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 now to finance a home where he is living, but the tenant refuses to move. I am nearly certain the tenant is subletting (not allowed by contract). He has not increased the rent over the years so the house is not generating the same level of rent as other houses in the area. Is there anything he can do?
Unfortunately, during the recession the position your son found himself in was quite common. He has done well to maintain ownership of the property since it was in negative equity, as many were not so lucky.
Firstly, let’s deal with the current rent the house is producing. Your son has every right to increase the rent in accordance with the law. That is, if his property is in a Rent Pressure Zone, he must issue the tenants a notice of rent increase.
This involves filling out the Residential Tenancies Board (RTB) form regarding rental increases and providing three comparable properties showing rent higher or the same as to what the new rent is going to be. The tenants must be given 90 days’ notice of this increase. Most importantly, your son should go on to the RTB website to use its rent calculator facility to work out what the new rent will be.
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There is a lot of information around serving a rent increase to tenants on the RTB website, so I would encourage him to look at this. The bad news, from my own experience of doing this for landlords whose properties we manage, is that there won’t be a windfall for your son.
This is because the increments that the rent can be raised by are nominal. 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.
Subletting
The next point to deal with is the subletting of the property or bedrooms within the house without the landlord’s consent. 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 then give the tenant a reasonable amount of time to rectify the wrong. The reasonable amount of time varies based on the breach in question.
For example, if you were writing to the tenant about their failure to maintain the front and back gardens of the house, then giving a couple of weeks to get them back in order is quite reasonable. However, due to the current property supply crisis, I would advise that you give the tenant four to six weeks to rectify this breach.
If the tenants do not carry out the request and the breach continues, then your son can issue them with 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.
Termination of tenancy
From my professional experience representing landlords with tenants who are overholding, I know the process can take a year if not longer. You state that your son wants to sell the house to finance a home where he is now living. Taking that into consideration, one might say the above course of action is not be the most appropriate one to pursue with these tenants.
I say that because the overriding goal is 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 in the near future and take advantage of the strong sales market.
If I was in your son’s shoes, I would issue a termination-of-tenancy notice for the purpose of sale straight away, giving the tenants the required days’ notice.
As the recession was many years ago, your son will probably have to give the tenants the maximum amount of time to move out. Once again, the law sets out very clearly how a valid termination of tenancy for the purpose of sale should be issued.
This information is on the RTB website, as are the steps which need to be followed when issuing this type of notice. For example, you are obliged to include an original statutory declaration with the termination of tenancy and to send a copy of this notice into the RTB the same day you serve it on the tenants.
One parting piece of advice: if you do believe there are other people living in the house that were not on the original lease, simply ask the head tenant for their names. Tell them you need to update your RTB annual registration, as is required by law.
Once that exercise is done and you are equipped with this important 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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