ireland

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