If you are on the wrong side of 38 and like so many bought your first home which was a 2 bed apartment over 10 years ago you are possibly now one of Irelands wave of reluctant landlords.
Things were different in 2004 when you bought, the property boom was in full swing and your new home was going to be a 3-4 year investment until you decided to sell it to the next wave of investors/ first time buyers for about 50% more than you bought it. Then you had your eye on that house just outside the postcode where you’re from but it would have been perfect for another few years until you had enough equity to move onto a road three or four down from Mum and Dads, well that was the plan….
However it’s 2014 and things are decidedly different from your initial blue print, the fabulous 2 bed apartment with the designated parking space is now asking 40% less than you paid. You’re now married with one child and are contemplating a second however, as it is, things are kinda cramped here with all of little Ella’s toys and you’d love a garden for the 3 week Irish summer…
Whilst prices have dropped considerably there’s still no real liquidity in the Irish market and even if you could get a loan you still have that grey elephant, €550k mortgage, in the background so you decide to move out, rent your apartment and rent a house. How hard can it be…?
It’s at this stage you need to sit down and decide if you have the time, knowledge and patience to let/manage the property yourself or will you get a Letting Agent / Managing Agent to look after everything for you. Take some time and research what companies are out there and ask your friends for direction on who they’ve used. Fee’s will vary depending on who you talk to but traditionally you should anticipate paying between 5-7% of the annual rent for a letting only service and between 6-10% for full management, these figures will also be subject to VAT. However service fees can be offset against your annual income tax. You will also now be liable for additional tax as any rent you receive is now classed as additional income. These cases vary so talk to your accountant for specific details. These fees may seem high at first but when you weigh them up against the experience and insight a good Agent has it will be worth it, especially if you have any problems with tenants or you get a phone call about a burst pipe in the middle of the night.
Firstly you need to step back and decide what you’re going to bring with you and what you’re going to leave. Just because you think that hand carved elephant you got on your honeymoon in Africa is cute and quirky does not mean your tenant will, in fact it will probably be thrown in a box along with a lot of other items you leave behind and put in storage somewhere. If there is anything you have any emotional attachment to take it out, whilst this was your first home it is now going to become someone else’s home so you are going to have to cut all emotional attachments to the property. The house should be professionally cleaned and if required painted, preferably a neutral colour. Professional cleaners are always a good idea for the sake of €100, they clean every day and will pay close attention to the oven, extractor fans, fridges and bathrooms as these are the traditional area’s tenants overlook when handing back a property so having them the way you want them returned and highlighting this is always a good idea. You are also legally required to have a B.E.R. cert, (Building Energy Rating) for the property to let or sell it, prices vary but you should get an average 3 bed house done for as little as €150.
You are obliged to notify your lender that you will be renting out the property as technically your home is now a R.I.P., (Residential Investment Property). Likewise you should notify your insurance company and transfer your home contents as you will not be liable for the personal possessions of the tenants and they should be made aware of this in their lease.
As you hold viewings you will meet a selection of people who will have an interest in your property, apart from the initial meeting and brief chat with whom can seem the right person, you should also request references and lots of them…
If you have decided to look after the property yourself we strongly advise going to your solicitor for a current lease, it’s the bones of the tenancy and should there be any issues in the future it will be the first thing the P.R.T.B. will refer to. The number of people that come to us after a tenancy is gone wrong looking for advice only to discover a photocopy of a lease a friend of a friend gave them is quite high.
On the day the tenant takes possession you should meet them at the property and run through it with them before you sign the lease. Highlight the condition of the oven, fridge, back garden etc. so everyone knows where they stand from the get-go. All parties will sign the lease and you should have the tenant sign a standing order form for the rent, at this stage you will also receive the first months’ rent to go with the security deposit, the deposit should be lodged into a secure unused account as this will be returned to the tenant once all is ok when they decide to vacate.
If you have followed these simple steps you should be on your way to a hassle free tenancy with minimal disruption to you and your new tenant. However if it’s still a bit daunting and you feel you may need some more guidance; Feel free to get in touch with us at +353 (1) 685 2059 or info@hadenproperties and we’ll be happy to help. Good Luck