I’ve recently inherited a house from my parents, who have died, and I’m just wondering if I should rent it out. I have three children and, given how scarce housing is, I’m leaning towards holding on to the property rather than selling it. I’m wondering about renting it out for several years at least. What should I know about becoming a landlord and what are the first steps to getting started? I’m also wondering how it works to hire a property manager and if that makes sense in my situation or not.
Renting out the property you have inherited could be a great option, especially given the high demand for rental accommodation in Ireland. However, becoming a landlord comes with significant responsibilities, both legal and financial, so it is important to understand what is involved before making a decision.
One of the first things to consider is ensuring that the property meets the required standards for rental accommodation. In Ireland, all rental properties must comply with the Housing (Standards for Rented Houses) Regulations 2019, which set out minimum requirements for heating, ventilation and safety. More information on these requirements can be found on the Citizens Information website.
Additionally, all tenancies must be registered with the Residential Tenancies Board (RTB), the body that regulates the rental sector and enforces landlord and tenant rights.
A clear, written lease agreement is also essential to ensure that both you and any future tenants understand your responsibilities.
Before advertising the property for rent, you must obtain a building energy rating (Ber) certificate. This certificate provides an energy efficiency rating for the property, which is legally required to be included in any advertisements for rental accommodation.
A better Ber can make your property more attractive to tenants and may also help reduce energy costs in the long run. If your property has a poor Ber, you might want to consider making energy efficiency upgrades, such as improving insulation standards or the heating system, before letting it out.
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From a financial perspective, rental income is taxable and you will need to declare it to Revenue. It is advisable to seek tax advice to fully understand your obligations, as there may be deductions available for expenses such as mortgage interest (if applicable), property management fees and maintenance costs. You will also need to budget for Local Property Tax and RTB registration fees.
One of the biggest decisions you will need to make is whether to manage the property yourself or to engage a letting agent. If you choose to self-manage, you will be responsible for advertising the property, selecting tenants, collecting rent, dealing with maintenance issues and ensuring compliance with all regulations.
It has been argued that rent controls discourage investors, while many landlords blame them for making renting unviable and forcing them out of the market
Tenant selection is particularly important, as choosing the wrong tenants can lead to costly issues down the line. A thorough vetting process, including reference checks and reviewing any past disputes on the RTB website, is highly recommended. You should also document the condition of the property before the tenants move in, using a detailed inventory with photographs, as this can help prevent disputes over damage when the tenancy ends.
If you do not have the time or experience to manage the property yourself, you may prefer to hire a letting agent or property manager. They will handle the day-to-day running of the tenancy, including tenant selection, rent collection and maintenance. The cost of using a property manager is a deductible expense, meaning it can be offset against your rental income for tax purposes. It is important to ensure that any agent you use is licensed by the Property Services Regulatory Authority.
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Another key consideration is insurance. Standard home insurance policies do not always cover rental properties, so you will need to ensure you have the right landlord insurance in place. This can protect against potential risks such as property damage, liability claims and loss of rental income.
Once you have found suitable tenants, you will need to sign a lease agreement, register the tenancy with the RTB and arrange for the transfer of utilities into the tenant’s name. It is also a good idea to set up a standing order for rent payments and to carry out regular inspections to ensure the property is being well maintained. Keeping good communication with your tenants can help to prevent issues from escalating, and dealing with any maintenance problems promptly can save money in the long run.
If you are comfortable handling the responsibilities yourself, it can be a great way to generate income while retaining the property for the future. However, if you would prefer a hands-off approach, hiring a professional to manage it on your behalf may be the best option.
Letting out your inherited property can be a financially rewarding decision, but it does require careful planning and ongoing management. As always, the bottom line is key, and the figures will have to add up over the period you want to rent it for.
You don’t mention if the property is in a Rent Pressure Zone (RPZ) or not. If it is, that will be a very important element to consider. An RPZ is a designated area where rent increases are capped. Rents in an RPZ cannot be increased by more than general inflation, as recorded by the Harmonised Index of the Consumer Price, or by 2 per cent if inflation is higher. This restriction applies to new and existing tenancies in RPZs (unless an exemption applies).
The issue of rent controls is a controversial one. It has been argued that the limits discourage investors from the property market, while many landlords blame them for making renting unviable and forcing them out of the market. On the other hand, it’s argued that they bring stability to thousands of renters by limiting increases.
Either way, changes are likely in the near future so it’s important you keep abreast of developments. The State’s Housing Agency is carrying out a review of the controls and is expected to report to the Government later this month.
Whatever it decides will have a direct impact on renters, landlords, and the future of the rental market.
If you decide to rent out the property, take your time to prepare properly, obtain the required Ber certificate, and seek professional advice along the way where needed.
Majella Galvin is an estate agent and chartered member of the Society of Chartered Surveyors Ireland
Do you have a query? Email propertyquestions@irishtimes.com
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