My son moved abroad to work during the recession. His house was in negative equity at the time, so he had no other choice but to rent it out. He needs to sell it now to finance a home where he is now living, but the tenant refuses to move out. I am nearly certain the tenant is subletting (not allowed by contract). My son has not increased the rent over the years so now the house is not generating rent that other houses in the area are getting. Is there anything he can do?
Unfortunately, during the recession the position your son found himself in was one experienced by many other people. He has done well to hold on to the ownership of the property even though it was in negative equity as many were not so lucky.
Firstly, to deal with the current rent the house is producing. Your son has every right to increase the rent in accordance with the law. If his property is in a rent pressure zone area, he must issue the tenants a notice of rent increase on the prescribed form. This involves filling out the Residential Tenancies Board (RTB) form regarding rental increases, providing three comparable properties showing rent higher or the same as what the new rent is going to be, give the tenants 90 days’ notice of this increase and, most importantly, go on to the RTB website to use the rent calculator facility to work out what the new rent will be. There is a lot of information about how to correctly implement and inform tenants of a rent increase on the RTB website and I would encourage your son to look at this.
The bad news, which I know from my own experience managing properties for landlords, is there isn’t going to be any windfall for your son. This is because the increments that the rent can increase by over the years is a nominal amount. That said, it may go some way to bridging the gap between what the open market rent is for similar properties in the same area and the current rent he is receiving.
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The next point to deal with is the subletting of the property or bedrooms within the house without the landlord’s permission. If that is the case, then the process is straightforward. The legislation states that a landlord must send a warning letter to a tenant setting out clearly what breach has occurred and give the tenants a reasonable amount of time to rectify the wrong. The reasonable amount of time varies based on the breach in question.
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For example, if you were writing to the tenants about their failure to maintain the front and back gardens of the house, then giving the tenants a couple of weeks to tend to them and get them back in order is all very reasonable. However, due to the current property supply crisis, I would advise that you give the tenants four to six weeks to rectify this breach.
If the tenants do not carry out your request and they continue to breach the rental contract, he can issue a 28-day termination of tenancy. If the tenants continue to live in the house, then you would have no choice but to lodge a case to the RTB for overholding. This is the worst possible outcome as the RTB is now taking months to process these types of cases. From experience representing landlords with tenants who are overholding, I know the process can take a year if not longer.
If I was in your son’s shoes I would ignore the subletting issues and go straight to issuing a termination of tenancy for the purpose of sale, giving the tenants the required notice
I also note that your son wants to sell the house to finance a home where he is now living. Once you take that into consideration, one might say that all the above may not be the avenues to pursue with these tenants. I say that because from my point of view in this situation the overriding goal would be to get full vacant possession of the house as soon as possible. This will allow your son to place the house on the open market and take advantage of the current strong sales market.
So, if I was in your son’s shoes I would ignore the subletting issues and go straight to issuing a termination of tenancy for the purpose of sale, giving the tenants the required notice. Since the recession was many years ago, your son is probably going to have to give the tenants the maximum amount of time to move out. For tenancies of more than eight years, it is a notice period of 224 days.
Once again, the law sets out clearly how a valid termination of tenancy for the purpose of sale should be issued. This information is also on the RTB website and will set out the steps that need to be followed when issuing this type of notice. Some of these steps are making sure you include an original statutory declaration with the termination of tenancy and to sending a copy of this notice into the RTB the same day you serve it on the tenants.
One parting piece of advice: if you believe there are other people living in the house who were not on the original lease, simply ask the head tenant for their names as you need to update your RTB annual registration as is required now by law. Once that exercise is done and you are equipped with this important piece of information, you can issue the termination of tenancy specifically naming all the tenants in the house. This will solidify the validity of your notice, which is vitally important these days.
Marcus O’Connor is a chartered surveyor and member of the Society of Chartered Surveyors Ireland
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