Below is our quick start guide to being a successful residential landlord in Ireland. The points below outline some of the key things you need to know and consider:
Decide if you will use a letting agent
One of the first considerations with an investment property is deciding whether to manage the property yourself or to use the services of a letting agent or management company. Do you have time to respond to tenant problems? Do you have the time and know how to carry out maintenance on your property? If you do not live close to the property, self-managing may not be a viable option. The decision to manage the property yourself, depends on your individual circumstances and the amount of time you can devote to it.
Be realistic about the potential rental income from a property. Do your research on rental levels in the local area. Always factor in void periods (time when the property is empty) into your financial projections. Remember that owning investment property takes time and effort to manage the property, manage your finances and complete the required tax returns. Always factor in the requirement for on-going maintenance.
Furnish the property well
A good fit-out does not have to be expensive. How a property is furnished is a key part of marketing your rental investment. Don’t expect prospective tenants to be happy with ‘old fashioned, damaged and miss-matched furniture’ that better belongs in a skip.
A well-furnished and presented property is easier to market and will rent much quicker than a badly furnished property. Tenants are also likely to stay longer in nicely finished properties.
Have the correct insurance
The insurance risks associated with letting residential property can be substantial and are different to that of owner-occupiers. Do not under estimate the importance of having the right insurance for your investment property. Some landlords make the mistake of relying on normal household cover – this is not adequate. An investment property requires specific investment property (buy-to-let) insurance.
Screening tenants is the most important part of managing rental property. While no landlord wants to have vacant property – it is better (and cheaper!) to have an empty property than one with bad tenants who may end up costing you thousands in lost rent and damages by the time you eventually manage to get them out. Landlords are always anxious when they have an empty property, but don’t rush into taking the first tenant that comes along. Take the time to screen potential tenants.
Have a lease agreement and an inventory
A good lease agreement is essential to the effective management of investment property and it helps to avoid disputes and disagreements during the course of the tenancy. Never let a tenant into a property without a signed lease agreement. The lease agreement forms the basis for the landlord /tenant relationship for your property. An inventory is the itemisation of the contents of the property and their condition. Every landlord should have an inventory for each property as it outlines not only what is in the property, but also what condition the contents are in at the time of letting. This can help to prevent disputes when tenants move out.
Know the rules
The residential letting market in Ireland is governed by the Residential Tenancies Act 2004, which also established the PRTB to resolve disputes between landlords and tenants and to operate a system of tenancy registration. Landlords and tenants may refer disputes to the PRTB for resolution.
The Residential Tenancies Act 2004 sets out basic tenancy obligations for both landlords and tenants. It is not possible to contract out of these obligations (i.e. the act overrides the terms of any tenancy agreement).
It is important that every landlord understands the main provisions of the Residential Tenancies Act 2004 and the impact this has on areas such as registering tenancies and serving notice on tenants.
Register with the PRTB
When a tenant rents your property you must both complete a PRTB registration form, which the landlord must send off to the PRTB. It costs €90 to register and it is a legal requirement. Your tenancies must be registered in order to claim mortgage interest as an allowable expense against tax.
Manage your finances
Get a reliable accountancy firm to make your landlord tax returns. Clear Group based in Balbriggan, Co. Dublin provide landlord tax return services across Dublin, Meath and Louth.
You will have to make a tax return every year. Rental income is liable to income tax but you are allowed to offset certain expenses. Open a separate bank account for rental property income and out-goings. Get the rent paid by standing order into the account. Keep accurate records of all income and expenses including all receipts. Build up a contingency fund to cover your costs when the property is empty or to pay for unexpected repairs and maintenance (for example, a new heating boiler).
Be a good landlord
Be professional and business like in your dealings with tenants. Remember they are your tenants, not your friends. Respond promptly to phone calls or messages from tenants. Deal quickly with repair or maintenance problems. Keep your promises – if you commit to getting something done, then get it done. Keep a professional, polite attitude to retain the respect of your tenants. Once the tenants are paying their rent and maintaining the property, keep your distance and respect their privacy – it is their home not yours!